 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 17007 / May 16, 2001
SECURITIES
AND EXCHANGE COMMISSION V. PAUL SHINGLEDECKER
(United States District Court for the Western
District of Michigan, 5:01-CV-283)
The
Commission announced today the filing and simultaneous
settlement of a civil fraud action in the United
States District Court for the Western District
of Michigan against Paul Shingeldecker of Marcellus,
Michigan for his participation in a widespread
fraudulent "prime bank" scheme known
as The Gateway Association. The Commission's complaint
alleges that from approximately November 1997
and continuing through about December 1998, Shingeldecker
solicited investors to invest in an alleged overseas
bank debenture trading program involving medium-term
bank debentures. Shingledecker participated in
several meetings in the Michigan area, and at
least one meeting in the Minnesota area, where
he described to investors a 1,250% rate of return
on a ten-month investment. Shingledecker detailed
a payout schedule promising a ten percent compounded
monthly return on a $100,000 investment, with
a $759,768 balloon payment at the end of the ten
months. Shingledecker directed investors to either
send their checks to the Gateway office or to
wire their funds directly to one of several bank
accounts. Shingledecker offered and sold these
non-existent securities to at least eleven investors
and raised over $500,000 for Gateway. Shingledecker,
through his insurance company, received approximately
$140,000 in funds from Gateway.
Without
admitting or denying the allegations in the complaint,
Shingledecker consented to the entry of an Order
that: (1) enjoins him 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; (2) orders
him to pay disgorgement in the amount of $140,000
plus prejudgment interest of $25,148.86; and (3)
waives disgorgement in excess of $25,000 and does
not impose a civil penalty based upon Shingledecker's
sworn statements demonstrating his inability to
pay.
from:
http://www.sec.gov/litigation/litreleases/lr17007.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 16979 / April 30, 2001
SECURITIES
AND EXCHANGE COMMISSION V. THE GATEWAY ASSOCIATION,
THE GATEWAY ASSOCIATION (ILLINOIS), RICHARD J.
COLLINS, BILL WILSON, JEROME COPPAGE, DAVID A.
MORGENSTERN, WILLIAM J. WINDSOR, LINDA A. FEHL,
MALCOLM SILVERMAN, JANET COLLINS AND CHRISTINE
J. TODD (United States District Court for the
Northern District of Illinois, 01C 3085)
The
Commission announced today the filing of a civil
fraud action in the United States District Court
for the Northern District of Illinois against
two corporations and three individuals for the
fraudulent sale of over $10 million in non-existent
prime bank securities. According to the complaint,
The Gateway Association Inc., and Illinois corporation,
and The Gateway Association (Illinois) Inc., a
Florida corporation, (collectively Gateway); Richard
J. Collins (Collins), of Naperville, Illinois;
Bill Wilson (Wilson), of Elmhurst, Illinois; and
Jerome Coppage (Coppage), of Schererville, Indiana
sold over $10 million in non-existent prime bank
securities. The Commission alleges that the defendants
violated the securities registration and antifraud
provisions of the federal securities laws in connection
with their offer and sale of these alleged prime
bank instruments. At least six relief defendants
received investor funds from Gateway. David A.
Morgenstern (Morgenstern), of Ft. Lauderdale,
Florida, is alleged to have received approximately
$1.7 million of these funds; William J. Windsor
(Windsor), of Kissimmee, Florida, is alleged to
have received approximately $325,000 of these
funds; Linda A. Fehl (Fehl), of Alphraretta, Georgia,
is alleged to have received approximately $1.7
million of these funds; Malcolm Silverman (Silverman),
of Arlington Heights, Illinois, is alleged to
have received approximately $120,000 of these
funds; Janet Collins, Collins' wife, and a resident
of Naperville, Illinois, is alleged to have received
approximately $325,000 of these funds; and Christine
J. Todd, Collins' daughter, and a resident of
Plainfield, Illinois, is alleged to have received
approximately $200,000 of these funds.
The
Commission's complaint alleges that from approximately
November 1997 through March 1999, Gateway, Collins,
Wilson and Coppage solicited primarily Hispanic
investors to invest in a fictitious prime bank
trading program. Specifically, Gateway, Collins,
Wilson and Coppage made misrepresentations and
omitted to state material facts to investors relating
to, among other things: the rates of return on
the Gateway trading program; the existence of
prime bank securities; the risks of the trading
program; the location of investors' deposits;
and the use of the proceeds. At meetings held
across the country, the defendants described the
Gateway investment as a guaranteed, risk-free,
high yield trading program in which a $100,000
initial investment would yield $1.25 million in
ten months. Promotional materials provided to
investors by Gateway representatives explained
to investors that their funds would be pooled
to invest in an overseas bank debenture trading
program involving medium-term bank debentures
issued by the "top one hundred world banks."
Approximately 400 investors invested more than
$10 million in the Gateway program. In fact, this
type of investment program does not exist and
the investors' funds were simply used to fund
various individual and corporate accounts, to
purchase cars, and to pay for various other personal
expenses.
The
Commission's complaint alleges that in connection
with this scheme, the defendants engaged in transactions,
acts, practices and courses of business which
constitute violations of Sections 5(a), 5(c) and
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 promulgated
thereunder.
The
Commission seeks a permanent injunction prohibiting
the defendants from violating the securities registration
and antifraud provisions of the Securities Act
and the Exchange Act. In addition, the Commission
seeks disgorgement of ill-gotten gains from Defendants
Gateway, Collins, Wilson and Coppage and from
Relief Defendants Morgenstern, Windsor, Fehl,
Silverman, Janet Collins and Christine Todd, and
the imposition of civil monetary penalties against
all the primary defendants pursuant to Section
20(d) of the Securities Act and Section 21(d)(3)
of the Exchange Act.
from:
http://www.sec.gov/litigation/litreleases/lr16979.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 17258 / DECEMBER 5, 2001
SECURITIES
AND EXCHANGE COMMISSION V. RICHARD COLLINS ET
AL. (United States District Court for the Northern
District of Illinois, 01C-3085)
The
United States Securities and Exchange Commission
("Commission") announced that on November
17, 2001, the Honorable Matthew F. Kennelly of
the United States District Court for the Northern
District of Illinois entered an Order of Permanent
Injunction and Other Equitable Relief against
Jerome Coppage ("Coppage"), a resident
of Schererville, Indiana, for his participation
in a widespread fraudulent "prime bank"
scheme known as The Gateway Association ("Gateway").
Without admitting or denying the allegations in
the complaint, Coppage consented to the entry
of an Order that enjoins him 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 and orders
him to disgorge his ill-gotten gains and pay civil
penalties in an amount to be determined in a separate
hearing by the Court.
On
April 30, 2001, the Commission filed a complaint
against Coppage and others based on their participation
in raising over $10 million in the Gateway prime
bank scheme. The Commission's complaint alleges
that from about November 1997 through about March
1999, the Gateway investment scheme raised approximately
$10 million from at least 400 investors who were
told that their money would be invested in a purported
overseas bank debenture trading program. At numerous
meetings held across the country, Coppage and
others promised investors a 1,250% rate of return
on a ten-month, $100,000 investment. In reality,
the promised high rate of return lacked a reasonable
basis, since, among other things, prime bank securities
described by Coppage do not exist and are inherently
fraudulent. To date, Gateway has not paid investors
their promised rates of return. Nor have investors
received their money back. None of the investment
proceeds were used to purchase or sell financial
instruments. In fact, most of the money raised
from investors has been spent or wired to offshore
bank accounts.
from:
http://www.sec.gov/litigation/litreleases/lr17258.htm
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