Litigation
Release No. 16915 / February 28, 2001
SEC
v. John E. Brinker, Jr., Gary J. Bentz, Castlerock
Consulting, LLC, Guardian First Limited, Inc.
(a Nevada corporation), Guardian First Limited,
Inc. (a Grenada corporation), Wellington
Bank and Trust, Ltd., Wellington Capital Holdings
Ltd., Inc., Wellington Capital Holdings, Ltd.,
Wellington International Investments, Inc., Wellington
First International Investments, Inc. and all
subsequently numbered Wellington International
Investments, Inc. entities, Alpha Advantage II,
Inc., Eleven Eighty-Five, LP, and Steadfast Ministries,
Inc., Civil Action No. IP01-0259 C-H/G.
The
U.S. Securities and Exchange Commission ("Commission")
announced today that a federal court in Indianapolis
has entered an order permanently enjoining Wellington
Bank and Trust, Ltd ("Wellington Bank"),
John E. Brinker, Jr. ("Brinker"), Gary
J. Bentz ("Bentz"), and entities they
control or with which they are associated, from
engaging in fraud, unregistered sales of securities,
and acting as unregistered brokers, in violation
of federal securities laws. The order also freezes
the assets of the defendants and relief defendants.
Finally, the order appoints an examiner to determine
how funds of allegedly defrauded investors were
distributed and spent. The Court will determine
later the amount of ill-gotten gains, if any,
defendants and relief defendants must disgorge
and the amount of civil penalties, if any, to
be paid by defendants.
In
its complaint, the Commission alleges that the
defendants operated a "Ponzi" scheme
that raised approximately $7.1 million from over
200 investors in eleven states. Most investors
are Indiana residents and several are elderly.
Specifically, the complaint alleges that from
the Cincinnati, Ohio offices of Castlerock Consulting,
LLC ("Castlerock"), Brinker and Bentz
sold unregistered securities in an investment
program offered by Wellington Bank, which is based
in the nation of Grenada. According to the complaint,
Brinker and Bentz represented to investors that
the program would generate annual returns of 50%
or more through trading in "prime bank"
instruments. Numerous government agencies, including
the Commission, the Federal Deposit Insurance
Corporation and the Board of Governors of the
Federal Reserve System, however, have warned the
public that trading programs in prime bank instruments
do not exist and are fraudulent. The complaint
further alleges that of the $7.1 million they
raised, Brinker and Bentz diverted at least $5.4
million to themselves, entities they control,
and others with no relation to a legitimate investment
purpose.
Besides
Brinker, Bentz, Castlerock, and Wellington Bank,
the defendants are several U.S., Grenadan, and
Bahamian corporate entities that helped facilitate
the scheme. The complaint also names as relief
defendants three companies associated with Brinker
and Bentz, Alpha Advantage II, Inc., Eleven Eighty-Five,
LP and Steadfast Ministries, Inc., that received
investor money.
The
defendants and relief defendants consented to
the court's order without admitting or denying
the allegations in the complaint. Specifically,
the order: (1) permanently enjoins all defendants
from engaging in fraud or the sale of unregistered
securities in violation of Sections 5(a), 5(c),
and 17(a) of the Securities Act of 1933, and Section
10(b) of the Securities Exchange Act of 1934 and
Rule 10b-5 thereunder; (2) and permanently enjoins
Castlerock, Wellington Capital Holdings Limited,
Inc., Wellington Capital Holdings, Ltd., Brinker,
and Bentz from acting as unregistered brokers
in violation of Sections 15(a) and 15(c) of the
Securities Exchange Act of 1934 and Rule 15c1-2
thereunder. The order was entered on February
27, 2001, by U.S. District Judge David F. Hamilton,
in S.E.C. v. John E. Brinker, Jr., et. al., (Case
No. IP01 0259 C-H/G).
The
Commission acknowledges the assistance of the
Indiana Securities Division, the Kentucky Division
of Securities, and the Delaware Division of Securities
in this matter.
http://www.sec.gov/litigation/litreleases/lr16915.htm
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