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U.S. Securities and Exchange Commission

SEC Brings Emergency Enforcement Action Against Payday Lender in South Florida


Washington, D.C., March 19, 2002 — The Securities and Exchange Commission filed an emergency enforcement action today against ACE Payday Plus LLC, a start-up company purportedly offering "check cashing" and "payday advance" services. The SEC alleges that the company, its affiliates and its chief executive raised more than $800,000 from investors with promises of excessive investment returns and wildly optimistic profits.

A U.S. District Court in Miami granted the SEC's request for a temporary restraining order and a freeze of the defendants' assets. The court scheduled a hearing for April 5 on the SEC's request for a preliminary injunction against future violations of the antifraud and registration provisions of the federal securities laws.

In addition to ACE Payday, defendants are ACE Management LLC and ACE Payday Management Inc., two entities separately identified as Ace Payday's manager; and James Bianco of North Miami Beach, Fla., who controlled Ace Payday and its affiliates.

The Commission alleges that defendants raised at least $800,000 from at least 30 investors by fraudulently offering and selling membership units in Ace Payday through telemarketers called "independent sales offices" or ISOs. In various written materials, sent to prospective investors at the direction of the ISOs, the defendants describe Ace Payday as a start-up company in the business of providing "retail payday advance" and "check cashing" services, claim that check cashing is possibly "the fastest growing industry in America today," and encourage investors to "[t]ake advantage of participating in this lucrative industry," according to the complaint.

The defendants allegedly project that the company's payday loan operations will yield "an average of up to 360% profit per year" and that the company's check cashing operations will generate "up to 720% per year." Investors are offered (a) interest at the rate of 20% per annum to be paid at a rate of 5% each quarter for three years, and (b) a pro-rata share of the company's profits, according to the complaint. The complaint alleges that defendants told investors that 90% of the offering proceeds would be used to develop Ace Payday's business when, in truth, 40% to 45% of the offering proceeds have been used to compensate the ISOs, which act as unregistered brokers soliciting unsophisticated investors.

The Commission's complaint charges all of the defendants with violating the antifraud and registration provisions of the federal securities laws. In addition to the emergency relief described above, the complaint seeks permanent injunctions prohibiting future violations of the securities laws, disgorgement, and civil penalties.

Contacts: Barry W. Rashkover, Associate Regional Director (646.428.1856) and William Currier (646.428.1683), Northeast Regional Office.



Modified: 03/19/2002