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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
SECURITIES COMMISSION UNITED STATES INVESTORS COURT ACCOUNTS EXCHANGE COMMISSION JUDGE CORNERSTONE PRODIGY GROUP SANDRA REEDER DISTRICT TEXAS CONTINUATION ASSET MONEY EXPENSES FUNDS SCHEME DUTY REPATRIATE LIVING EXPENSES AMOUNTS RECONSIDERATION STATE SECURITIES BOARD FEDERAL BUREAU VALUABLE ASSISTANCE TSSB FBI MATTER |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16390 / December 15, 1999
Securities and Exchange Commission v. Cornerstone Prodigy Group, Inc.,
Gary D. Reeder, Sandra Reeder and Executive Netprofits, Inc.
(Defendant Solely for Purposes of Equitable Relief) Case No. 4
99-CV-0978-Y USDC, NDTX (Dallas Division)
On December 10, 1999, Judge Terry R. Means, United States District
Judge for the Northern District of Texas, ordered, pursuant to the
parties agreement, the continuation of an asset freeze against
Cornerstone Prodigy Group, Inc. and its principals Gary D. Reeder, a
convicted felon, and Sandra Reeder, a licensed securities
professional. In an agreed preliminary injunction, the court ordered
the Reeders to immediately surrender their passports and prohibited
them from traveling outside the continental United States. (After
learning of the initial Temporary Restraining Order entered against
them on November 24, 1999, the Reeders fled to Canada, but
subsequently returned.) Judge Means also required the Reeders to file
a sworn accounting by December 28, 1999, of 1) all money transferred
to a checking account used to pay their personal expenses, 2) all
accounts into which investors funds were deposited, and 3) all money
from investors not deposited into accounts. The Complaint filed by the
U.S. Securities and Exchange Commission (ACommission@) alleges that
since early 1999, the Reeders raised over $16.5 million from over 600
investors through internet and cold-call sales in the Ponzi scheme
they perpetuated.
To protect the Commissions ability to recover the funds raised in the
Reeders fraudulent securities scheme, the court subjected the Reeders
to a continuing duty to identify and repatriate all assets located
outside the United States. The court also limited the Reeders to
$5,000 per month for living expenses for a period of 90 days, with any
additional amounts subject to reconsideration by the court.
The case was investigated jointly by the Commission, the Texas State
Securities Board ("TSSB"), and the Federal Bureau of Investigation
("FBI"). The Commission wishes to acknowledge the very valuable
assistance of both the TSSB and the FBI in this matter.
_________________________________________________________________
Modified 12/17/1999
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