UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16089 \ March 17, 1999
SECURITIES AND EXCHANGE COMMISSION v. BENJAMIN FRANKLIN COOK,
individually and dba DENNEL FINANCE LIMITED, GERALD LEE PATE, ELLSWORTH
WAYNE McLAWS and ALAN CLAGG, et al., 3:99CV0571-X, USDC, ND/TX
(Dallas Division)
On March 16, 1999, Judge Jerry Buchmeyer, United States District
Judge for the Northern District of Texas, granted the Commission's
request for a temporary restraining order to halt a fraudulent scheme
to offer and sell unregistered "prime bank" securities throughout the
United States. In connection with the scheme, approximately $30 million
has been raised from more than 100 investors nationwide. The fraudulent
trading program was developed by Benjamin Franklin Cook ("Cook") and
his company, Dennel Finance Ltd ("Dennel"), and marketed to investors
chiefly by Gerald Lee Pate ("Pate"), Ellsworth Wayne McLaws, ("McLaws")
and Alan Clagg ("Clagg"), all named as defendants in this matter.
According to the Commission's complaint, the defendants targeted
religious and charitable groups and persons investing retirement funds.
To induce investment in the scheme, the defendants misrepresented the
use and safety of investor funds. Defendants represent, for example,
that investor funds will be transferred to a London bank, secured by a
bank guarantee and used as collateral to trade financial instruments
with top 50 European banks. This trading activity, investors are told,
will provide them with annual returns of 24 to 60 percent. In reality,
the prime bank program marketed to investors does not exist. Dennel
has not sent any funds to Europe for use in a trading program and funds
have not been secured by any type of guarantee. Rather, defendants
have misappropriated investment funds for personal and unauthorized
uses, including making Ponzi payments to existing investors with funds
provided by new investors.
The Court also entered an order freezing the assets of the
defendants as well as FPC-1 Limited Partnership, Samuel Limited
Partnership, Alliance Investments Corp., Cornerstone Management LLC,
International Business Consultants Limited, Highlander Limited
Partnership, and C. Kelly Olsen (collectively "relief defendants"),
named as defendants solely for relief purposes, and ordered the
defendants and relief defendants to account for investor monies and to
repatriate any funds not subject to the jurisdiction of the Court.
Additionally, the Court ordered the appointment of a receiver to take
control of the assets of the defendants and relief defendants for the
benefit of investors.
The Commission is seeking preliminary and permanent injunctions
enjoining Cook, Dennel, Pate, McLaws and Clagg from future violations
SNIPPETS:
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
On March 16, 1999, Judge Jerry Buchmeyer, United States District Judge for the Northern
approximately $30 million has been raised from more than 100 investors nationwide.
The fraudulent trading program was developed by Benjamin Franklin Cook and his company,
the defendants targeted religious and charitable groups and persons investing retirement
Defendants represent, for example, that investor funds will be transferred to a London bank,
Dennel has not sent any funds to Europe for use in a trading program and funds have not been
The Court also entered an order freezing the assets of the defendants as well as FPC-1
Partnership, and C. Kelly Olsen, named as defendants solely for relief purposes, and ordered
the Court ordered the appointment of a receiver to take control of the assets of the
The Commission is seeking preliminary and permanent injunctions enjoining Cook, Dennel, Pate,
This matter was jointly investigated by the Commission, the Securities Division of the
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