 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 16950 / April 3, 2001
SEC
V. STEVEN E. THORN, CRAIG A. MORGAN, KAREN A.
ESTRADA, GLOBAL INVESTORS GROUP, LLC, FIRST FINANCIAL
VENTURES, LLC, SECOND FINANCIAL VENTURES, LLC,
THIRD FINANCIAL VENTURES, LLC, FUND GLOBAL, LLC,
AND GLOBAL EQUITY GROUP, LLC, U.S. District Court
for the Southern District of Ohio, Civil Action
No. C2-01-290 (S.D. Ohio)
The
Commission announced today that on April 2, 2001,
Judge Algenon L. Marbley of the United States
District Court for the Southern District of Ohio
entered a temporary restraining order against
Steven E. Thorn (Thorn), a resident of Cleveland,
Ohio, Karen A. Estrada (Estrada), a resident of
Atascadero, California, and their related entities
for raising approximately $64.5 million in a fraudulent
prime bank scheme. The judge also ordered that
their assets be frozen and that defendants account
for the funds raised.
The
Commission's Complaint alleges that since February
1998, Thorn and Estrada have raised at least $10.5
million by selling investments in purported European
bank trading programs through three entities they
controlled, Global Investors Group, LLC, Fund
Global, LLC and Global Equity Group, LLC (the
Global Trading Programs). The Complaint further
alleges that since November 1999, Thorn, Estrada,
Craig A. Morgan ("Morgan") and others
raised at least $54 million through three different
entities, First Financial Ventures, LLC, Second
Financial Ventures, LLC, and Third Financial Ventures,
LLC (Financial Ventures Programs) and had investors
deposit funds for the scheme at Bank One in Columbus,
Ohio.
In
both programs, Thorn and Estrada allegedly made
false claims that the money they raised would
be used as collateral for the purchase of prime
bank instruments issued by European financial
institutions. Numerous government agencies, including
the Commission, the Federal Deposit Insurance
Corporation and the Board of Governors of the
Federal Reserve System, however, have warned the
public that trading programs in prime bank instruments
do not exist and are fraudulent. The Complaint
further alleges that Thorn and Estrada misrepresented
to investors in the Global Trading Programs that
their principal was never at risk and promised
rates of return ranging from 7% to 100% per month.
The Complaint alleges that of the total amount
raised in the Global Trading Programs, at most
only $3.8 million could have been used for any
legitimate investment purposes, and $1.5 million
was used to pay for Thorn's personal expenses.
The
Commission also alleges that the Financial Ventures
Programs differed from the early schemes only
in that Thorn and Estrada told investors that
their funds would remain on deposit in a U.S.
bank, that investors would retain control of their
funds, and that investor funds would not be pledged
as security or collateral to fund the trading.
In the Financial Ventures Programs, Thorn and
Estrada again told investors that their principal
was never at risk and promised returns of 50%
to 100% per month. The Complaint further alleges
that Thorn and Estrada misrepresented the existence
of bank trading programs, the safety of investors'
principal and the guarantee of profit, and the
use of investor funds.
The
Court granted the Commission's emergency motion
and temporarily enjoined Thorn, Estrada and their
related entities from violations of the antifraud
provisions of the federal securities laws, Section
17(a) of the Securities Act of 1933 and Section
10(b) of the Securities Exchange Act of 1934 (Exchange
Act) and Rule 10b-5 thereunder; temporarily enjoined
Defendants Thorn and Estrada from violations of
the broker-dealer registration and antifraud provisions,
Section 15(a) and 15(c) of the Exchange Act and
Rule 15c1-2 thereunder; froze the assets of Thorn,
Estrada and the defendant entities; and ordered
other ancillary relief. A hearing on the Commission's
motion for a preliminary injunction is scheduled
for April 24, 2001.
from:
http://www.sec.gov/litigation/litreleases/lr16950.htm
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