United States Securities and Exchange Commission
Litigation Release No. 18041 / March 18, 2003
Civil Action No. A 03-CA-162, (USDC/Western District of Texas)
On March 18, 2003, the Commission filed an insider trading and
pump-and-dump case in federal court in Austin, Texas against the
former CEO and the former president of BGI Inc. ("BGI"), an Austin
company that operates charity donation slot machines. The Commission
also named BGI's operations manager in its insider trading action.
According to the Commission's complaint, the company touted in press
releases, a Commission filing and a newsletter its increased revenues
and business expansion without disclosing that many of its machines
and bank accounts had been seized by Texas law enforcement authorities
for allegedly violating the state's gaming laws. The Commission
further alleges in its complaint that the defendants engaged in
prohibited insider trading by selling BGI stock before BGI publicly
disclosed the seizures, avoiding losses totaling about $562,000.
The defendants are
* Wilmer Reid Funderburk, age 49 and a resident of Austin, Texas,
who was the CEO and chairman of BGI during the relevant period.
Funderburk was involved in drafting and issuing the misleading BGI
press releases and newsletter. He was also responsible for
reviewing and signing the false Commission filing on behalf of
BGI. Funderburk sold 100,000 shares of his personally held BGI
stock, generating over $436,000, before BGI publicly disclosed the
seizures of its machines and machine proceeds;
* Edward W. Reckdenwald, age 37, formerly of Austin, Texas, who was
BGI's president during the relevant period. Reckdenwald was also
involved in drafting and issuing the misleading press releases and
newsletter. He sold 20,000 of his personally held shares of BGI
stock, generating over $56,000, before BGI publicly disclosed the
seizures of its machines and machine proceeds; and
* Todd Burk Priddy, age 37, a resident of Austin, Texas, who is
BGI's operations manager. Priddy was aware of the seizures of
BGI's machines and proceeds, and was aware of BGI's failure to
publicly disclose these facts, when he sold 29,000 shares of his
BGI stock, generating over $90,000, at a price artificially
inflated by the misleading press releases, newsletter and
Commission filing.
The Commission alleges in its complaint that between October 2001 and
January 2002, BGI, through Funderburk and Reckdenwald, issued
misleading press releases and authorized a misleading Internet-based
SNIPPETS:
United States Securities and Exchange Commission
On March 18, 2003, the Commission filed an insider trading and pump-and-dump case in federal
The Commission further alleges in its complaint that the defendants engaged in prohibited
The defendants are * Wilmer Reid Funderburk, age 49 and a resident of Austin, Texas, who was
Funderburk was involved in drafting and issuing the misleading BGI press releases and
He was also responsible for reviewing and signing the false Commission filing on behalf of
Funderburk sold 100,000 shares of his personally held BGI stock, generating over $436,000,
Reckdenwald was also involved in drafting and issuing the misleading press releases and
* Todd Burk Priddy, age 37, a resident of Austin, Texas, who is BGI's operations manager.
Priddy was aware of the seizures of BGI's machines and proceeds, and was aware of BGI's
The Commission alleges in its complaint that between October 2001 and January 2002, BGI,
The BGI press releases, newsletter and quarterly report were materially misleading because,
BGI's stock price increased from $0.89 per share to over $5 per share.
Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and, in addition, for Funderburk's
The Commission is also seeking officer and director bars against Funderburk and Reckdenwald,
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