 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 17164 / September 28,
2001
Securities
and Exchange Commission v. Gilbert Merrell Wynne,
et al., Civil Action No. 01-4936 (E. D. Pa.)
The
Securities and Exchange Commission ("Commission")
announced today that, on September 28, 2001, it
filed a complaint in federal district court in
Philadelphia, Pennsylvania, charging that Gilbert
Merrell Wynne and Richard V. Dear engaged in a
fraudulent scheme to defraud public investors
through the offer and sale of securities issued
by three entities controlled by Wynne, namely
Kingdom Growth Fund, Ltd., Kingdom Financial Services
and Orthodox Church of Jesus Christ, Inc. The
Commission's complaint charges that from at least
November 1998 through November 1999, Wynne and
Dear, directly and through their salespersons,
fraudulently induced investors to purchase the
securities by making numerous material misrepresentations
and omissions including, among other things, guaranteeing
investors returns ranging from 15-20 percent per
month. They claimed that the investments were
risk free and that the guaranteed returns would
be generated through investing in so-called "prime
bank" instruments. In actuality the instruments
touted by the defendants did not exist and there
was no reasonable basis for guaranteeing the exorbitant
returns. Ultimately, the defendants raised at
least $2.2 million from more than 200 investors
located in Pennsylvania and other states. According
to the complaint, none of the investor funds was
invested as promised. Instead, Wynne used those
funds for personal and business expenses, to pay
existing investors, and to pay commissions to
Dear and other salespeople.
In
its complaint, the Commission also charges Stephen
W. Beik, an attorney practicing in Maitland, Florida,
with aiding and abetting the fraudulent scheme.
Beik did so by drafting certain offering documents
used in the scheme, acting as escrow agent for
funds raised in the scheme, attempting to generate
fees by identifying prime bank investments ostensibly
suitable for investor funds and by transferring
investor funds to offshore accounts after he was
aware that the Commission was investigating the
matter.
Based
on the conduct described above, the complaint
alleges that Wynne, Dear, Kingdom Growth Fund,
Ltd., Kingdom Financial Services and Orthodox
Church of Jesus Christ, Inc. violated 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. The complaint
also alleges that Beik aided and abetted the violations
of Section 10(b) of the Exchange Act and Rule
10b-5 thereunder. In addition, the complaint alleges
that Wynne and Dear each violated Section 15(a)
of the Exchange Act by failing to register as
a broker or dealer. Based on those violations,
the complaint seeks permanent injunctions, disgorgement,
prejudgment interest and civil penalties against
each defendant.
from:
http://www.sec.gov/litigation/litreleases/lr17164.htm
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