U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19178 / April 11, 2005
Securities and Exchange Commission v. Philip D. Phillips, et al., Civil Action No. 2-05CV-107-J, United States District Court for the Northern District of Texas (Amarillo Division).
SEC FILES EMERGENCY CIVIL ACTION AGAINST SECURITIES BROKER TO HALT INVESTMENT SCHEME AND FREEZE ASSETS FOR INVESTORS
On April 7, 2005, the Commission filed an emergency action in United States District Court for the Northern District of Texas against Philip D. Phillips - d/b/a American Heartland Sagebrush Securities Investments, Inc. and Sagebrush Securities, American Heartland, Inc. ("Sagebrush") - charging that Phillips, a securities broker, bilked investors out of approximately $2.5 million on the false promise that he would invest their funds in safe income-generating securities. The Court granted a temporary restraining order, asset freeze and other emergency relief against Phillips and Sagebrush.
In its complaint, the Commission alleges that Phillips lured investors with a number of misrepresentations: 1) Phillips portrays Sagebrush to investors, falsely, as a brokerage firm; 2) Phillips falsely promises investors in "consultations" with them that he will purchase specific securities in their names; 3) Phillips assures the investors, falsely, that their funds will remain safe, and, claims, falsely, that their "Sagebrush accounts" are SIPC insured; and 4) on a monthly or quarterly basis, as "evidence" of the purported success and safety of the investments, Phillips prepares and delivers to investors bogus "account statements" purportedly reflecting the composition and value of their investments. The Commission further alleges that Phillips fraudulently failed to disclose to investors that he misappropriated a large portion of the their funds, and that he did not, in fact, purchase or hold in the investors' names the securities reflected on the investors' "account statements."
The Commission also named Kirby J. Curry as a relief defendant in its complaint, based on his alleged improper receipt of investor funds. The Commission seeks to freeze any investor funds under Curry's control.
The Commission alleges in its complaint that defendant Phillips, d/b/a Sagebrush, violated Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief that has been granted by the Court, the Commission seeks against Phillips a permanent injunction, disgorgement plus prejudgment interest, and civil money penalties.