SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16288 \ September 22, 1999

SEC V. W. DAVID BLUNK, AUBREY JOHN ELAM AND STANLEY C. EAVES, Civil Action Number 5:99-CV-372-3(M.D.Ga.)

SEC SUES DAVID BLUNK, AUBREY JOHN ELAM AND STANLEY C. EAVES FOR OFFERING TO SELL FICTITIOUS PRIME BANK SECURITIES TO MERCER UNIVERSITY

On September 22, 1999, the Securities and Exchange Commission filed a complaint in the U.S. District Court for the Middle District of Georgia, alleging that a Texas lawyer, W. David Blunk, and two Charlotte, North Carolina businessmen, Aubrey John Elam and Stanley C. Eaves, committed securities fraud by repeatedly offering to sell fictitious prime bank securities to Mercer University. According to the complaint, when officials of Mercer became suspicious that the defendants' proposals were too good to be true, they met with members of the Commission's staff and other law enforcement authorities. Subsequently, Mercer instructed Blunk, Elam and Eaves to conduct all future negotiations with an undercover FBI agent posing as the University's investment consultant.

The complaint alleges that Blunk, Elam, and Eaves made numerous misrepresentations in connection with their offers of securities to Mercer. According to the complaint, they repeatedly misrepresented that an investment of $5 - $10 million dollars would generate returns of 120% per year and that the safety of Mercer's principal would be guaranteed by one of several well-known European banks. The SEC alleges that Eaves and Elam also misrepresented what they were told about the investment by officials of a prominent Charlotte bank and by an FBI agent they spoke with in London. At other times, they misrepresented that the University could earn a return of 50% on an investment of $10 million in just 25 days.

The SEC's complaint asks the court to enjoin the defendants from future violations of Section 17(a) of the Securities Act of 1933 and to impose civil penalties on each of them.