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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
CMA DEFENDANTS TESSA SECURITIES COMPLAINT ALLEGES EXCHANGE COMMISSION CMA FUNDS RICHARD HAMILTON SAVINGS ACCOUNT REPAY INVESTORS PROTECTION TESSA FINANCIAL GROUP CIVIL CALIFORNIA INSURANCE ACT BROKERAGE ACCOUNT PRIVATE INVESTMENTS RELATED COMPANIES PROFITS LOW-RISK HIGH-RISK INVESTMENT VAST MAJORITY WRITTEN NOTICE ABILITY THEREUNDER PERMANENT INJUNCTIVE RELIEF DISGORGEMENT PLUS PREJUDGMENT CIVIL PENALTIES |
SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16323 / September 30, 1999
SECURITIES AND EXCHANGE COMMISSION v. TESSA FINANCIAL GROUP, INC. and
RICHARD HAMILTON, Civil Action No. CV 99-10015 WJR (CWx) (C.D. Cal.).
The Securities and Exchange Commission filed today a Complaint in
federal district court in Los Angeles against Tessa Financial Group,
Inc. (Tessa), of Harbor City, California, and Richard Hamilton
(Hamilton), of Anaheim, California. The Complaint alleges that the
Defendants fraudulently raised over $1.9 million from investors
nationwide in an investment program called Capital Management
Agreement (CMA).
The Complaint alleges that Defendants lied to investors about certain
material facts connected with CMA
* Defendants represented that Tessa would pool CMA funds into a
brokerage account and invest CMA funds in various public and
private investments. Defendants further represented that the CMA
program would pay a return equivalent to the prime interest rate.
In fact, Defendants used virtually all CMA funds to operate Tessa
and its related companies, and these companies generated no
profits with which to repay investors their principal and stated
return;
* Defendants represented that CMA was a low-risk,
insurance-protected investment, that had protection similar to a
savings account. In fact, CMA was a high-risk investment, the vast
majority of CMA funds were not protected by insurance, and CMA had
no protections remotely similar to savings accounts; and
* Defendants represented that Tessa would repay investors their
principal and stated return upon seven days written notice. In
fact, Tessa had little or no ability to repay investors, much less
upon the required seven days.
The Complaint alleges that Defendants violated Section 17(a) of the
Securities Act of 1933, Section 10(b) of the Securities Exchange Act
of 1934, and Rule 10b-5 thereunder. The Complaint seeks permanent
injunctive relief, disgorgement plus prejudgment interest, and civil
penalties.
_________________________________________________________________
Modified 10/01/1999
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