SEC Files Emergency Action to Halt $98 Million Prime Bank Scheme, Recover Investors' Funds
FOR IMMEDIATE RELEASE
Washington, DC, March 27, 2002 The Securities and Exchange Commission announced today that it has obtained emergency court orders to shut down a nationwide, $98 million prime bank scheme and recover victims' money.
In a complaint filed in the U.S. District Court in Dallas, Texas, the SEC alleged that a Tacoma, Washington company, Resource Development International (RDI), and its two principals, David and James Edwards-a "father-son team"-bilked more than 1,300 investors nationwide in a "prime" bank scheme that targeted retirement funds.
U.S. District Court Judge Jerry Buchmeyer issued a repatriation order Wednesday that requires the scam's promoters to return to the U.S. tens of millions of dollars that they had moved offshore. Earlier this week, Judge Buchmeyer granted the SEC's request for a temporary restraining order directing the promoters to immediately cease their illegal activities. The court also granted the SEC's requests for an asset freeze and the appointment of a receiver to take possession of money and other assets for the benefit of the victims of the scam.
According to the SEC complaint, the Edwards and a team of "facilitators" falsely claimed to investors that their 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. Investors were promised annual returns of 48 to 120 percent with complete safety of principal, and with 50% of excess profit going to humanitarian causes, according to the SEC complaint
However, neither the financial instruments touted by RDI nor the markets on which they purportedly trade exist. The Commission alleges that, instead, the Edwards and their accomplices used investor funds for their own personal and unauthorized purposes while telling victims that their investment returns were tied-up by anti-terrorism efforts.
"These schemes involving the purported issuance, trading or use of so-called "prime" bank or "top 25 or 50" world bank instruments are flagrantly fraudulent," said SEC Fort Worth District Administrator Harold F. Degenhardt. "Even more outrageous were claims by the defendants that delays in paying investors were due to the tragic events of September 11th and new anti-terrorism regulations."
The SEC's lawsuit names Resource Development International, LLC, of Tacoma, Washington; Jade Asset Management, Ltd., incorporated in Nevis, West Indies; Sound Financial Services, of Tacoma, incorporated in Nevada; David Edwards, of University Place, Washington; James Edwards, of Tacoma, Washington, and the father of David Edwards; Intercoastal Group, LLC, of Manitowoc, Wisconsin, a Nevada limited liability corporation; Intercoastal Group II, LLC, of Manitowoc, Wisconsin, a Delaware and Nevada limited liability corporation; Blackwolf Holding, LLC, of Manitowoc, Wisconsin, a Nevada limited liability corporation; Gerald Stock, of Manitowoc, Wisconsin; Kevin Lynds, of Wichita Falls, Texas; and William Whelan, of Visalia, California.
Additional information on how prime bank and other banking-related investment schemes work can be found at the SEC's Prime Bank Fraud Information Center (http://www.sec.gov/divisions/enforce/primebank.shtml) in the Enforcement Section of the SEC Web site. For further information about the RDI lawsuit see SEC Litigation Release No. LR-17438.
Press Contacts: Spencer C. Barasch, Associate District Administrator, and Jeffrey Norris, District Trial Counsel for the SEC's Fort Worth, Texas District Office, (817) 978-3821.