Securities and Exchange Commission v. Funding Resource Group, et al., Civil Action No. 3:98-CV-02689-M, USDC ND/TX (Dallas Division)
The Securities and Exchange Commission announced that on May 16, 2001, the Honorable Barbara M.G. Lynn, United States District Judge, Northern District of Texas, entered default judgments against Robert Cord, a/k/a Robert F. Schoonover, Jr., WinterHawk West Indies, Ltd., Funders Marketing Company, Inc., FMCI Trust, Earl McKinney, Fortune Investments, Ltd., and TREDS Financial Trust. The Court entered final judgments and ordered Cord and WinterHawk, jointly and severally, to pay disgorgement of $6,290,980, together with prejudgment and post-judgment interest, ordered Funders and FMCI, jointly and severally, to pay disgorgement of $8,174,332, together with prejudgment and post-judgment interest, ordered McKinney and Fortune, jointly and severally, to pay disgorgement of $3,432,621, together with prejudgment and post-judgment interest, and ordered TREDS to pay disgorgement of $966,183.
In its Complaint, filed November 13, 1998, the Commission alleged that Cord, WinterHawk, Funders, FMCI, McKinney, Fortune and others violated the registration and antifraud provisions of the federal securities laws based on their conduct in offering and selling "prime bank" investment programs. The Complaint alleged that the "prime bank" programs were nothing more than a "Ponzi" scheme. The Complaint also alleged that TREDS and others received monies from the programs without any claim of entitlement.
The final judgments enjoin Cord, WinterHawk, Funders, FMCI, McKinney and Fortune from violating Sections 5(a) 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
On November 6, 2000, Judge Lynn entered a default judgment against Funding Resource Group. That judgment enjoined Funding Resource Group from violating Sections 5(a) 5(c) and 17(a) of the Securities Act, Section 10(b0 of the Securities Exchange Act and Rule 10b-5 and ordered Funding Resource Group to pay disgorgement of $9,993,929, together with prejudgment and post-judgment interest.
On April 23, 2001, Judge Lynn entered an agreed judgment against Mary Ann Bauce. That judgment required Bauce to pay disgorgement of $77,377. That amount consisted of all funds Bauce had received from the "prime bank" scheme and to which she was not entitled.
Cord, the individual who controlled WinterHawk, is currently imprisoned on charges arising out the conduct alleged in the Commission's Complaint. Steven Roberts, the individual who controlled Funding Resource Group, has been sentenced to 27 months in prison and is awaiting his "report date." B. David Gilliland, an individual who assisted the scheme, has entered a guilty plea to securities fraud in Pensacola, Florida, and others who participated in the scheme were convicted by a jury there. All are awaiting sentencing. Still others are the subjects of federal and state criminal investigations.
The Commission acknowledges the assistance and cooperation of several other government agencies, including the Offices of the United States Attorneys in the Southern District of Texas, the Northern District of Florida and the District of Minnesota, the Federal Bureau of Investigation, the United States Customs Service, the Internal Revenue Service and the Texas Rangers.
Unscrupulous promoters continue to victimize the public with "prime bank" schemes. Accordingly, investors are advised to access the Commission's "Prime Bank" Investor Alert. That provides tips on who to avoid becoming a victim of such scams. The investor alert can be found on the Commission's web site at www.sec.gov/investor/alerts.shtml.
http://www.sec.gov/litigation/litreleases/lr17012.htm