U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19282 / June 23, 2005
U.S. SECURITIES AND EXCHANGE COMMISSION v. JAMES R. HARROLD, ET AL., (United States District Court for the Southern District of Indiana, Case No. IP 01-1318-C H/K)
UNITED STATES OF AMERICA v. JAMES R. HARROLD, (United States District Court for the Southern District of Indiana, Case No. IP 04-CR-0185-01)
JAMES R. HARROLD SENTENCED TO 78 MONTHS IN PRISON AND ORDERED TO PAY RESTITUTION OF APPROXIMATELY $3.6 MILLION
The Commission announced that, in a criminal case prosecuted by the United States Attorney's Office for the Southern District of Indiana, on May 20, 2005, James R. Harrold, 61, formerly of Indianapolis, Indiana was sentenced to 78 months in prison.. The sentencing in the United States District Court for the Southern District of Indiana in Indianapolis followed Harrold's guilty plea to 16 counts of mail fraud, two counts of wire fraud, seven counts of interstate transportation securities acquired by fraud, and four counts of money laundering. The court also ordered Harrold to pay restitution of approximately $3.6 million, and imposed three years of supervised release after Harrold completes his prison term.
The guilty plea followed Harrold's indictment on charges stemming from a prime bank scheme, in which Harrold solicited groups of people to invest in an investment program, in which their funds would ultimately end up in a so-called prime prime bank debenture instrument that would generate a monthly profit of 20%. Rather than make the promised investments, Harrold utilized the investors' funds to pay personal and business expenses, and to repay principal and the purported 20% interest to investors who liquidated their investments.
In a related civil case brought by the Commission on September 7, 2001, the Commission filed a complaint alleging that Harrold and various entities ("Entity Defendants") through which he operated had violated the registration and antifraud provisions of the federal securities laws by operating a prime bank scheme. On the same day, the court entered a Temporary Restraining Order freezing three accounts controlled by Harrold and, on September 10, 2001, the court entered an order freezing all of the defendants' assets. On September 14, 2001, Harrold and the Entity Defendants consented to the entry of an Order of Permanent Injunction, which continued the asset freeze and enjoined them from engaging in violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Harrold and the Entity Defendants consented to the entry of the permanent injunction without admitting or denying the allegations of the complaint. On October 19, 2001, the court appointed a receiver to take possession of the defendants' assets. Shortly thereafter, Harrold fled to Belize, where he was arrested on November 9, 2004 on charges of having fraudulently acquired a Belizean passport. Subsequently, Harrold waived extradition to face the charges in the criminal action.
For further information, see Litigation Releases No. 17132 (September 18, 2001) and No. 17208 (October 25, 2001).