UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15105 / October 2, 1996
Securities and Exchange Commission v. Gary W. Berus, Patricia S.
Gale, Robert W. Harper and Nancy A. Swoffer, (United States
District Court for the Eastern District of Michigan, Civil Action
No. 96-CV-74524)
The Securities and Exchange Commission announced that on
September 30, 1996, a Complaint was filed in the U.S. District
Court for the Eastern District of Michigan against Gary W. Berus
(Berus), Patricia S. Gale (Gale), Robert W. Harper (Harper) and
Nancy A. Swoffer (Swoffer) seeking an Order of Permanent
Injunction, Disgorgement and Civil Penalties based on their
violations of Sections 17(a)(1), 17(a)(2) and 17(a)(3) of the
Securities Act of 1933, Section 10(b) of the Securities Exchange
Act of 1934 (Exchange Act) and Rule 10b-5 promulgated thereunder
and Gale's and Swoffer's violations of Sections 15(a)(1) and
15(c)(1) of the Exchange Act.
The Commission's Complaint alleges, among other things, that
during the period from 1990 through 1994, Berus, Harper and their
sales agents, Gale and Swoffer, defrauded a total of
approximately 120 investors through the offer and sale of $3
million in securities. Specifically, through three separate
investment scams, Berus, Harper, Gale and Swoffer offered and
sold fictitious certificates of deposit (CDs) issued by a
purported international bank, Century Security Bank and Trust,
Ltd. (Century Security), and interests in two investment clubs,
the Profit Masters Group (Profit Masters) and Meca International,
Inc. (Meca).
In connection therewith, CD investors were told that they
were purchasing variable rate CDs, with their money to be used by
Century Security to finance various business ventures.
Investment club investors were told that their funds would be
pooled to purchase common stocks. Depending on the investment
scam, investors were promised annual returns ranging from 8% to
24%. In return for the investments, Berus and Harper generally
sent investors confirmations for the funds invested and
fictitious monthly and/or annual account statements which lulled
investors into believing the legitimacy of the investments. In
SNIPPETS:
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Act of 1934 (Exchange Act) and Rule 10b-5 promulgated thereunder and Gale's and Swoffer's
The Commission's Complaint alleges, among other things, that during the period from 1990
Specifically, through three separate investment scams, Berus, Harper, Gale and Swoffer
In connection therewith, CD investors were told that they were purchasing variable rate CDs,
Investment club investors were told that their funds would be pooled to purchase common
Depending on the investment scam, investors were promised annual returns ranging from 8% to
Berus and Harper generally sent investors confirmations for the funds invested and fictitious
Despite the above representations regarding Century Security, Profit Masters and Meca,
Instead, Berus and Harper simply operated three separate "ponzi" schemes, with Gale and
Undisclosed to investors, Berus and Harper then used investor funds to pay personal and
|
