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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
CONTEMPT VIOLATION FREEZE SECURITIES COMMISSION ASSET COURT INJUNCTION EXCHANGE COMMISSION CIVIL CONTEMPT DEFENDANTS LITIGATION FUNDS INVESTORS ACT CONTEMPT PROCEEDINGS BORROWING ALLEGATIONS COMPLAINT COURT-APPOINTED EXAMINER FROZE SPENT PAYS CUSTODY CREDIBLE SHOWING MATTER UNITED STATES ATTORNEY CRIMINAL CONTEMPT PROSECUTION NOS |
SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17534 / May 24, 2002
SEC v. John E. Brinker, Jr., Gary J. Bentz, et al., Civil Action No.
IP01-0259 C-H/G (S.D. Ind.).
The U.S. Securities and Exchange Commission ("Commission") announced
today that on May 23, 2002, a federal judge held Gary J. Bentz
("Bentz") in civil contempt and ordered him imprisoned for violating
an asset freeze order. Bentz, a resident of the Cincinnati area,
violated the order by secretly spending up to $142,000 in funds frozen
by the court.
In February 2001, the Commission sued Bentz and others for operating a
fraudulent Ponzi scheme that raised millions of dollars from investors
in a "prime bank" trading program. At the same time, Hon. David F.
Hamilton of the U.S. District Court in Indianapolis issued a permanent
injunction that prohibits Bentz and other defendants from engaging in
fraud and other misconduct in violation of Sections 5(a), 5(c), and
17(a) of the Securities Act of 1933, Sections 10(b), 15(a), and 15(c)
of the Securities Exchange Act of 1934, and Rules 10b-5 and 15c1-2
thereunder. The defendants consented to the injunction order without
admitting or denying the allegations in the Commission's complaint. A
court-appointed examiner later reported that Bentz and his
co-defendants raised a total of $20.3 million from over 600 investors.
The injunction order also froze the assets of Bentz and the other
defendants. In the contempt proceedings, the Commission alleged that
shortly before the asset freeze, Bentz obtained approximately $142,000
by borrowing against his assets, and that after the freeze, he spent
all or part of the borrowed funds in violation of the freeze. The
court ruled that Bentz violated the freeze and is in civil contempt,
and ordered him imprisoned until he pays $142,000 into the court's
custody or makes a credible showing that he is unable to do so. The
court also referred the matter to the United States Attorney for a
possible criminal contempt prosecution. (For more detail on the
injunction and contempt proceedings, see Litigation Release Nos. and
.)
_________________________________________________________________
Modified 05/29/2002
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