U.S. Securities and Exchange Commission
Litigation Release No. 18670 / April 19, 2004
Securities and Exchange Commission v. Timothy R. Heyman and Heyman International, Inc., (U.S.D.C. N.D. AL., Case Number CV-04-CO-0686-S, filed April 5, 2004)
On April 15, 2004, the Commission obtained an Order of Preliminary Injunction and Other Relief ("Order") from the United States District Court for the Northern District of Alabama against Timothy R. Heyman ("Heyman") and Heyman International, Inc. ("Heyman International"), pursuant to their consent. The Order preliminarily enjoins the Defendants from violating the anti-fraud and registration provisions of the federal securities laws in connection with a $10 million Ponzi scheme. The Order also continues the asset freeze and other ancillary relief previously ordered by the Court on April 5, 2004, upon the Court's grant of the Commission's Ex Parte Motion for a Temporary Restraining Order and Other Emergency Relief.
The Commission's Complaint in this action alleged that from at least 2001 to the present, Heyman raised at least $10 million from approximately 150 investors through the unregistered offer and sale of securities issued by Heyman International. Heyman represents to investors that as a result of investments that he makes, investors will earn a minimum of 10% per month on their fully refundable principal investment. The Commission's Complaint alleges that, in reality, Heyman is operating a Ponzi scheme by using investor funds to pay previous investors their monthly returns and to pay his personal expenses. The Commission's Complaint alleges that Heyman has used at least $1.3 million of investor funds to pay personal expenses, including several luxury cars and lavish trips. The Complaint also alleges that Heyman invested at most a de minimus amount of investor funds and that Heyman International does not have sufficient funds in its bank accounts to repay investors as Heyman represented.
The Order preliminarily restrains and enjoins Heyman and Heyman International from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Order also, among other things, continues the freeze of Heyman's and Heyman International's assets and the freeze of Heyman International investor funds wherever located. The Commission acknowledges the continued assistance and cooperation of the Federal Bureau of Investigation, the Internal Revenue Service and the State of Alabama Securities Commission. All of the agencies' investigations are continuing.
For additional information, see [Litigation Release No. 18659]