 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 16139 / MAY 11, 1999
Securities
and Exchange Commission v. HDG Investment Corporation
and Paul J. Edwards, Civil Action No. 99-K-911
(D. Colo.)
On
May 11, 1999, the Securities and Exchange Commission
filed a civil action in the U.S. District Court
for the District of Colorado charging HDG Investment
Corporation ("HDG") and Paul J. Edwards
("Edwards") with fraudulently raising
over $300,000 from investors through a prime bank
investment scheme. HDG is incorporated in the
British Virgin Islands and purports to offer various
investment services to investors worldwide. Edwards,
the sole director of HDG, is a Canadian citizen
living in Prague, Czech Republic.
The
Commission alleges in its complaint that HDG and
Edwards defrauded investors by offering and selling
over the Internet, and through other means, interests
in a fictitious prime bank investment program.
The Commission alleges that Edwards promised investors,
among other things, that they would receive a
20-to-1 return in thirty days for their investment
in HDG’s program, and that the returns were
to be generated from international bank-to-bank
loan and/or trade transactions. In fact, the Commission
alleges, these representations, as well as representations
regarding the use of investor proceeds, were complete
fabrications. According to the Commission, HDG’s
purported investment program does not exist. The
Commission further alleges that Edwards continued
to give investors false assurances that they would
receive their promised returns months after diverting
at least $100,000 of investor proceeds to his
personal use.
The
Commission seeks preliminary and permanent injunctions
to prevent HDG and Edwards from continuing to
violate the antifraud provisions of the securities
laws, specifically 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.
The Commission also seeks an accounting, disgorgement,
prejudgment interest, and the imposition of civil
penalties.
In
addition to this civil action in U.S. District
Court against HDG and Edwards, the Commission
instituted cease-and-desist proceedings against
Lila Keith ("Keith") of Aurora, Colorado,
for violations of the antifraud provisions of
the federal securities laws and for acting as
a unregistered broker-dealer in connection with
her sales activities on behalf of HDG and Edwards.
A hearing will be scheduled to determine whether
the allegations against Keith are true and, if
so, whether a cease and desist order should be
issued and whether Keith should be required to
make an accounting and pay disgorgement, including
reasonable interest. (Rel. No. 33- 7678) (Rel.
No. 34-41388)
from: http://www.sec.gov/litigation/litreleases/lr16139.htm
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