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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
ATMS SECURITIES DEFENDANTS CASH SYSTEMS EXCHANGE COMMISSION COMPLAINT ACT ROBERT STRUTH ALLEGES WEG MONTHLY LEASE PAYMENTS VIOLATIONS REGISTRATION PROVISIONS WESTERN EXECUTIVE GROUP RIETZ PARRISH STEPHEN EDGEL CALIFORNIA INTERNET OPERATING OFFERING PRIVATE MONEY ANTIFRAUD SECURITIES LAWS RENO NEVADA |
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U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15134 /October 23, 1996
SECURITIES AND EXCHANGE COMMISSION v. WESTERN EXECUTIVE GROUP,
INC., CASH SYSTEMS USA, INC., CHARLES R. RIETZ, ROBERT R.
PARRISH, ROBERT J. STRUTH and R. STEPHEN EDGEL,
Civil Action No. 96-6938 GHK (JGx) (C.D. Cal.)
The Securities and Exchange Commission ("Commission")
announced that on October 22, 1996, the Honorable George H. King,
United States District Court Judge for the Central District of
California, signed a Preliminary Injunction ("Order") halting a
Ponzi scheme involving investment contracts for the sale and
leaseback of automated teller machines ("ATMs"). The defendants
offered the ATM investment program over the Internet to the
public and raised over $3.49 million from at least 132 investors
nationwide. This is the first lawsuit involving ATMs and the
largest lawsuit involving Internet investment fraud brought by
the Commission to date.
In its Complaint, the Commission alleges that the defendants
have operated a Ponzi scheme from at least September 1995, when
they began offering and selling investments involving the sale
and leaseback of privately owned ATMs (ATMs not affiliated with
banks). Through simultaneously executed agreements with both WEG
and Cash Systems, investors purchased ATMs from WEG for $23,950
and immediately leased them back to Cash Systems. Investors were
guaranteed monthly lease payments for five years which payments
would allegedly return all of the investors' principal and a
yield of 17.4% per year. However, as of July 1996, only 42 ATMs
were operational even though the defendants had sold 195 ATMs,
and only 2 of the 42 ATMs made enough money to cover their
associated monthly lease payments and expenses. Consequently,
the defendants were using new investor funds to pay existing
investors their monthly lease payments.
The Commission obtained an order enjoining the following
entities and individuals from future violations of the antifraud
and registration provisions of the federal securities laws:
Western Executive Group, Inc. ("WEG") headquartered in Reno,
Nevada; Cash Systems USA, Inc. ("Cash Systems") headquartered in
Reno, Nevada; Charles R. Rietz ("Rietz") of Mesa, Arizona; Robert
R. Parrish ("Parrish") of Gilmer, Texas; Robert J. Struth
("Struth") of Southern California; and R. Stephen Edgel ("Edgel")
of Carmichael, California. The Order also imposes an asset
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