U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19146 / March 18, 2005
Securities and Exchange Commission v. Violet Gail Eldridge and UTA-BVI, Ltd., Defendants, and The United Tribes of the Americas Inc. and Executive Bureau of Research and Recovery, Inc., Relief Defendants, No. 05-0735 (U.S.D.C. N.D. Georgia)
The United States Securities and Exchange Commission ("Commission") announced today that it filed a complaint in the United States District Court for the Northern District of Georgia against Defendants Violet Gail Eldridge ("Eldridge") and UTA-BVI, Ltd. ("UTA-BVI") and Relief Defendants The United Tribes of the Americas, Inc. and Executive Bureau of Research and Recovery, Inc.
The Complaint alleges that Eldridge and UTA-BVI, which she controlled, misappropriated at least $2 million from two investment advisory clients. Specifically, the Complaint alleges that in 1999 UTA-BVI, acting through Eldridge, entered into written trust agreements with two entities named First National Equity, LLC ("First National Equity") and P.K. Trust & Holding Inc. ("P.K. Trust"). After signing the trust agreements, First National Equity and P.K. Trust transferred $24 million into securities brokerage accounts Eldridge controlled in the name of UTA-BVI. Under the terms of the trust agreements UTA-BVI, through Eldridge, agreed to invest the money received from First National Equity and P.K. Trust in the best interest of those two clients. However, instead of investing the funds for the benefit of First National Equity and P.K. Trust, Eldridge and UTA-BVI misappropriated at least $2 million of the funds by paying personal expenses for Eldridge and by transferring funds to several bank accounts, including accounts Eldridge controlled in the names of the Relief Defendants. First National Equity and P.K. Trust, along with others, are defendants in an action the Commission previously filed in the United States District Court for the Southern District of Indiana. In that case, the Commission alleges that First National Equity, P.K. Trust and others fraudulently raised the $24 million in funds deposited with UTA-BVI and Eldridge. Eldridge and UTA-BVI were initially defendants in that action but were dismissed, without prejudice, on venue grounds. The Commission's allegations against UTA-BVI and Eldridge in the new action pending in the Northern District of Georgia mirror the allegations first alleged in the Indiana action, namely that UTA-BVI, acting through Eldridge, was an investment adviser and violated its fiduciary duty to its clients by misappropriating client funds; by transferring client funds for its and Eldridge's benefit, in violation of the trust agreements and without notice to or authorization from its clients; and by knowingly misrepresenting the uses it would make of client funds.
The Commission's Complaint alleges that UTA-BVI violated Section 206(1) and 206(2) of the Investment Advisers Act of 1940 ("Advisers Act") and that Eldridge aided and abetted UTA-BVI's violations of the Advisers Act. The Complaint also alleges that Relief Defendants The United Tribes of the Americas Inc. and Executive Bureau of Research and Recovery received ill-gotten gains to which they have no legitimate claim. The SEC's Complaint requests that the Court permanently enjoin UTA-BVI and Eldridge from the securities law violations alleged, order both UTA-BVI and Eldridge to pay a civil penalty, and order UTA-BVI and Eldridge, along with the Relief Defendants, to disgorge, with pre-judgment interest, all ill-gotten gains.
For additional information see Litigation Release No. 18411.