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UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
LITIGATION RELEASE
NO. 15869 / September 2, 1998
Securities and
Exchange Commission v. Scott B. Walker, Equity
Management Services, Scott L. Simpson,
and Zappa International
Corporation, Civil Action No. 98-CV-213-B
(USDC Wyo.)
The Commission
announced today that it obtained an emergency
restraining order prohibiting the fraudulent
sale of interests in
two prime bank-type trading programs which
falsely offered
guaranteed returns up to 100 percent per
year and which claimed
to be sponsored by the Federal Reserve
and the International
Monetary Fund. The order, entered September
1, 1998 by Judge
Clarence A. Brimmer (D.C. Wyoming), included
an order freezing
the assets of the defendants and requiring
the repatriation of
assets.
The complaint
named as defendants Scott B. Walker (Walker),
Equity Management Services (EMS), Scott
L. Simpson (Simpson), and
Zappa International Corporation (Zappa),
and alleged that since
February 1998 to the present, the defendants
had engaged in a
fraudulent prime bank investment scheme
in which they guaranteed
high rate of return and falsely represented
that the investors'
principal was fully secured by a top European
Bank and that the programs were implemented through traders licensed by the
International Monetary Fund. The Commission
alleged that Walker
and EMS, both located in Afton, Wyoming,
failed to disclose the use of investor funds to pay solicitation fees to others who
referred the investor and to make "Ponzi"
payments to earlier
investors who sought the return of their
investment. The
complaint also alleged that Simpson and
Zappa, located in
Richmond, Texas, offered interests in the
Zappa International
Asset Management Program which would generate
returns for
investors of 25 percent per month. The
Commission alleged that
materials regarding the Zappa program also
were distributed by Walker and EMS. The Zappa program, according to the complaint,
falsely stated that the program was sponsored
by the Federal
Reserve and the International Monetary
Fund and that the program
was guaranteed by a "top world bank."
The Commission alleged
that through their false and misleading
statements, Walker, EMS,
Simpson and Zappa violated the antifraud
provisions, Section
17(a) of the Securities Act of 1933 and
Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder.
Judge Brimmer
also ordered a freeze upon all assets derived
from the
fraudulent conduct of Walker, EMS, Simpson and
Zappa held by
the relief defendant Eagle Vision Holdings,
Inc. of Washington.
The Commission requested the emergency
action to prevent Walker, EMS, Simpson, Zappa and Eagle Vision Holdings, Inc. from
transferring or liquidating any funds.
The Commission
wishes to thank the Wyoming Secretary of State's Securities Division for its assistance in this matter.
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