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U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 14794 / January 25, 1996
SECURITIES AND EXCHANGE COMMISSION V. SOUTHERN CALIFORNIA
SECURITIES, INC., GRIZZLY OPERATING CORP. DBA CHEROKEE OPERATING
CO., BUCKEYE DEVELOPMENT CORP. DBA WESTERN RESERVE DEVELOPMENT
CORP., JAMES E. HAMMONDS AND RAYMOND C. GROSS, Civil Action No.
94-6156 HLH (JRx)
The Securities and Exchange Commission ("Commission")
announced that on January 17, 1996, the Honorable Harry L. Hupp,
United States District Court Judge for the Central District of
California ("Court"), entered a Judgment Setting Amounts of
Disgorgement and Civil Penalties ("Judgment") against Defendants
James E. Hammonds ("Hammonds") and Raymond C. Gross ("Gross").
The Judgment was entered following the Court granting the
Commission's summary judgment motion. The Commission's
enforcement action was initially filed on September 12, 1994. On
November 18, 1994, the Court entered an Order of Permanent
Injunction and Other Relief against Hammonds and Gross, enjoining
them from future violations of Section 17(a) of the Securities
Act of 1933 ("Securities Act"), Sections 10(b) and 15(c) of the
Exchange Act and Rules 10b-5 and 15c1-2 thereunder.
The Commission's Complaint filed in this action alleged
that, from about January 1993 through August 1994, Hammonds and
Gross, through Southern California Securities, Inc. ("SCSI"), a
broker-dealer formerly registered with the Commission, raised
over $4.07 million from about 196 investors through a scheme
involving the fraudulent offer and sale of unregistered limited
partnership interests in five oil and gas limited partnerships
("Partnerships") managed by Buckeye Development Co. dba Western
Reserve Development Co. ("Western") and operated by Grizzly
Operating Co. dba Cherokee Operating Co. ("Cherokee"). According
to the Complaint, in the offer and sale of these securities,
Hammonds and Gross made misstatements and omissions to investors
and prospective investors. For example, in promoting the
investments, Hammonds and Gross told investors that investor
funds would be used for oil and gas-related expenses, lease
acquisition costs, sales commissions, Western's fees, working
capital and investing in "U.S. Government obligations." In fact,
Hammonds and Gross misused and misappropriated substantial
amounts of investor funds to pay the overhead and operating
expenses of SCSI and Cherokee and to pay themselves. Hammonds
and Gross also failed to transfer oil and gas properties to the
SNIPPETS:
U.S. SECURITIES AND EXCHANGE COMMISSION
SOUTHERN CALIFORNIA SECURITIES, INC., GRIZZLY OPERATING CORP. DBA CHEROKEE OPERATING CO.,
The Securities and Exchange Commission announced that on January 17, 1996, the Honorable
James E. Hammonds and Raymond C. Gross.
The Judgment was entered following the Court granting the Commission's summary judgment
On November 18, 1994, the Court entered an Order of Permanent Injunction and Other Relief
The Commission's Complaint filed in this action alleged that, from about January 1993 through
o. and operated by Grizzly Operating Co. dba Cherokee Operating Co..
According to the Complaint, in the offer and sale of these securities, Hammonds and Gross
For example, in promoting the investments, Hammonds and Gross told investors that investor
Hammonds and Gross misused and misappropriated substantial amounts of investor funds to pay
Hammonds and Gross also failed to transfer oil and gas properties to the Partnerships and to
The Judgment orders disgorgement of $602,561 from Hammonds and $652,162 from Gross.
The Judgment further orders Hammonds to pay civil penalties in the amount of $602,561 and
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