United States Securities and Exchange Commission

Litigation Release No. 18380 / September 30, 2003

SEC Sues Recidivist, Clarence E. Long and His Company, ACI, Inc., for Fraud
in Connection with Alleged High Yield Trading Scheme

, Civil Action No. 6 03-CV-01343-JTM-DWB (USDC/D.KAN/Wichita Div.)

   On September 25, 2003, the Commission filed a civil action in the
   United States District Court for the District of Kansas against ACI,
   Inc. ("ACI") and Clarence E. Long, a securities law recidivist.
   According to the complaint, from October 2000 through September 2001,
   Long and ACI raised over $7.7 million from the fraudulent offer and
   sale of interests in high yield trading programs to at least 586
   investors located throughout the United States. The Commission
   alleges, specifically, that Long misled investors by stating, falsely,
   that ACI's trading programs were paying weekly returns of up to 45
   percent and that investors were "guaranteed" return of their principal
   plus 6½ percent at the end of the program's 13-month term. None of the
   investors' funds were invested as promised; rather, Long used the
   funds to make Ponzi payments couched as "trading profits" and
   misappropriated most of the remaining funds. Finally, the Commission
   alleges that Long favorably portrayed his background and experience
   without disclosing to investors that he had previously been civilly
   enjoined and criminally convicted for securities fraud.

   In its complaint, the Commission alleges that Long and ACI violated
   Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and
   Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
   thereunder. In its action, the Commission is seeking against ACI and
   Long a permanent injunction, disgorgement with prejudgment interest, a
   civil money penalty and an accounting. Additionally, the Commission
   seeks a "conduct-based" permanent injunction against Long, enjoining
   him from participating in any sale or offer to sell any security in an
   unregistered transaction while acting in association with an issuer,
   underwriter, broker or dealer involved in such transaction. Finally,
   the Commission seeks disgorgement with prejudgment interest and an
   accounting against Jon G. Ervin, Sr., the relief defendant, for his
   alleged unjust enrichment at the investors' expense.

   The Commission acknowledges the assistance and cooperation of the U.S.
   Attorney's Office for Arizona and the Securities Division of the
   Arizona Corporation Commission.

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Modified 10/1/2003