 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No.17085 / August 2, 2001
SECURITIES
AND EXCHANGE COMMISSION v. TLC INVESTMENTS &
TRADE CO., TLC AMERICA, INC. dba BREA DEVELOPMENT
COMPANY, TLC BROKERAGE, INC., dba TLC MARKETING,
TLC DEVELOPMENT, INC., TLC REAL PROPERTIES RLLP-1,
CLOUD & ASSOCIATES CONSULTING, INC., ERNEST
F. COSSEY, GARY W. WILLIAMS, AND THOMAS G. CLOUD,
Civil Action No. SACV 00-0960 DOC (MLG) (C.D.
Cal.).
TLC
ENTITIES' CFO AND PRESIDENT ENJOINED AND ORDERED
TO PAY OVER $11 MILLION IN DISGORGEMENT AND CIVIL
PENALTIES
The
Securities and Exchange Commission ("Commission")
announced that on July 26, 2001 and July 27, 2001,
the Honorable David O. Carter, United States District
Judge for the Central District of California,
entered Final Judgments of Permanent Injunction
and Other Relief against Gary W. Williams and
Ernest F. Cossey, residents of Diamond Bar, California.
Without admitting or denying the Commission's
allegations, Williams and Cossey consented to
the entry of injunctions prohibiting future violations
of the antifraud provisions, Section 17(a) of
the Securities Act of 1933 and Section 10(b) of
the Securities Act of 1934, and Rule 10b-5 thereunder.
Cossey also consented to the entry of an injunction
prohibiting future violations of the securities
registration provisions, Sections 5(a) and 5(c)
of the Securities Act. Under the judgments, Williams
is required to pay $248,145 in disgorgement and
Cossey is required to pay $10,690,697 in disgorgement,
$271, 921.53 in prejudgment interest and $110,000
in civil penalties (totalling $11,072,618.53).
The
Commission's complaint, filed on October 3, 2000,
alleged that since 1998, TLC Investments &
Trade Co., TLC America, Inc., dba Brea Development
Company, TLC Brokerage, Inc., dba TLC Marketing,
TLC Development, Inc, and TLC Real Properties
RLLP-1) (collectively, "TLC Entities"),
entities controlled by Williams and Cossey, committed
securities fraud in connection with a real estate
Ponzi scheme. The TLC Entities raised $151.6 million
from more than 1,800 investors, most of whom are
senior citizens. The TLC Entities promised investors
a safe, liquid investment that would pay guaranteed
returns of 8 to 15%. The Commission's complaint
further alleged that Williams and Cossey misused
at least $28.3 million of investor funds to pay
other investors, invest in a prime bank scheme,
buy racehorses, make charitable contributions
and wire funds overseas.
Prior
Litigation Release dealing with this case: LR-16789.
http://www.sec.gov/litigation/litreleases/lr17085.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 16789 / November 2, 2000
SECURITIES
AND EXCHANGE COMMISSION v. TLC INVESTMENTS &
TRADE CO., TLC AMERICA, INC. dba BREA DEVELOPMENT
COMPANY, TLC BROKERAGE, INC., dba TLC MARKETING,
TLC DEVELOPMENT, INC., TLC REAL PROPERTIES RLLP-1,
CLOUD & ASSOCIATES CONSULTING, INC., ERNEST
F. COSSEY, GARY W. WILLIAMS, AND THOMAS G. CLOUD,
Civil Action No. SACV 00-960 DOC(EEx) (C.D. Cal.)
The
United States Securities and Exchange Commission
("Commission") announced that on November
1, 2000, the Honorable David O. Carter, United
States District Judge for the Central District
of California, issued a preliminary injunction
order in a multimillion dollar securities fraud
case. The Court's order, superseding a temporary
restraining order, requires Ernest F. Cossey ("Cossey")
and Gary W. Williams ("Williams"), entities
controlled by them, and Thomas G. Cloud ("Cloud")
and his company Cloud & Associates Consulting,
Inc. ("C&A") to cease their fraudulent
activities and continues an asset freeze against
all the defendants. The Court's order also made
permanent the appointment of Robb Evans as Receiver
over the corporate defendants (except C&A);
ordered the defendants to provide an accounting;
ordered two of the defendants' attorneys to return
$217,500 to the receivership estate; denied living
expenses to Cossey; and granted other relief.
The
Commission's complaint, filed on October 3, 2000,
alleges that since 1998, the entities controlled
by Cossey and Williams (TLC Investments &
Trade Co., TLC America, Inc., dba Brea Development
Company, TLC Brokerage, Inc., dba TLC Marketing,
TLC Development, Inc, and TLC Real Properties
RLLP-1) (collectively, "TLC Entities")
committed securities fraud in connection with
a real estate Ponzi scheme. The Receiver's initial
status report filed by the Receiver indicates
that the defendants raised at least $159 million
from more than 1,800 investors, most of whom are
senior citizens, and that the estate only has
approximately $2.5 million in cash and real estate
purchased and developed at a cost of approximately
$61 million. Further, the Commission's complaint
alleges that Cossey and Williams have misused
at least $28.3 million in investor funds to pay
other investors, invest in a prime bank scheme,
buy racehorses, make charitable contributions
for Cossey's son and wire funds overseas. Cloud
and C&A misrepresented, among other things,
the commissions they received on sales of interests
in the TLC Entities, falsely claiming C&A
had received no commissions when, in fact, C&A
has received at least $1 million in commissions
through July 2000.
The
Commission obtained an order preliminarily enjoining
Cossey, Williams, the TLC Entities, C&A and
Cloud from committing securities fraud in violation
of Section 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 thereunder. The defendants
(except Williams) were also preliminarily enjoined
from committing violations of the securities registration
provisions of Sections 5(a) and 5(c) of the Securities
Act of 1933 ("Securities Act"). In addition
to the interim relief granted on October 30, 2000,
the Commission seeks a final judgment against
Cossey, Williams, entities they previously controlled,
Cloud & Associates and Cloud enjoining them
from future violations of Sections 5(a) and 5(c)
of the Securities Act (except for Williams), Section
17(a) of the Securities Act, Section 10(b) of
the Exchange Act and Rule 10b-5 thereunder, ordering
them to disgorge all ill-gotten gains, and pay
civil penalties.
from:
http://www.sec.gov/litigation/litreleases/lr16789.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 16754 / October 5, 2000
SECURITIES
AND EXCHANGE COMMISSION v. TLC INVESTMENTS &
TRADE CO., TLC AMERICA, INC. dba BREA DEVELOPMENT
COMPANY, TLC BROKERAGE, INC., dba TLC MARKETING,
TLC DEVELOPMENT, INC., TLC REAL PROPERTIES RLLP-1,
CLOUD & ASSOCIATES CONSULTING, INC., ERNEST
F. COSSEY, GARY W. WILLIAMS, AND THOMAS G. CLOUD,
Civil Action No. SACV 00-960 DOC(EEx) (C.D. Cal.)
The
United States Securities and Exchange Commission
("Commission") announced that on October
5, 2000, the Honorable David O. Carter, United
States District Judge for the Central District
of California, issued a temporary restraining
order halting an ongoing multimillion dollar securities
fraud by Ernest F. Cossey ("Cossey")
and Gary W. Williams ("Williams"), entities
controlled by them, and Thomas G. Cloud ("Cloud")
and his company, who were using the Internet to
sell the fraudulent securities. The Court: (1)
ordered the defendants to immediately cease their
fraudulent activities; (2) placed a freeze on
the defendants' assets; (3) appointed a temporary
receiver over those assets for 12 days pending
a hearing to determine the full extent of their
fraudulent conduct; (4) ordered an accounting
from the defendants; and (5) granted other relief.
The
Commission's complaint, filed on October 3, 2000,
alleges that since 1998, the entities controlled
by Cossey and Williams (TLC Investments &
Trade Co., TLC America, Inc. dba Brea Development
Company, TLC Brokerage, Inc., dba TLC Marketing,
TLC Development, Inc, and TLC Real Properties
RLLP-1) (collectively, "TLC Entities")
have raised at least $156 million from more than
2,600 investors, including numerous senior citizens,
purportedly for the purpose of investing in distressed
real estate. In fact, Cossey, Williams and the
TLC Entities are currently operating an undisclosed
Ponzi scheme using client funds to make interest
payments. In addition, Cossey and Williams have
misused at least $28.3 million in investor funds
to pay other investors, invest in a prime bank
scheme, buy racehorses, make charitable contributions
for Cossey's son and wire funds overseas. Cloud
and his company, Cloud & Associates Consulting,
Inc. ("C&A"), misrepresented, among
other things, the commissions they received on
sales of interests in the TLC Entities, falsely
claiming C&A had received no commissions when,
in fact, C&A has received at least $1 million
in commissions through July 2000.
The
Commission obtained an order temporarily restraining
Cossey, Williams, the TLC Entities, C&A and
Cloud from committing securities fraud in violation
of Section 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 thereunder. The defendants
(except Williams) were also temporarily restrained
from committing violations of the securities registration
provisions of Sections 5(a) and 5(c) of the Securities
Act of 1933 ("Securities Act"). In addition
to the interim relief granted today, the Commission
seeks a final judgment against Cossey, Williams,
entities they control, Cloud & Associates
and Cloud enjoining them from future violations
of Sections 5(a) and 5(c) of the Securities Act
(except for Williams), Section 17(a) of the Securities
Act, Section 10(b) of the Exchange Act and Rule
10b-5 thereunder, ordering them to disgorge all
ill-gotten gains, and assessing civil penalties
against them.
from:
http://www.sec.gov/litigation/litreleases/lr16754.htm
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