UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16355 / November 16, 1999
SECURITIES AND EXCHANGE COMMISSION V. ORACLE TRUST FUND; JUBILEE TRUST
FUND; ELKOSH TRUST FUND; JEROME L. DEFRIES and KEVIN S. MCQUEEN,
Defendants, and ROGER PEARSON, individually and d/b/a BIZ ENTERPRISES,
Defendant Solely for the Purpose of Equitable Relief
Case No. 99-1483MLB, USDC, DISTRICT OF KANSAS, WICHITA DIVISION
The U.S. Securities and Exchange Commission ("Commission") announced
today that Monti L. Belot, U.S. District Court for the District of
Kansas, Wichita Division, issued various emergency orders sought by
the Commission to halt a $7.4 million affinity fraud which targeted,
among others, members of Christian churches in rural Kansas, Nebraska
and Missouri towns. According to the Commission's complaint, the
defendants raised funds from at least 125 investors, supposedly to
trade in high-yield foreign bank instruments in a secret "prime bank"
trading market. The defendants represented to investors that they
would receive a monthly return of 20% for 12 to 18 months, and that
the return of the investors' principal was fully guaranteed. In
reality, the prime bank trading program does not exist and investor
funds have been transferred by the defendants to several offshore
entities and used for unauthorized purposes. The Commission's
complaint alleges that the defendants also conducted a "Ponzi" scheme
by making principal and interest payments to early investors with
funds raised from later investors to give the false illusion that the
investment was successful.
The Commission alleges that the investment scheme is a classic
"affinity fraud," in which the defendants preyed on various church
communities. To establish credibility within the church communities,
defendants gave the investments various names with Biblical
connotations, such as Jubilee Trust Fund, Oracle Trust Fund and Elkosh
Trust Fund (collectively, the "three funds"). They also proclaimed
their status as so-called "born-again" Christians and suggested that
the investment would fulfill a religious "duty" or "prophecy."
Moreover, they informally enlisted members of various church
communities to proselytize on behalf of the investment funds.
Consequently, investors, most of whom are unsophisticated investors,
invested in the trading programs on trust and faith, rather than
adequate information.
According to the Commission's complaint, the scheme was devised,
and/or participated in, by Jerome L. DeFries ("DeFries"), Kevin S.
McQueen ("McQueen") and Roger Pearson ("Pearson").
SNIPPETS:
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION V. ORACLE TRUST FUND;
Case No. 99-1483MLB, USDC, DISTRICT OF KANSAS, WICHITA DIVISION
The U.S. Securities and Exchange Commission announced today that Monti L. Belot, U.S.
According to the Commission's complaint, the defendants raised funds from at least 125
the prime bank trading program does not exist and investor funds have been transferred by the
The Commission's complaint alleges that the defendants also conducted a "Ponzi" scheme by
The Commission alleges that the investment scheme is a classic "affinity fraud," in which the
To establish credibility within the church communities, defendants gave the investments
According to the Commission's complaint, the scheme was devised, and/or participated in, by
DeFries, age 53, is a resident of Bonner Springs, Kansas.
Pearson is a resident of Nebraska, doing business as Biz Enterprises, a Nebraska company
Pearson was named in the lawsuit only as a defendant for the purpose of equitable relief.
In its lawsuit, filed today, the Commission sought and the Court granted emergency orders
prohibiting the destruction of documents; authorizing expedited discovery; requiring Oracle,
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