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SECURITIES
AND EXCHANGE COMMISSION
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.
Webmaster Note:
The Prime Bank information section has been
moved. Updated information on this topic can be
found at http://www.sec.gov/enforce/pbank/pbnkhome.htm
http://www.sec.gov/litigation/litreleases/lr16428.htm
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