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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
VIOLATING DEFENDANTS COMPLAINT EXCHANGE COMMISSION CHARLES DISTRICT CHARLES DENNIS MCKITTRICK COMPLAINT ALLEGES NOTE OFFERINGS SOUTHERN FINANCIAL GROUP RICHARD GERALD HUNTER UNITED STATES DISTRICT SOUTH CAROLINA CHARLESTON DIVISION CIVIL TEMPORARILY RESTRAINING SOUTHERN PROVISIONS FEDERAL SECURITIES LAWS BOOKS ASSETS INVESTMENTS RELIEF SCHEME OPERATING FUNDS ACT CIVIL PENALTIES |
U.S Securities and Exchange Commission
Litigation Release No. 17535 / May 28, 2002
SECURITIES AND EXCHANGE COMMISSION V. SOUTHERN FINANCIAL GROUP, INC.,
RICHARD M. WOOTEN, CHARLES DENNIS MCKITTRICK AND GERALD F. HUNTER,
JR., United States District Court for the District of South Carolina,
Charleston Division, Civil Action File No. 2 02-1806-18 (Filed May 24,
2002)
The Securities and Exchange Commission ("Commission") announced that
on May 24, 2002, the Honorable David C. Norton, United States District
Judge for the District of South Carolina, Charleston Division, entered
an order temporarily restraining Southern Financial Group, Inc.
("Southern"), Richard M. Wooten ("Wooten"), Charles Dennis McKittrick
("McKittrick") and Gerald F. Hunter, Jr. ("Hunter") from violating the
anti-fraud provisions of the federal securities laws. The order also
temporarily restrains Southern, Wooten and McKittrick from violating,
or aiding and abetting violations of, the broker-dealer net capital
and books and records provisions of the federal securities laws,
freezes the assets of the defendants as well as the assets of
Springdale Investments, Inc., a relief defendant, and grants other
expedited relief.
The Commission's complaint alleges the defendants have raised at least
$25 million through a fraudulent scheme involving the sale of
short-term notes on behalf of UC Properties LLC. The complaint alleges
that the defendants have been operating these note offerings as a
Ponzi scheme, using funds raised from current note offerings to pay
principal and interest to investors in prior offerings. The complaint
further alleges that Southern has been operating in violation of the
net capital rule since at least October 2001, and that the firm's
FOCUS reports and other books and records have been inaccurate since
that time.
The complaint seeks preliminary and permanent injunctions against the
defendants to prevent future violations of Section 17(a) of the
Securities Act of 1933, and Sections 10(b), 15(c)(3) and 17(a)(1) of
the Securities Exchange Act of 1934 and Rules 10b-5, 15c3-1, 15c3-3,
17a-3, 17a-5 and 17a-11 thereunder. The complaint also seeks an
accounting of funds, disgorgement of ill gotten gains with prejudgment
interest thereon and civil penalties.
_________________________________________________________________
Modified 05/29/2002
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