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SECURITIES AND EXCHANGE
COMMISSION
LITIGATION RELEASE NO. 15892 / September 21, 1998
SEC Files Emergency Action and Freezes Assets in $19 million
Prime Bank Ponzi Scheme
SECURITIES AND EXCHANGE COMMISSION v. TERRY V. KOONTZ, ZONE
PRODUCTIONS, INC., JEFFREY A. DeVILLE, MYKAEL DeVILLE,
PRIVATE
POOL,
LLC, RICHARD FULCHER, THOMAS DOLAN, LAWRENCE E.
SEPPANEN,
WALTER LAPP and KURT FOX and as Relief Defendants JEFFREY
A. DeVILLE,
as Acting Trustee for PURR TRUST, MARILYN KOONTZ, DOROTHY M. GERODEMOS, NANCY CHAMICH, STEWART A. KORAL, and
EMANON
II, INC. (United States District
Court for the District of
Massachusetts,
C.A. No. 98 CV 11904-NG)
The Commission announced that a seal has been lifted on an
emergency action freezing the assets of ten defendants
who were
participating
in a massive prime bank Ponzi scheme in which
more than $19 million was raised from more than 80 investors
in 16 states.
The records had been previously sealed until all known
bank accounts were frozen.
The Commission alleged that beginning
in August 1997, three Tampa-area defendants, Terry Koontz
("Koontz"), Jeffrey
DeVille (J. DeVille") and Mykael DeVille
(M. DeVille"), recruited and used a network of salesmen
on the East
Coast
to sell interests in
an
"international bank debenture
trading
program" named Private Pool. LLC.
Using false information and offering materials provided by
defendants Koontz, J. DeVille and M. DeVille,
sales agents, including defendants
Richard
J. Fulcher, Thomas Dolan, Lawrence E. Seppanen,
Walter Lapp, and Kurt Fox, residents of Florida,
Virginia, New York and New Jersey, falsely informed
investors that their funds would be invested in
a 40-week bank debenture trading program through
Koontz, an international bond trader affiliated
with Barclays Bank .
The
defendants falsely promised investors that investments
in the trading program would provide a 1% weekly
return and would be secured by Government National
Mortgage
Association
or Federal Home Loan Mortgage Corporation bonds. The
bank debenture trading program does not exist,
and Koontz is not affiliated with Barclays. To
support these misrepresentations, the defendants
distributed fraudulent documents bearing forged
signatures of Barclays officials as well as counterfeit
stamps of Barclays and the State of New York to
convince people that their investments were effectively
secured by the bonds.
The Complaint alleges that investor funds are being deposited
into a bank account in the
name of Zone Productions, which is
controlled
by Koontz .
Koontz
dissipated at least $9.9 million
from
the Zone account.
Among
other things, he spent $468,000 on
automobiles;
over $250,000 on jewelry; and $650,000 on real estate. Koontz made gratuitous transfers of over $500,000 to
his wife, relief defendant Marilyn Koontz,
$3.1 million to relief
defendant
Dorothy Gerodemos, $481,000 to relief defendant
Nancy Chamich, $1.9
million to relief defendant Emanon II, Inc. and $727,000
to relief defendant Stewart Koral. The Complaint
alleges
that the Devilles also used investor funds for their
own personal
use,
buying a Cadillac, 2
BMWs,
and jewelry. The
DeVilles also
transferred
$300,000 to an off-shore account.
The Commission obtained an order temporarily restraining the
fraudulent activities, freezing assets, prohibiting
the acceptance of additional investor
funds,
requiring repatriation
of funds transferred abroad and other relief in a complaint
filed on
September 17, 1998 in the United States District
Court for the
District of Massachusetts.
This matter is a related case to another emergency fraudulent
offering
action,
SEC v. Michael D. Richmond,
et al., Civ. Action
No.
98-11378 (NG) ("Richmond"), filed with
this Court on July 15,
1998, in which Koontz, Zone Productions and Purr Trust
are also
are
defendants.
The
case is related
because
the main defendant
in
the Richmond case transferred to Koontz and Zone
over $6
million of proceeds he had raised by selling fictitious
certificates of deposit (See Litigation Release No. 15813).
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