Closed Meeting - Thursday, January 15, 2009 - 2:00 p.m.
The subject matter of the closed meeting scheduled for January 15 will be: formal orders of investigation; institution and settlement of injunctive actions; institution and settlement of administrative proceedings of an enforcement nature; and other matters relating to enforcement proceedings.
At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.
Debra McClister, CPA Reinstated to Appear and Practice Before the Commission as an Accountant Responsible for the Preparation or Review of Financial Statements Required to be Filed with the Commission
Pursuant to Rule 102(e)(5)(i) of the Commission's Rules of Practice, Debra McClister, CPA has applied for and been granted reinstatement of her privilege to appear and practice before the Commission as an accountant responsible for the preparation or review of financial statements required to be filed with the Commission. Ms. McClister's privilege of appearing or practicing before the Commission as an accountant was denied on April 7, 2005. Her reinstatement is effective immediately. (Rel. 34-59224; AAE Rel. 2918; File No. 3-11887)
In the Matter of Howard Graham
On January 12, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities and Exchange Act of 1934 (Exchange Act), Making Findings and Imposing Remedial Sanctions (Order) against Howard Graham. The Order finds that, at all relevant times, Graham sold securities in the form of investment contracts and/or fractional interests in oil and gas leases. Further, the Order finds that on Dec. 23, 2008, a final judgment was entered by consent against Graham permanently enjoining him from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (Securities Act), and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder in the civil action entitled Securities and Exchange Commission v. Braintree Energy, Inc. et al., Civil Action Number 3:07-CV-10307 in the United States District Court for the District of Massachusetts. According to the Commission's complaint filed on Feb. 20, 2007, from at least 2000 through 2006, Graham made numerous oral and written misrepresentations to more than 200 investors nationwide and in foreign countries regarding the expected rate of return, level of profits, and risks associated with the investment. The Commission alleged that Graham failed to disclose that he intended to and did take approximately 30% of investors' funds for himself. The Commission alleged that as a result of the scheme, Graham obtained at least $9 million of investor funds and Graham and/or entities controlled by him received approximately $3 million.
Based on the above, the Order bars Howard Graham from association with any broker or dealer. Howard Graham consented to the issuance of the Order without admitting or denying any of the findings, except with respect to jurisdiction and the entry of the injunction in the civil action. (Rel. 34-59226; File No. 3-13329)
In the Matter of Mark E. Salyer
On January 12, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions (Order) against Mark E. Salyer. The Order finds that Salyer was a registered representative for MetLife Securities, Inc., a broker-dealer and investment adviser registered with the Commission. The Order finds that on Dec. 3, 2008, a judgment was entered by consent against Salyer, permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Mark E. Salyer, et al., Civil Action Number 2:08-cv-00179, in the United States District Court for the Eastern District of Tennessee.
The Commission's complaint alleged that, from at least June 2005 through October 2007, Salyer fraudulently diverted approximately $6 million from the accounts of at least 33 MetLife customers to multiple entities, two of which he directly controls. According to the complaint, Salyer diverted the money by forging customer signatures on wire transfer forms and by convincing customers to invest in a company he controlled under the guise that it was a MetLife investment. The complaint further alleged that to facilitate and otherwise conceal his fraud, Salyer falsified customer brokerage account statements or provided customers with fraudulent explanations for discrepancies in the account balances reflected in their account statements.
Based on the above, the Order bars Salyer from association with any broker, dealer, or investment adviser. Salyer consented to the issuance of the Order without admitting or denying any of the findings in the Order except as to the jurisdiction of the Commission over him and the entry of the permanent injunction against him. (Rel. 34-59227; AAE Rel. 2826; File No. 3-13330)
In the Matter of Laurence G. Young
On January 12, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Notice of Hearing (Order) against Laurence G. Young. The Order finds that it is necessary and appropriate in the public interest that public administrative proceedings be instituted based on the entry of a permanent injunction in the case SEC v. Jarrod W. McMillin, et al., Civil Action No. 07-cv-2636-REB-MEH (D. Colo.). In the Order Instituting Proceedings, the Division of Enforcement alleges that the judgment, entered on December 22, 2008, enjoins Young from future violations of 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.
In its complaint in the injunctive case, the Commission alleged that Young participated in a scheme to defraud investors by soliciting investors to finance an advertising program known as American Investors Network or AIN. AIN promised to return monthly profits of $10,000 to $20,000 on each $2,000 investment. The advertising interests were investment contracts which are securities under federal law. Among other claims, the complaint alleged that Young knew that AIN was a Ponzi scheme and that there was no advertising program. Rather, investors who received "profit" distributions were paid with funds solicited from other investors. The complaint also alleged that Young acted as an unregistered broker-dealer in connection with the offer and sale of securities. A hearing will be convened to determine whether the allegations in the Order Instituting Proceedings are true, to provide Young an opportunity to dispute the allegations, and to determine whether any remedial sanction is appropriate in the public interest against Young.
The Order directs the Administrative Law Judge to issue an initial decision in this matter no later than 210 days from the date of service of the Order. 34-59228; File No. 3-13331)
Temporary Restraining Order Entered in Multi-Million Dollar Offering Fraud and Ponzi Scheme in Western New York
The Commission announced today that the Honorable William M. Skretny, United States District Judge for the Western District of New York, entered a decision and order, on Jan. 8, 2009, temporarily restraining defendants Gen-See Capital Corporation a/k/a Gen Unlimited and its owner and president, Richard S. Piccoli, from continuing to engage in a fraudulent offering of securities. The court also froze the defendants' assets and prohibited the defendants from destroying documents.
The SEC's complaint, filed in federal court in Buffalo, New York, alleges that Gen-See and Piccoli orchestrated a Ponzi scheme and affinity fraud targeting clergy, Catholic parishioners, and senior citizens. The complaint further alleges that the defendants have raised millions of dollars from investors by promising steady, "guaranteed" returns, ranging from 7.1% to 8.3% per annum, and no fees or commissions. In November 2008 alone, the defendants raised over $500,000. The complaint further alleges that the defendants relied heavily on advertisements in newsletters published by churches and dioceses, and told investors that their money was invested in "high quality" residential mortgages that the defendants were able to purchase at a discount. In addition, the complaint alleges that the defendants did not invest the funds as promised, but instead used new investor funds to make payments to earlier investors. In addition, the complaint alleges that Gen-See's offering of securities to the public was not registered with the Commission.
The SEC's complaint alleges that the defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
In addition to the emergency relief sought, the Commission also seeks preliminary and permanent injunctive relief and civil money penalties against the defendants, as well as disgorgement by the defendants of their ill-gotten gains plus prejudgment interest. [SEC v. Gen-See Capital Corp. and Richard S. Piccoli, Civil Action No. 09 Civ. 0014 (WMS) (W.D. N.Y.)] (LR-20849)
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