SEC CHARGES INDIVIDUALS, ENTITIES IN PRIME BANK FRAUD INVOLVING OVER $31 MILLION

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 
SEC Charges Seven Individuals and Six Entities Involved in Prime Bank Fraud

The Securities and Exchange Commission filed a civil injunctive action on December 12, 2013, in the United States District Court for the District of Colorado against Colorado resident Daniel D. Coddington, his company Golden Summit Investors Group, Ltd., and others who carried out a Prime Bank Fraud that raised more than $31 million from 2010 through 2012.

The SEC’s complaint alleges that Coddington, Jesse W. Erwin, Merlyn C. “Curt” Geisler, Marshall D. Gunn, Lewis P. Malouf, Golden Summit, Extreme Capital Ltd, Fidelity Asset Service Corp., Geisco FNF, LLC and SouthCom Management, LLC claimed to have access to special programs that would provide annual returns of more than 250 percent by obtaining loans against a financial instrument known as a collateralized mortgage obligation, or CMO, and then investing the loan proceeds in a purported CMO trading program.  The complaint alleges that the above individuals and entities never obtained any loans against CMOs or placed investor funds in a CMO trading program, but instead misappropriated investor funds for their own use.  The complaint also alleges that Seth A. Leyton, Michael B. Columbia and Stonerock Capital Group LLC aided and abetted the fraud by selling CMOs held for the benefit of investors and funneling those proceeds back to Coddington.

The SEC’s complaint alleges that Coddington, Erwin, Geisler, Gunn, Malouf, Golden Summit, Extreme Capital, Fidelity Asset, Geisco and SouthCom violated the antifraud provisions of the securities laws in Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder; and that Coddington, Erwin, Columbia, Leyton, and Stonerock Capital also aided and abetted these violations.  The complaint also alleges that Coddington, Geisler, Gunn, Malouf, Extreme Capital, Geisco, Golden Summit, and SouthCom violated the security registration provisions of the securities laws in Sections 5(a) and (c) of the Securities Act.  Also, the complaint alleges that Coddington, Geisler, Gunn, Malouf, Extreme Capital, Geisco, Golden Summit, and SouthCom violated Section 15(a) of the Exchange Act by acting as unregistered broker-dealers.  The SEC’s complaint seeks permanent injunctions, disgorgement plus prejudgment interest, third-tier penalties, and other relief against all of the defendants.   Additionally, the complaint seeks disgorgement plus prejudgment interest from relief defendants Daniel S. “Scott” Coddington, Coddington Family Trust, Joanna I. Columbia, Vincent G. Farris, and Vincent G. Farris Co., L.P.A.

The SEC’s investigation was conducted in the Denver Regional Office by John C. Martin, Kerry M. Matticks and James A. Scoggins.  Leslie J. Hughes will lead the SEC’s litigation.  The SEC acknowledges the assistance and cooperation of the Federal Bureau of Investigation and the Financial Industry Regulatory Authority.

"SKY-HIGH" YIELDS, SECRET EUROPEAN TRUST AND, SEC CHARGES OF INVESTOR FRAUD

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., Nov. 19, 2012 — The Securities and Exchange Commission today charged the operators of a long-running prime bank scheme with defrauding investors who were promised sky-high returns on loans to a secret European trust. It also is seeking an emergency court order to freeze the operators’ assets for the benefit of investors.

The SEC alleges that Billy W. McClintock, who lives in Florida, and Dianne Alexander, a former Georgia resident who now lives in California and also is known as Linda Dianne Alexander, raised $15 million from at least 220 investors in more than 20 states, primarily Georgia. McClintock portrayed himself as the "U.S. Director" of a secret European trust that had the power to create money and claimed to have appointed Alexander as a "U.S. Regional Director" for the trust. McClintock and Alexander led investors to believe that they could receive 38 percent annual interest on loans to the trust, provided they abide by the trust’s strict rules requiring secrecy. However, investor money was instead used to merely pay other investors, the hallmark of a Ponzi scheme.

"McClintock and Alexander pitched an investment opportunity that simply did not exist. They merely reshuffled funds between investors in a modern take on a classic prime bank scheme," said William P. Hicks, Associate Director of Enforcement in the SEC’s Atlanta Regional Office.

According to the SEC’s complaint filed in U.S. District Court for the Northern District of Georgia, McClintock and Alexander began conducting the scheme by at least 2004 and misrepresented or omitted facts about investment risks, expected returns, and how investor funds would be used. The complaint charges McClintock and Alexander with violating the securities registration, broker-dealer registration, and antifraud provisions of the U.S. securities laws and a related SEC anti-fraud rule.

The SEC’s complaint also names as relief defendants two entities that McClintock controls — MSC Holdings USA LLC, and MSC Holdings Inc. — and another entity controlled by Alexander — MSC GA Holdings LLC. The SEC believes the three firms may have received ill-gotten assets from the fraud that should be returned to investors.

Information on how to avoid prime bank frauds is available at: http://www.sec.gov/divisions/enforce/primebank.shtml and


http://investor.gov/investing-basics/avoiding-fraud/types-fraud/prime-bank-investments

The SEC’s investigation, which is continuing, has been conducted by Natalie M. Brunson and Lucy T. Graetz of the SEC's Atlanta Regional Office under the supervision of Aaron W. Lipson. Senior Trial Counsel Pat Huddleston II will lead the litigation. The SEC acknowledges the assistance of the U. S. Attorney's Office for the Northern District of Georgia and the Federal Bureau of Investigation’s Atlanta Division in this matter.