 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 16896 / February 13, 2001
SECURITIES
AND EXCHANGE COMMISSION V. TAC INTERNATIONAL LIMITED,
DOUGLAS R. WALKER, CRAIG SOUTHWOOD, LARRY B. RICHARDSON
and JAN HARRY "JACK" WILDE, 3:00CV54MU
(GCM) (WDNC) (February 7, 2000)
SEC
OBTAINS DEFAULT JUDGMENTS AGAINST TAC INTERNATIONAL
LTD. AND ITS OWNERS FOR "PRIME BANK"
FRAUD; JUDGE ORDERS THAT $10.9 MILLION BE DISGORGED
On
January 31, 2001, the Securities and Exchange
Commission obtained default judgments against
TAC International Ltd., its former president and
owner, Douglas R. Walker, and its current president
and owner, Craig Southwood, in a civil action
involving the sale of fraudulent "prime bank"
securities which duped investors out of millions
of dollars. Chief U.S. District Judge Graham C.
Mullen of the U.S. District Court for the Western
District of North Carolina found that TAC, Southwood
and Walker violated the anti-fraud provisions
of the federal securities laws. Chief Judge Mullen
enjoined the defendants from future violations,
ordered them to disgorge approximately $10.9 million,
imposed civil monetary penalties against them
totaling $770,000, and ordered them to produce
a written, specific accounting of all proceeds
obtained by them as a result of their conduct.
Chief Judge Mullen also entered a final judgment
against Jan Harry "Jack" Wilde, formerly
one of TAC's national vice-presidents, enjoining
Wilde from future violations.
The
Commission's action, filed on February 7, 2000,
alleged that from the summer of 1996 until August
of 1997, TAC, a Bahamas corporation, and its senior
officers, represented that by buying a Bahamian
International Business Corporation ("IBC"),
investors could participate in certain securities
trading programs not available in the United States.
These trading programs supposedly enabled investors
to obtain phenomenal returns, at no risk to principal,
by participating in purported trading in high
yield debentures between and among banks. The
Complaint alleged that the defendants did not
engage in any trading, but instead used the money
they procured from investors to pay for their
lifestyles and personal expenses. According to
the Complaint, the defendants defrauded thousands
of United States residents, who each entrusted
the defendants with investments of at least $1,500
each.
The
Complaint alleged that Walker, TAC's original
owner, developed the fraudulent IBC trading program
that TAC sold to investors. Under the IBC program,
investors paid a minimum of $1,500 each to get
access to purported debenture trading between
and among banks. The Complaint alleged that TAC
represented that at the end of one year, the IBC
trading program could generate as much as $20,000
from the original $1,500 investment -- an annual
return of over 1,300%. According to the Complaint,
Southwood, TAC's present owner, supervised TAC's
operations at its headquarters in the Bahamas
and created a second fraudulent investment scheme,
which he named the "Southwood Program."
Under the Southwood Program, the Complaint alleged,
investors were required to wire a minimum of $50,000
to TAC. According to the Complaint, TAC promised
a return of 600% within thirty days of the initial
investment. The Complaint alleged that, along
with another national vice president, Wilde trained
TAC's United States sales force to market the
fraudulent programs and supervised the marketing
efforts.
The
default judgments entered against TAC, Southwood
and Walker find that each of them violated the
anti-fraud 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, and Rule 10b-5 thereunder, permanently
enjoin each of them from engaging in future violations
of those provisions, and require each of them
to account for and disgorge $8,419,367.70, representing
profits gained as a result of the conduct alleged
in the Complaint, together with prejudgment interest
thereon in the amount of $2,579,087.26, for a
total of $10,998,454.96. The Court also ordered
TAC, Southwood and Walker to pay civil penalties
of $550,000, $110,000 and $110,000, respectively.
Wilde
consented, without admitting or denying the
allegations of the Complaint, to the entry of
a final judgment permanently enjoining him from
his violative conduct, waiving disgorgement
and declining to impose a civil monetary penalty
based on his demonstrated inability to pay.
TAC, Southwood, Walker and Wilde were the only
remaining defendants in this matter. For additional
information, see litigation release number 16428
(February 7, 2000).
The SEC issued an Investor Alert concerning prime
bank schemes, which can be found at the SEC's
website, www.sec.gov.
from:
http://www.sec.gov/litigation/litreleases/lr16896.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 16428 / February 7, 2000
Securities
and Exchange Commission v. TAC International Limited,
Douglas R. Walker, Craig Southwood, Larry B. Richardson
and Jan Harry "Jack" Wilde, 3:00CV54MU
(GCM) (WDNC) (February 7, 2000)
SEC
Sues TAC International Limited and Four Senior
Officers
for “Prime Bank” Fraud
On
February 7, 2000, the Securities and Exchange
Commission filed a civil injunctive action in
the United States District Court for the Western
District of North Carolina, alleging that from
the summer of 1996 until August of 1997, TAC International
Ltd., a Bahamas corporation, and its senior officers
sold fraudulent "prime bank" securities
which duped U.S. investors out of millions of
dollars. Charged in the action, along with TAC,
are Douglas R. Walker, TAC's former president
and owner, Craig Southwood, TAC's current president
and owner, Larry B. Richardson and Jan Harry "Jack"
Wilde, TAC's national vice presidents.
According
to the Complaint, the defendants represented that
by buying a Bahamian International Business Corporation
("IBC"), investors could participate
in certain securities trading programs not available
in the United States. These trading programs supposedly
enabled investors to obtain phenomenal returns,
at no risk to principal, by participating in purported
trading in high yield debentures between and among
banks. The Complaint alleges that the defendants
did not engage in any trading, but instead used
the money they procured from investors to pay
for their lifestyles and personal expenses. According
to the Complaint, thousands of United States residents
entrusted the defendants with investments of at
least $1,500 each, and the enterprise took in
over $12 million.
The
Complaint alleges that Walker, TAC's original
owner, developed the fraudulent IBC trading program
that TAC sold to investors. Under the IBC program,
investors paid a minimum of $1,500 each to get
access to purported debenture trading between
and among banks. The Complaint alleges that TAC
represented that at the end of one year, the IBC
trading program could generate as much as $20,000
from the original $1,500 investment -- an annual
return of over 1,300%. According to the Complaint,
Southwood, TAC's present owner, supervised TAC's
operations at its headquarters in the Bahamas
and created a second fraudulent investment scheme
which he named the "Southwood Program."
Under the Southwood Program, the Complaint alleges,
investors were required to wire a minimum of $50,000
to TAC. According to the Complaint, TAC promised
a return of 600% within thirty days of the initial
investment. The Complaint alleges that Richardson
and Wilde trained TAC's United States sales force
to market the fraudulent programs and supervised
the marketing efforts.
The
Commission's Complaint seeks a judgment from the
Court permanently enjoining TAC, Walker, Southwood,
Richardson and Wilde from engaging in future 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, and Rule 10b-5 promulgated thereunder,
requiring each of the defendants to account for
and disgorge, with prejudgment interest, the illegal
profits and proceeds they obtained as a result
of their fraudulent scheme, and requiring each
to pay a civil monetary penalty.
Simultaneous
with the filing of the Complaint, Richardson consented,
without admitting or denying the allegations of
the Complaint, to the entry of a final judgment
permanently enjoining him from his violative conduct,
waiving disgorgement and declining to impose a
civil monetary penalty based on his demonstrated
inability to pay.
Also
on February 7, 2000, the United States Attorney
for the Western District of North Carolina announced
the indictment of Walker and Southwood for 17
felony counts each, for federal conspiracy, mail
fraud, wire fraud and money laundering. The Commission
wishes to thank the United States Attorney's office
and the Federal Bureau of Investigation for their
cooperation in this matter.
The
SEC is also issuing an Investor Alert concerning
prime bank schemes, which can be found at the
SEC's website, www.sec.gov.
from: http://www.sec.gov/litigation/litreleases/lr16428.htm
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