International Law

Worldwide Equity Corporation Prime Bank Fraud

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From the SEC Press Release on a Prime Bank Fraud

The Securities and Exchange Commission ("Commission") charged Brian V. Prendergast of Castle Rock, Colorado, and his entity Enterprises, LLC, a Colorado limited liability company, with conducting a fraudulent prime bank offering scheme in coordination with Donald R. Smith of Aurora, Colorado, Yuail I. Enwia of Ceres, California, and Worldwide Equity Corporation ("WEC"), a Nevada corporation.

The Commission alleges that Prendergast, who has previously been convicted of criminal securities fraud in Colorado and is currently on court-supervised release, purported to raise $2.5 million from investors, several of whom are senior citizens.

On February 4, 2009 the Court entered an order granting a temporary restraining order against the defendants, requiring accountings, and freezing the defendants' assets derived from investor funds obtained in the fraudulent scheme.

According to the Commission's complaint, filed February 4, 2009 in federal district court in Denver, Colorado, the representations to investors had all the hallmarks of a fraudulent prime bank scheme.

According to the complaint, Prendergast solicited seniors and induced them to pull equity out of their homes, sell off other investments, and liquidate their retirement accounts in order to invest in the fraudulent scheme.

Prendergast allegedly represented to investors that monies invested in Enterprises would be pooled with other investors' funds to create a $2.5 million fund, and that the pooled funds would then be invested in WEC, which is run by Smith and Enwia.

The complaint alleges Prendergast told investors that the Enterprises investment was "a once in a lifetime opportunity," and that the funds wired from Enterprises to WEC would be traded in "investment grade securities through international banks."

The Commission further alleges that Prendergast represented to investors that the Enterprises investment will generate "guaranteed" returns of four to 20 percent per month, depending on the amount invested, for a total return of 48 to 240 percent per year from the trades conducted by WEC.

Investors in Enterprises were also warned to keep information about the investment "strictly confidential" since WEC's transactions were "sensitive in nature." According to the complaint, as many as 14 other investors have invested in Enterprises and WEC.

The Commission's complaint alleges that the defendants violated Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Commission is seeking injunctive relief, disgorgement plus prejudgment interest, and civil penalties against all the defendants.

Full post as published by Misleading Advertising Law on February 06, 2009 (boomark / email).