SECURITIES
AND EXCHANGE COMMISSION
LITIGATION
RELEASE NO. 16979 / April 30, 2001
SECURITIES AND EXCHANGE COMMISSION V. THE GATEWAY
ASSOCIATION, THE GATEWAY ASSOCIATION (ILLINOIS),
RICHARD J. COLLINS, BILL WILSON, JEROME COPPAGE,
DAVID A. MORGENSTERN, WILLIAM J. WINDSOR, LINDA
A. FEHL, MALCOLM SILVERMAN, JANET COLLINS AND
CHRISTINE J. TODD (United States District Court
for the Northern District of Illinois, 01C 3085)
The Commission announced today the filing of
a civil fraud action in the United States District
Court for the Northern District of Illinois against
two corporations and three individuals for the
fraudulent sale of over $10 million in non-existent
prime bank securities. According to the complaint,
The Gateway Association Inc., and Illinois corporation,
and The Gateway Association (Illinois) Inc., a
Florida corporation, (collectively Gateway); Richard
J. Collins (Collins), of Naperville, Illinois;
Bill Wilson (Wilson), of Elmhurst, Illinois; and
Jerome Coppage (Coppage), of Schererville, Indiana
sold over $10 million in non-existent prime bank
securities. The Commission alleges that the defendants
violated the securities registration and antifraud
provisions of the federal securities laws in connection
with their offer and sale of these alleged prime
bank instruments. At least six relief defendants
received investor funds from Gateway. David A.
Morgenstern (Morgenstern), of Ft. Lauderdale,
Florida, is alleged to have received approximately
$1.7 million of these funds; William J. Windsor
(Windsor), of Kissimmee, Florida, is alleged to
have received approximately $325,000 of these
funds; Linda A. Fehl (Fehl), of Alphraretta, Georgia,
is alleged to have received approximately $1.7
million of these funds; Malcolm Silverman (Silverman),
of Arlington Heights, Illinois, is alleged to
have received approximately $120,000 of these
funds; Janet Collins, Collins' wife, and a resident
of Naperville, Illinois, is alleged to have received
approximately $325,000 of these funds; and Christine
J. Todd, Collins' daughter, and a resident of
Plainfield, Illinois, is alleged to have received
approximately $200,000 of these funds.
The Commission's complaint alleges that from
approximately November 1997 through March 1999,
Gateway, Collins, Wilson and Coppage solicited
primarily Hispanic investors to invest in a fictitious
prime bank trading program. Specifically, Gateway,
Collins, Wilson and Coppage made misrepresentations
and omitted to state material facts to investors
relating to, among other things: the rates of
return on the Gateway trading program; the existence
of prime bank securities; the risks of the trading
program; the location of investors' deposits;
and the use of the proceeds. At meetings held
across the country, the defendants described the
Gateway investment as a guaranteed, risk-free,
high yield trading program in which a $100,000
initial investment would yield $1.25 million in
ten months. Promotional materials provided to
investors by Gateway representatives explained
to investors that their funds would be pooled
to invest in an overseas bank debenture trading
program involving medium-term bank debentures
issued by the "top one hundred world banks."
Approximately 400 investors invested more than
$10 million in the Gateway program. In fact, this
type of investment program does not exist and
the investors' funds were simply used to fund
various individual and corporate accounts, to
purchase cars, and to pay for various other personal
expenses.
The Commission's complaint alleges that in connection
with this scheme, the defendants engaged in transactions,
acts, practices and courses of business which
constitute violations of Sections 5(a), 5(c) and
17(a) of the Securities Act of 1933 (Securities
Act), Section 10(b) of the Securities Exchange
Act of 1934 (Exchange Act) and Rule 10b-5 promulgated
thereunder.
The Commission seeks a permanent injunction prohibiting
the defendants from violating the securities registration
and antifraud provisions of the Securities Act
and the Exchange Act. In addition, the Commission
seeks disgorgement of ill-gotten gains from Defendants
Gateway, Collins, Wilson and Coppage and from
Relief Defendants Morgenstern, Windsor, Fehl,
Silverman, Janet Collins and Christine Todd, and
the imposition of civil monetary penalties against
all the primary defendants pursuant to Section
20(d) of the Securities Act and Section 21(d)(3)
of the Exchange Act.
http://www.sec.gov/litigation/litreleases/lr16979.htm
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