UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16610 / June 26, 2000
SECURITIES AND EXCHANGE COMMISSION v. THOMAS J. KEARNS, individually
and doing business as Financial Associated Service, and KEARNS
FINANCIAL SERVICES, INC. Civil Action No. 4 00-CV-1358-M, USDC, NDTX
(Dallas Division)
On June 23, 2000, Judge Sidney Fitzwater, United States District Judge
for the Northern District of Texas, granted the Commission's
Application for Temporary Restraining Order against THOMAS J. KEARNS,
individually and doing business as Financial Associated Service (FAS),
and KEARNS FINANCIAL SERVICES, INC. (KFS). He also entered an Order
appointing a receiver for Kearns, FAS and KFS and an Order freezing
assets, requiring an accounting, preserving documents and permitting
expedited discovery.
* Thomas J. Kearns, age 55 and a resident of Dallas, has conducted
business as FAS since 1990. FAS is not incorporated in any state
and is merely an assumed name filed in Dallas County, Texas.
Kearns is currently registered as an insurance agent with the
Texas Department of Insurance, holding a Texas Group I insurance
license (life, health and HMO products). He has also identified
himself as an investment adviser.
* Kearns Financial Services, Inc., which was incorporated in Texas
on September 18, 1998, has its principal place of business in
Dallas, Texas. KFS is wholly owned by Kearns and is currently
being used by him to enter into investment advisory agreements
with elderly investors.
In its complaint, the Commission alleges that Kearns would sell
insurance and insurance-related products to seniors, establishing a
relationship of trust with them and gaining access to information
regarding their assets and financial condition. He then solicited them
to entrust him with their funds to invest in promissory notes,
annuities, viatical settlements and other investments. Kearns required
most of his clients to sign powers-of-attorney and/or advisory
agreements giving him complete authority over their money, while
repeatedly representing to clients that he was investing their money
in safe investments, and guaranteeing them fixed returns from his
management of their funds. However, after obtaining at least $1.5
million, he did not invest the funds as he had represented and instead
loaned $325,000 to a friend to start a ginseng vitamin company and
expended other monies to acquire a vacation home, to improve that
home, to improve his residence and to acquire fifteen (15)
automobiles. No evidence has been uncovered indicating that Kearns has
made any legitimate investments on behalf of his clients.
SNIPPETS:
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION v. THOMAS J. KEARNS, individually and doing business as
On June 23, 2000, Judge Sidney Fitzwater, United States District Judge for the Northern
He also entered an Order appointing a receiver for Kearns, FAS and KFS and an Order freezing
* Thomas J. Kearns, age 55 and a resident of Dallas, has conducted business as FAS since 1990.
FAS is not incorporated in any state and is merely an assumed name filed in Dallas County,
Kearns is currently registered as an insurance agent with the Texas Department of Insurance,
He has also identified himself as an investment adviser.
KFS is wholly owned by Kearns and is currently being used by him to enter into investment
In its complaint, the Commission alleges that Kearns would sell insurance and
Kearns required most of his clients to sign powers-of-attorney and/or advisory agreements
No evidence has been uncovered indicating that Kearns has made any legitimate investments on
This action was brought in conjunction with the issuance and execution of search warrants on
In its Complaint, the Commission alleges the defendants violated the antifraud provisions of
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