U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19060 / February 2, 2005
Securities and Exchange Commission v. Southern Financial Group, Inc., Richard M. Wooten, Charles Dennis McKittrick and Gerald F. Hunter, Jr.,United States District Court for the District of South Carolina, Charleston Division, Civil Action File No. 2:02-1806-18
Federal Judge Permanently Enjoins Gerald F. Hunter, Jr.
The Securities and Exchange Commission announced that the Honorable David C. Norton, United States District Judge for the District of South Carolina, Charleston Division, entered a Final Judgment as to Defendant Gerald F. Hunter, Jr. (Hunter) on January 17, 2005. Hunter was enjoined from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Court ordered disgorgement and prejudgment interest against Hunter in the amount of $1,120,576, but waived payment of all but $100,000 due to Hunter's demonstrated inability to pay, and did not impose a civil penalty. Hunter consented to the entry of the judgment against him without admitting or denying any of the allegations of the Commission's Complaint.
The Commission's Complaint alleged that defendants Hunter, Southern Financial Group, Inc., Richard M. Wooten and Charles Dennis McKittrick raised at least $25 million through a fraudulent scheme involving the sale of short-term notes on behalf of UC Properties LLC. The Complaint alleged that defendants operated these note offerings as a Ponzi scheme, using funds raised from current note offerings to pay principal and interest to investors in prior offerings, and that at least $5 million was transferred to relief defendant Springdale Investments, Inc. The Complaint further alleged that Southern operated in violation of the net capital rule since at least October 2001, and that the firm's FOCUS reports and other books and records have been inaccurate since that time.