 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 16797 / November 8, 2000
SEC
V. ROY E. MATLOCK and ALAN ROOT, N.D.ILL., 99
Cv 7399, filed November 12, 1999
The
Commission announced the entry of an Order of
Permanent Injunction and other Equitable Relief
(Order) against Roy E. Matlock ("Matlock")
and Alan Root ("Root"). Matlock and
Root consented to the entry of the order without
admitting or denying the allegations of the Complaint.
The Complaint, which was filed on November 12,
1999, alleged that, from November 1992 through
May 1993, Matlock and Root, through their companies
Legacy Trust and Legacy Management Group, Inc.,
raised $3.5 million from 8 investors, including
$3.2 million from the Chicago Housing Authority
pension plans. The Complaint alleged that Matlock
and Root made misstatements and omitted to state
material facts to investors regarding the true
use of proceeds, the rate of return and the risk
of the investment.
The
Complaint alleged that investors were told that
their funds would be pooled with other investors'
funds to buy and sell prime bank instruments,
specifically, letters of credit, standby letters
of credit, and notes issued by the top 100 world
banks. Prime bank instruments do not exist. Instead
of investing the money as represented, the Complaint
alleged that Matlock and Root used the investor
funds to pay personal and business expenses and
to operate a Ponzi scheme by paying interest and
principal to prior investors. The Complaint further
alleged that Matlock and Root told investors to
expect a high rate of return on their investment,
and their principal investment was guaranteed
Finally, the complaint alleged that investors
suffered losses of over $2.6 million dollars.
The
Honorable Judge Joan Gottschallof the U.S. District
Court for the Northern District of Illinois entered
the Order enjoining Matlock and Root from future
violations of 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
promulgated thereunder.
from:
http://www.sec.gov/litigation/litreleases/lr16797.htm
UNITED
STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 42391 / February 7, 2000
ADMINISTRATIVE
PROCEEDING
FILE NO. 3-10138
|
_______________________
In
the Matter of
ROY E. MATLOCK,
Respondent.
________________________
|
:
:
:
:
:
|
ORDER
INSTITUTING PROCEEDINGS,
MAKING FINDINGS AND IMPOSING
REMEDIAL SANCTIONS PURSUANT TO
SECTIONS 15(b) and 19(h) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
I.
The
Securities and Exchange Commission ("Commission")
deems it appropriate in the public interest and
for the protection of investors that public administrative
proceedings be instituted against Roy E. Matlock
("Matlock") pursuant to Sections 15(b)
and 19(h) of the Securities Exchange Act of 1934
("Exchange Act").
II.
In
anticipation of the institution of these proceedings,
Matlock has submitted an Offer of Settlement ("Offer")
which the Commission has determined to accept.
Solely for the purpose of these proceedings and
any other proceedings brought by or on behalf
of the Commission, or to which the Commission
is a party, and without admitting or denying the
Commission's findings contained herein, except
the Commission's findings set forth in Paragraphs
III.A.,B. and C., which are admitted, Matlock
consents to the entry of this Order Instituting
Proceedings, Making Findings and Imposing Remedial
Sanctions pursuant to Sections 15(b) and 19(h)
of the Exchange Act ("Order").
Accordingly,
IT IS HEREBY ORDERED that proceedings pursuant
to Sections 15(b) and 19(h) of the Exchange Act
be and hereby are instituted.
III.
On
the basis of this Order and Matlock's Offer, the
Commission finds that:
A.
Matlock was a registered representative for various
broker-dealers registered with the Commission
from 1984 through 1993.
B.
On December 3, 1999, in the case of SEC v.
Roy E. Matlock, (Case No. 99 7399), the Honorable
Joan Gotschall United States District Judge for
the Northern District of Illinois, entered an
Order of Permanent Injunction against Matlock,
pursuant to his consent and without Matlock's
admitting or denying the allegations in the Commission's
Complaint, enjoining Matlock from violating 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 Complaint alleged that Matlock, through Legacy
Management Group, Inc. and Legacy Trust defrauded
numerous investors to whom he sold certificates
of trust. According to the complaint, Matlock
represented to investors that Legacy Trust would
pool the money raised from investors who purchased
the certificates to buy and sell prime bank instruments,
specifically, letters of credit, standby letters
of credit, and notes issued by the top 100 world
banks. The Complaint alleged that Matlock represented
to the investors that the profits earned from
trading prime bank instruments would then be distributed
to the investors. From at least November 1992
through May 1993, the Commission alleged, that
Matlock raised about $3.5 million from investors
in Legacy Trust. The Complaint alleged that Matlock
misrepresented the risk involved in the investment;
the expected return on the investment; the existence
of a guaranteed return on the investments; the
safety of the principal investment; and the use
of funds raised from investors. The complaint
also alleged that, contrary to his representations,
Legacy Trust never bought or sold a prime bank
instrument because prime bank instruments do not
exist. Further, the Complaint alleged, that Matlock
diverted investor proceeds to pay commissions,
pay himself consulting fees, pay the operating
expenses of Legacy Trust, and pay "returns"
to previous investors. The Complaint also alleged
that Matlock could not guarantee a return on the
investments, or guarantee the safety of the principal
investment, in the certificates of trust because
he used investor proceeds in this manner. Finally,
the Complaint alleged that Matlock made these
representations knowing them to be false because
prime bank instruments do not exist, and therefore,
Legacy Trust could not trade in such instruments.
C.
On May 5, 1999, in the case of United States
of America v. Roy E. Matlock, et. al. (Case
No. 98-Cr-172-1), the Honorable Robert W. Gettleman,
United States District Court for the Northern
District of Illinois, accepted Matlock's plea
of guilty and entered a conviction against Matlock
for conspiracy to commit mail, wire, and securities
fraud in violation of 18 U.S.C. §§ 2
and 371. The criminal indictment against Matlock
in that case was based on conduct similar to that
alleged in the complaint described in paragraph
2 above. In October 1999, Matlock was sentenced
to 18 months imprisonment.
IV.
In
light of the foregoing, it is in the public interest
to impose the sanctions specified in the Offer
submitted by Matlock.
Accordingly,
IT IS HEREBY ORDERED that Roy E. Matlock be, and
hereby is, barred from association with any broker
or dealer.
By
the Commission.
Jonathan
G. Katz
Secretary
from:
http://www.sec.gov/litigation/admin/34-42391.htm
|
