From SEC Press Release at
http://www.sec.gov/news/press/2009/2009-30.htm
Securities and Exchange Commission
SEC Halts Ponzi Scheme Targeting Deaf Investors
FOR IMMEDIATE RELEASE
2009-30
Washington, D.C., Feb. 19, 2009 — The Securities and Exchange
Commission has obtained a court order halting a Ponzi scheme that
specifically targeted members of the Deaf community in the United
States and Japan.
Additional Materials
Litigation Release No. 20906
SEC Complaint
The SEC alleges that Hawaii-based Billion Coupons, Inc. (BCI) and its
CEO Marvin R. Cooper raised $4.4 million from 125 investors since at
least September 2007 by, among other things, holding investment
seminars at Deaf community centers. The SEC also alleges that Cooper
misappropriated at least $1.4 million in investor funds to pay for a
new home and other personal expenses. The order obtained by the SEC
freezes the assets of BCI and Cooper.
“This emergency action shows that the Commission will act quickly and
decisively to help victims of affinity fraud,” said Linda Chatman
Thomsen, Director of the SEC’s Division of Enforcement.
“A Ponzi scheme targeting members of the Deaf community is
particularly reprehensible,” said Rosalind R. Tyson, Regional Director
of the SEC’s Los Angeles Regional Office. “This case is an example of
successful coordination between federal and state agencies to protect
vulnerable investors.”
The SEC’s complaint, filed yesterday in federal court in Honolulu,
alleges that BCI and Cooper represented to the investors that their
funds would be invested in the foreign exchange (Forex) markets, that
investors would receive returns of up to 25 percent compounded monthly
from such trading, and that their investments were safe. According to
the complaint, BCI and Cooper actually used only a net $800,000 (cash
deposits minus cash withdrawals) of investor funds for Forex trading,
and they lost more than $750,000 from their Forex trading. The
complaint further alleges that BCI and Cooper failed to generate
sufficient funds from their Forex trading to pay the promised returns,
and instead operated as a Ponzi scheme by paying returns to existing
investors from funds contributed by new investors.
The SEC alleges that BCI and Cooper have violated the registration
and antifraud provisions of the federal securities laws. In its
lawsuit, the SEC obtained an order temporarily enjoining BCI and
Cooper from future violations of these provisions. The SEC also
obtained an order: (1) freezing the assets of BCI and Cooper; (2)
appointing a temporary receiver over BCI; (3) preventing the
destruction of documents; (4) granting expedited discovery; and (5)
requiring BCI and Cooper to provide accountings. The Commission also
seeks preliminary and permanent injunctions, disgorgement, and civil
penalties against both defendants. A hearing on whether a preliminary
injunction should be issued against the defendants and whether a
permanent receiver should be appointed is scheduled for March 2, 2009,
at 9 a.m. HST.
The Commodity Futures Trading Commission (CFTC) also filed an
emergency action yesterday against BCI and Cooper, alleging violations
of the antifraud provisions of the Commodity Exchange Act. The State
of Hawaii’s Department of Commerce and Consumer Affairs (DCCA), Office
of the Commissioner of Securities, issued a preliminary order to cease
and desist against BCI and Cooper.
The Commission acknowledges the assistance of the Hawaii DCCA’s
Office of the Commissioner of Securities and the assistance of the
CFTC in this matter.
# # #
For more information, contact:
Andrew Petillon
Associate Regional Director, Los Angeles Regional Office
(323) 965-3214
Kelly Bowers
Senior Assistant Regional Director, Los Angeles Regional Office
(323) 965-3924
John B. Bulgozdy
Senior Trial Counsel, Los Angeles Regional Office
(323) 965-3322
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