 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 17132 / September 18,
2001
U.S.
Securities and Exchange Commission v. James R.
Harrold, Franklin Management and Consulting, LLC,
Accipter, LLC, Franklin Asset Management and Consulting,
LLC, Franklin Management and Consulting, Inc.,
and Concord Development Group, LLC., U.S. District
Court for the Southern District of Indiana, Cause
No. IP 01-1318-C H/G (S.D. Indiana 2001)
The
U.S. Securities and Exchange Commission ("Commission")
announced that on September 14, 2001, the Honorable
Judge David F. Hamilton of the United States District
Court for the Southern District of Indiana entered
an Order of Permanent Injunction against James
R. Harrold ("Harrold"), a resident of
Indianapolis, Indiana and the Entity Defendants.
On Friday, September 7, 2001, the Commission filed
a Complaint alleging that Harrold and the Entity
Defendants raised approximately $2 million in
a fraudulent prime bank scheme and sought temporary
and emergency relief. On the same day Judge Hamilton
entered a Temporary Restraining Order freezing
three accounts controlled by Harrold and set a
hearing for Monday, September 10, 2001. On September
10, 2001, Judge Hamilton entered a Temporary Restraining
Order freezing all of Harrold and the Entity Defendants'
assets and granted other ancillary relief.
The
Commission's Complaint alleged that the Federal
Bureau of Investigation warned Harrold in October
1999 that prime trading programs do not exist.
Despite that warning, however, since October 1999
through at least February 2001, Harrold and the
Entity Defendants raised at least $2 million by
selling investments in the Rubix Program, a purported
"prime bank trading program." The Complaint
further alleged that Harrold and the Entity Defendants
are currently soliciting investors to invest in
at least two other fraudulent investment programs.
In
the Rubix Program, Harrold and the Entity Defendants
made false claims that the money raised would
be used to purchase prime bank debentures issued
by top world banks. Numerous government agencies,
including the Commission, the Federal Deposit
Insurance Corporation and the Board of Governors
of the Federal Deposit Systems, however, have
warned the public that trading programs in prime
bank instruments do not exist and are fraudulent.
The Complaint also alleged that Harrold and the
Entity Defendants misrepresented to investors
in the Rubix Program that their principal was
never at risk and promised a 20% monthly rate
of return. The Complaint further alleged that
the majority of funds raised in the Rubix Program
were misappropriated and used for business and
personal expenses.
The
Order, entered pursuant to Harrold and the Entity
Defendants' consents and without admitting or
denying the allegations contained in the Commission's
Complaint, permanently enjoins Harrold and the
Entity Defendants from further violating Sections
5(a), 5(c) and 17(a) of the Securities Act of
1933, Section 10(b) of the Securities Exchange
Act of 1934 and Rule 10b-5 thereunder. In addition,
the Order freezes all of Harrold and the Entity
Defendants' assets, requires the repatriation
of assets, prohibits Harrold and the Entity Defendants
from destroying any documents, orders Harrold
and the Entity Defendants to account for all their
ill-gotten gains and orders Harrold and the Entity
Defendants to disgorge their ill-gotten gains
and pay civil penalties in an amount to be determined
in a separate hearing by the Court.
from:
http://www.sec.gov/litigation/litreleases/lr17132.htm
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