SEC Files Emergency Action to Halt $30 Million Ponzi Scheme

Assets Frozen, Receiver Appointed in Atlanta-Based Scam

FOR IMMEDIATE RELEASE
2006-173

Washington, D.C., Oct. 12, 2006 - The Securities and Exchange Commission yesterday filed emergency securities fraud charges against an Atlanta promoter to halt a Ponzi scheme that raised at least $30 million from approximately 2,000 investors in fraudulent real estate development partnerships. The Commission's complaint against Pinnacle Development Partners LLC, a Georgia limited liability company with its principal place of business in Atlanta, Ga., and Gene A. O'Neal, its managing member, was filed in the Northern District of Georgia.

The Court entered an order freezing the defendants' assets, appointing a receiver for Pinnacle and investor partnerships controlled by Pinnacle, imposing a preliminary injunction against the defendants enjoining future violations of the registration and antifraud provisions of the federal securities laws, and providing other relief. The defendants consented to the order without admitting or denying the allegations in the complaint.

"This case illustrates the danger of promoters who solicit investments by promising exorbitant returns," said Walter Ricciardi, SEC Enforcement Division Deputy Director. "The Commission is committed to taking aggressive action to protect investors from such schemes."

The Commission alleges that, from at least October 2005 through the present, Pinnacle and O'Neal have fraudulently offered and sold interests in real estate development partnerships through a nationwide advertising campaign, which included general solicitations for investors in more that 40 magazines and newspapers. Pinnacle also sold notes to some investors. According to the complaint, Pinnacle promised investors a 25% return in 45 or 60 days, and a second 25% return and the return of investor capital after 90 days. Pinnacle represented that the profits would be earned by the respective partnership purchasing foreclosed real estate, making minor repairs and reselling the property within 45 to 60 days. The Commission alleged that, in fact, without disclosure to investors, Pinnacle itself, or O'Neal, purchased property from third parties and sold it to its investor partnerships at high mark-ups. The exorbitant returns promised to investors were generated by the respective partnership selling the property to other investor partnerships controlled by Pinnacle.

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For more information, contact:

William P. Hicks
District Trial Counsel
(404) 842-7675

http://www.sec.gov/news/press/2006/2006-173.htm