U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19142 / March 17, 2005
SECURITIES AND EXCHANGE COMMISSION v. LEARN WATERHOUSE, INC.; RANDALL TREADWELL; RICK D. SLUDER; LARRY C. SATURDAY; AND ARNULFO M. ACOSTA, Civil Action No. 04-CV-2037W (LSP) (S.D.Cal.)
FEDERAL JUDGE FINDS DEFENDANT RANDALL TREADWELL IN CIVIL CONTEMPT OF COURT
The Securities and Exchange Commission announced that on February 23, 2005, U.S. District Judge Thomas J. Whelan in San Diego issued an order finding defendant Randall Treadwell to be in civil contempt. The court found that Treadwell violated prior orders of the court by failing to provide an accounting and other financial information to the Commission, failing to cooperate with the court-appointed receiver over Learn Waterhouse, Inc., withdrawing money from a bank account that was subject to the court's orders that froze all of the defendants' assets, offering and selling new securities under the guise of a legal defense fund, and continuing to make false representations regarding Learn Waterhouse and the securities that it had sold. The court's contempt order found that Treadwell violated the court's temporary restraining order of October 12, 2004 and order of preliminary injunction of November 1, 2004.
The court's contempt order provides that Treadwell must pay $15,319 to the receiver to cover Treadwell's withdrawals from a bank account in violation of the court's asset freeze order. The court's order further provides that Treadwell's obligation to provide an accounting and other financial information to the Commission and his cooperation with the receiver is conditioned upon rulings to be made by Magistrate Judge Leo S. Papas on two pending motions filed on behalf of Treadwell. If Treadwell's motions are denied, Treadwell must comply with the court's prior orders within two business days. At that time, if Treadwell fails to comply, Treadwell faces the prospect of incarceration and a fine of $1,000 per day pending his full compliance with the court's orders.
On October 12, 2004, the Commission filed a complaint against Treadwell, Learn Waterhouse, Rick D. Sluder, Larry C. Saturday, and Arnulfo M. Acosta alleging that they had raised more than $24 million from 1700 investors in a nationwide Ponzi scheme. Treadwell and the other defendants had told investors that their bank trading program generated returns ranging from 5% to 50% per month and that the investments were purportedly secured by a "pre-funded, cash-back instrument" that had been issued by a top U.S. bank. In fact, the complaint alleges, investor funds were being used to pay the returns and more than $2.5 million had been misappropriated by the defendants to support themselves and their other businesses.
On November 1, 2004, Thomas Lennon was appointed as the permanent receiver over Learn Waterhouse, and given authority over all of its assets. The court also ordered the defendants to repatriate all assets from abroad, and issued a preliminary injunction prohibiting all of the defendants from future violations of the antifraud and registration provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. In addition to the relief already obtained, the Commission seeks permanent injunctions, disgorgement and civil penalties from all of the defendants.