SECURITIES
AND EXCHANGE COMMISSION
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.
http://www.sec.gov/litigation/litreleases/lr16896.htm
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