 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 17012 / May 22, 2001
Securities
and Exchange Commission v. Funding Resource Group,
et al., Civil Action No. 3:98-CV-02689-M,
USDC ND/TX (Dallas Division)
The
Securities and Exchange Commission announced that
on May 16, 2001, the Honorable Barbara M.G. Lynn,
United States District Judge, Northern District
of Texas, entered default judgments against Robert
Cord, a/k/a Robert F. Schoonover, Jr., WinterHawk
West Indies, Ltd., Funders Marketing Company,
Inc., FMCI Trust, Earl McKinney, Fortune Investments,
Ltd., and TREDS Financial Trust. The Court entered
final judgments and ordered Cord and WinterHawk,
jointly and severally, to pay disgorgement of
$6,290,980, together with prejudgment and post-judgment
interest, ordered Funders and FMCI, jointly and
severally, to pay disgorgement of $8,174,332,
together with prejudgment and post-judgment interest,
ordered McKinney and Fortune, jointly and severally,
to pay disgorgement of $3,432,621, together with
prejudgment and post-judgment interest, and ordered
TREDS to pay disgorgement of $966,183.
In
its Complaint, filed November 13, 1998, the Commission
alleged that Cord, WinterHawk, Funders, FMCI,
McKinney, Fortune and others violated the registration
and antifraud provisions of the federal securities
laws based on their conduct in offering and selling
"prime bank" investment programs. The
Complaint alleged that the "prime bank"
programs were nothing more than a "Ponzi"
scheme. The Complaint also alleged that TREDS
and others received monies from the programs without
any claim of entitlement.
The
final judgments enjoin Cord, WinterHawk, Funders,
FMCI, McKinney and Fortune from 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.
On
November 6, 2000, Judge Lynn entered a default
judgment against Funding Resource Group. That
judgment enjoined Funding Resource Group from
violating Sections 5(a) 5(c) and 17(a) of the
Securities Act, Section 10(b0 of the Securities
Exchange Act and Rule 10b-5 and ordered Funding
Resource Group to pay disgorgement of $9,993,929,
together with prejudgment and post-judgment interest.
On
April 23, 2001, Judge Lynn entered an agreed judgment
against Mary Ann Bauce. That judgment required
Bauce to pay disgorgement of $77,377. That amount
consisted of all funds Bauce had received from
the "prime bank" scheme and to which
she was not entitled.
Cord,
the individual who controlled WinterHawk, is currently
imprisoned on charges arising out the conduct
alleged in the Commission's Complaint. Steven
Roberts, the individual who controlled Funding
Resource Group, has been sentenced to 27 months
in prison and is awaiting his "report date."
B. David Gilliland, an individual who assisted
the scheme, has entered a guilty plea to securities
fraud in Pensacola, Florida, and others who participated
in the scheme were convicted by a jury there.
All are awaiting sentencing. Still others are
the subjects of federal and state criminal investigations.
The
Commission acknowledges the assistance and cooperation
of several other government agencies, including
the Offices of the United States Attorneys in
the Southern District of Texas, the Northern District
of Florida and the District of Minnesota, the
Federal Bureau of Investigation, the United States
Customs Service, the Internal Revenue Service
and the Texas Rangers.
Unscrupulous
promoters continue to victimize the public with
"prime bank" schemes. Accordingly, investors
are advised to access the Commission's "Prime
Bank" Investor Alert. That provides tips
on who to avoid becoming a victim of such scams.
The investor alert can be found on the Commission's
web site at www.sec.gov/investor/alerts.shtml.
from:
http://www.sec.gov/litigation/litreleases/lr17012.htm
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