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1
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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
SECURITIES COMMISSION ACCOUNTS EXCHANGE COMMISSION EASTERN DISTRICT FUNDS AUTHORIZATION MONEY CUSTOMER FRANK TEXAS SHERMAN DIVISION CIVIL ASSETS REQUIRING EXPEDITED DISCOVERY REPRESENTING SCHEMES COMPLAINT ACT CIVIL MONEY PENALTY ASSET FREEZE PROHIBITION ALTERATION DESTRUCTION BOOKS ASSISTANCE FEDERAL BUREAU MATTER |
SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16954 \ April 6, 2001
SECURITIES AND EXCHANGE COMMISSION v. FRANK L. HARRIS, III.
(U.S.D.C., Eastern District of Texas, Sherman Division, Civil Action
No. CA 4 01CV117)
On April 6, 2001, at the Commission's request, Judge Paul Brown,
United States District Court for the Eastern District of Texas,
Sherman Division, issued Orders Freezing Assets, Directing the
Repatriation of Funds and Surrender of Passport, Requiring an
Accounting, Requiring Preservation of Documents and Authorizing
Expedited Discovery against defendant Frank L. Harris, III ("Harris").
Harris was a registered representative at the Addison branch office of
Josephthal & Co., Inc., a broker-dealer registered with the
Commission.
In its action, the Commission accuses Harris of using three schemes to
divert money from customer accounts to his own bank accounts
* Falsely representing that their funds would be used to purchase a
particular security;
* Borrowing against securities in customers' margin accounts without
their authorization; and
* Without customer authorization, liquidating their securities,
typically mutual funds, money market shares or blue chip stocks.
Harris' scheme started in at least January 2000, and came to an abrupt
halt in late March, when he failed to return to work. Harris is
believed to have fled to Cancun, Mexico.
The Commission's complaint charges Harris with violating the antifraud
provisions found in Section 17(a) of the Securities Act of 1933,
Section 10(b) of the Securities and Exchange Act of 1934 and Rule
10b-5 thereunder. The complaint seeks preliminary and permanent
injunctions, disgorgement with prejudgment interest and a civil money
penalty against Harris, as well orders for an asset freeze, an
accounting, the prohibition of the movement, alteration and
destruction of books and records and expedited discovery.
The Commission acknowledges the assistance of the Federal Bureau of
Investigation in this matter.
_________________________________________________________________
Modified 04/09/2001
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