U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19295 / July 7, 2005
Securities and Exchange Commission v. Benjamin Franklin Cook, et al., Civil Action No. 3:99-CV-571-R, USDC, NDTX (Dallas Division)
Securities and Exchange Commission v. Resource Development International, LLC, et. al., Civil Action No. 4-97CV-1018Y, USDC, NDTX (Dallas Division)
United States v. William Whelan, Criminal Action No. 05CR00226OWW, USDC, EDCA (June 30, 2005
PRIME BANK FRAUD PARTICIPANT INDICTED FOR PERJURY, OBSTRUCTION AND FALSE STATEMENTS DURING SEC LITIGATION
The Securities and Exchange Commission announced that on June 30, 2005, William Whelan, of Visalia, California, was named in a seven-count indictment on charges of perjury, obstruction of justice and providing false statements in connection with his testimony in the Commission's litigation of SEC v. Cook, an emergency action brought to stop a ponzi scheme.
The SEC v. Cook case concerned the offer and sale of non-existent prime bank securities issued by Dennel Finance Limited in 1999. The Commission, after successfully shutting down the Dennel scheme, learned that certain individuals affiliated with Dennel were conducting a nearly identical fraud under a new name, Resource Development International, LLC. As a result, the Commission successfully brought a second emergency action in March 2002 against Resource Development and others to end the related scheme. William Whelan was a named Defendant in the SEC v. Resource Development litigation.
The indictment alleges that Whelan, a licensed insurance agent, was sued by the Court-appointed Receiver in the SEC v. Cook case after he was identified as "facilitator" who received commissions from the offer and sale of the fraudulent Dennel program. The Commission and Receiver deposed Whelan in SEC v. Cook in August 2000, and Whelan was questioned about his involvement in other high-yield, prime bank programs, including, specifically, the Resource Development program.
The indictment alleges that Whelan, during his deposition, testified falsely numerous times about his role in the Resource Development program. Whelan testified that he had never received any commissions for offering or selling any high-yield bank debenture-type program other than the Dennel program. Whelan further testified that he had never seen documents relating to the Resource Development program. In addition, Whelan testified that he had never heard of an entity called "Resource Development." Contrary to Whelan's statements, he had, in fact, been offering and selling the fraudulent Resource Development program for several months prior to his testimony, had received commissions for selling the Resource Development investment and had utilized the documents disseminated by Resource Development in the course of selling the program.
The Commission's civil complaint against Whelan and others in the SEC v. Resource Development matter charged that from January 1999 through March 2002, the defendants fraudulently raised approximately $98 million from more than 1,300 investors nationwide, targeting persons seeking to invest retirement funds. In the course of marketing the RDI trading program, the Defendants falsely claimed that investor money would be used in Europe to trade financial instruments with "top 25" or "top 50" banks in a program sponsored by the Federal Reserve and global organizations, generating annual returns of 48 to 120 percent with complete safety of principal. In reality, the prime bank program marketed to investors did not exist and investor funds were misappropriated for personal and unauthorized uses, including making ponzi payments.
The Commission's complaint charged the Whelan and other defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Unscrupulous promoters continue to victimize the public with Prime Bank schemes. Accordingly, investors are advised to access the Commission's "Prime Bank" Investor Alert, which provides tips on how to avoid being a victim of these scams. The investor alert can be found on the Commission's web site, at www.sec.gov/divisions/enforce/primebank.shtml.
For more information see the following Litigation Releases: 16089 (March 17, 1999); 16112 (April 14, 1999); 16341 (October 25, 1999); 16538 (May 4, 2000); 16849 (January 2, 2001); 16863 (January 19, 2001); 17438 (March 26, 2002); 17635 (July 30, 2002); 18217 (July 7, 2003); 18418 (October 17, 2003); 19087 (February 27, 2005); 19087 (February 17, 2005); 19118 (March 3, 2005).