Case 5:09-cv-00022-RLV-CH Document 1 Filed 03/06/2009 Page 1 of 17 ·R· r Gf ~ ~ ff~i. ,O.. ! ·i~\:···'iL_
IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION
@UFL~fit SECURITIES AND EXCHANGE COMMISSION,
.MAR 062009
Plaintiff, v.
SHELBY DEAN MARTIN, D. MARTIN ENTERPRISES, INC. and DM VENTURES, LLC,
Defendants.
COMPLAINT FOR INJUNCTIVE RELIEF
Plaintiff, Securities and Exchange Commission ("Commission"), alleges, that:
OVERVIEW ,.. .,
1. This matter involves a Ponzi scheme orchestrated by Shelby Dean
Martin ("Martin"), D. Martin Enterprises, Inc. ("DM Enterprises") and DM
Ventures, LLC ("DM Ventures"). Martin controls DM Enterprises, a North
Carolina corporation, and DM Ventures, fOlmerly registered as a Nevada limited
5:09-cv-00022-RLV-CH Document 1 Filed 03/06/2009 Page 1 of 17ORIGINAL
IN THE UNITED STATES DISTRICT COURTFOR THE WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION
SECURITIES AND EXCHANGE MAR 0 62009COMMISSION,
WSSCRM BSSOSCT OP
Plaintiff, Civil Action No.
v. 5;0 ^eoQx
SHELBY DEAN MARTIN, D. MARTINENTERPRISES, INC. and DM VENTURES,LLC,
Defendants.
COMPLAINT FOR INJUNCTIVE RELIEF
Plaintiff, Secuities and Exchange Commission ("Commission"), alleges, that
OVERVIEW
1. This matter involves a Ponzi scheme orchestrated by Shelby Dean
Martin ("Martin"), D. Martin Enterprises, Inc. ("DM Enterprises") and DM
Ventures, LLC ("DM Ventures"). Martin controls DM Enterprises, a North
Carolina corporation, and DM Ventures, formerly registered as a Nevada limited
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Case 5:09-cv-00022-RLV-CH Document 1 Filed 03/06/2009 Page 2 of 17
liability corporation which had itstegistration revoked in April 2005. Martin
operates as an unregistered investment adviser.
2. Since at least 1998, Martin has raised more than $10 million from
over 150 investors through a variety of false and misleading statements. Martin
told most investors that he was going to invest their funds in private companies to
take them public. To other investors, Martin explained that-their money was going·
to be used to provide working capital to companies in financial trouble. Martin
also told a few investors that their funds would be used to purchase stock in
various companies. Martin gave the investors notes that promised to pay investors
a rate between 15% and 50% per year. The notes, which promised the return of
principal at the end of the term, were usually for a period of six or twelve months.
3. Contrary to Martin's claims to investors, Martin did not invest much
of the money in companies as he claimed. Instead, he diverted substantial investor
funds for his personal use and used new investor funds to pay returns to existing
investors.
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liability corporation which had its registration revoked in April 2005. Martin
operates as an unregistered investment adviser.
2. Since at least 1998, Martin has raised more than $10 million rom
over 150 investors through a variety of false and misleading statements. Martin
told most investors that he was going to invest their funds in private companies to
take them public. To other investors, Martin explained that their money was going
to be used to provide working capital to companies in inancial trouble. Martin
also told a few investors that their funds would be used to purchase stock in
various companies. Matin gave the investors notes that promised to pay investors
a rate between 15% and 50% per year. The notes, which promised the return of
principal at the end of the term, were usually for a period of six or twelve months.
3. Contrary to Martin's claims to investors, Martin did not invest much
of the money in companies as he claimed. Instead, he diverted substantial investor
funds for his personal use and used new investor funds to pay retuns to existing
investors.
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VIOLATIONS
4. Defendants have engaged, and unless restrained and enjoined
by this Court, will continue to engage in acts and practices that constitute and will
constitute violations of Sections 17(a) of the Securities Act of 1933 ("Securities
Act"Y[15 U.S.C. § 77q(a)], Section 10(b) ofthe Securities Exchange Act of 1934
("Exchange Act") [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §
240.10b-5]. Defendant Martin has engaged and unless enjoined will engage in acts
and practices that constitute violations of Sections 206(1) and 206(2) of the
Investment Advisers Act of 1940 ("Advisers Act")[15 U.S.C. 80b-6(l) and(2)].
JURISDICTION AND VENUE
5. The Commission brings this action pursuant to Sections 20 and 22 of
the Securities Act [15 U.S.C. §§ 77t and 77v], Sections 21(d) and 2I(e) ofthe
Exchange Act [15 U.S.C. §§ 78u(d) and 78u(e)] and Sections 209 and 214 of the
Advisers Act [15 U.S.C. 80b-9, 80b-I4], to enjoin the defendants from engaging in
the transactions, acts, practices, and courses ofbusiness"alleged in this complaint,
and transactions, acts, pr~ctices, and courses ofbusiness of similar purport and
object, for civil penalties and for other equitable relief.
3
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VIOLATIONS
4. Defendants have engaged, and unless restrained and enjoined
by this Court, will continue to engage in acts and practices that constitute and will
constitute violations of Sections 17(a) of the Securities Act of 1933 ("Securities
Act") [15 U.S.G. § 77q(a)], Section 10(b) of the Securities Exchange Act of 1934
("Exchange Act") [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §
240.10b-5], Defendant Martin has engaged and unless enjoined will engage in acts
and practices that constitute violations of Sections 206(1) and 206(2) of the
Investment Advisers Act of 1940 ("Advisers Act")[15 U.S.C. 80b-6(l) and(2)].
JURISDICTION AND VENUE
5. The Commission brings this action pursuant to Sections 20 and 22 of
the Securities Act [15 U.S.C. §§ 77t and 77vj, Sections 21(d) and 21(e) of the
Exchange Act [15 U.S.C. §§ 78u(d) and 78u(e)] and Sections 209 and 214 of the
Advisers Act [15 U.S.C. 80b-9, 80b-14], to enjoin the defendants rom engaging in
the transactions, acts, practices, and courses of business alleged in this complaint,
and transactions, acts, practices, and courses of business of similar purport and¦
object, for civil penalties and for other equitable relief.
3
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6. This Court has jurisdiction over this action pursuant to Section 22 of
the Securities Act [IS U.S.C. 77v], Sections 21(d), 21(e), and 27 of the Exchange
Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa] and and Section 214 of the Advisers
Act [15 U.S.C. 80b-14].
7. Defendants, directly and indirectly, made use of the mails, the means
and instruments of transportation and connnunication in interstate connnerce and
the means and instrumentalities of interstate connnerce in connection with the
transactions, acts, practices, and courses of business alleged in this complaint.
8. Certain of the transactions, acts, practices, and courses of business
constituting violations of the Securities Act, the Exchange Act and the Advisers Act
occurred in the Western District of North Carolina. In addition, defendant Martin
resides in the Western District of North Carolina. Defendants DM Enterprises and
DM Ventures maintain offices in the Western District ofNorth Carolina.
DEFENDANTS
9. Shelby Dean Martin, 71 years of age, resides in Mooresville, North
Carolina. Martin has served as president ofDM Enterprises since its inception in
1985 and as the managing member ofDM Ventures.
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6. This Court has juisdiction over this action pursuant to Section 22 of
the Securities Act [15 U.S.C. 77v], Sections 21(d), 21(e), and 27 of the Exchange
Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa] and and Section 214 of the Advisers
Act [15 U.S.C. 80b-14].
1. Defendants, directly and indirectly, made use of the mails, the means
and instruments of transportation and communication in interstate commerce and
the means and instrumentalities of interstate commerce in connection with the
transactions, acts, practices, and courses of business alleged in this complaint.
8. Certain of the transactions, acts, practices, and courses of business
constituting violations of the Securities Act, the Exchange Act and the Advisers Act
occurred in the Westen District of North Carolina. In addition, defendant Martin
resides in the Westen District of North Carolina. Defendants DM Enterpises and
DM Ventures maintain offices in the Westen Distict of North Carolina.
DEFENDANTS
9. Shelby Dean Martin, 71 years of age, resides in Mooresville, North
Carolina. Martin has served as president of DM Enterpises since its inception in
1985 and as the managing member of DM Ventures.
4
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10. D. Martin Enterprises, Inc. is a North Carolina corporation formed
in 198~ that has its principal place ofbusiness in Mooresville, NC. DM
Enterprises has never been registered with the .Commission in any capacity.
11. DM Ventures, LLC is an entity that was formerly registered in the
State ofNevada as a limited liability company with its principal place ofbusiness
in Mooresville, NC. DM Ventures' registration was revoked as ofApril 1, 2005.
DM VentUres has never been registered by the Commission in any capacity.
THE FRAUDULENT SCHEME
12. Since at least 1998, Martin, operating through DM Enterprises and
DM Ventures, has raised at least $10 million from more than 150 investors located
in North Carolina and in several other states.
13. In most cases, Martin sold investors promissory notes with terms of
six or twelve months that paid interest rates ranging from 15% to 50%. ,
14. Martin told most of his investors that he was going to invest their
funds in private companies that he would take public, which would enhance
returns to investors. Martin told other investors that their money would be used
to provide working capital to companies in financial trouble. With others, Martin
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10. D» Martin Enterprises, Inc> is a North Carolina corporation formed
in 1985 that has its principal place of business in Mooresville, NC. DM
Enterprises has never been registered with the Commission in any capacity.
11. DM Ventures, LLC is an entity that was formerly registered in the
State of Nevada as a limited liability company with its principal place of business
in Mooresville, NC. DM Ventures' registration was revoked as of April 1, 2005.
DM Ventures has never been registered by the Commission in any capacity.
THE FRAUDULENT SCHEME
12. Since at least 1998, Martin, operating through DM Enterpises and
DM Ventures, has raised at least $10 million rom more than 150 investors located
in North Carolina and in several other states.
13. In most cases, Martin sold investors promissory notes with terms of
six or twelve months that paid interest rates ranging rom 15% to 50%.
14. Martin told most of his investors that he was going to invest their
funds in private companies that he would take public, which would enhance
retuns to investors. Martin told other investors that their money would be used
to provide working capital to companies in financial trouble. With others, Martin
5
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claimed investor money would be used to purchase stock. In a few instances,
Martin simply obtained investor money without telling them how he would
achieve the returns he promised.
15. Generally, Martin told investors that they would not lose their
principal investment and they would receive anywhere from a 15% to 50% rate of
return on their investment. Martin personally guaranteed the promissory notes he
gave investors and, in several instances, told investors that their principal was
insured. In a few instances, the promissory notes given to investors were made in
the name of DM Enterprises.
16. Martin met most investors through word ofmouth. He often told
them that he was in the business of taking companies public. In that regard, Martin
wrote to investors on occasion updating the status of their investments on DM
Enterprises letterhead.
17. In one instance, Martin told an investor that the money would be used
to provide working capital for a company. Subsequently, in March 2001, the
investor wrote DM Ventures a check which Martin deposited into his bank
account.
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claimed investor money would be used to purchase stock. In a few instances,
Martin simply obtained investor money without telling them how he would
achieve the retuns he promised.
15. Generally, Martin told investors that they would not lose their
principal investment and they would receive anywhere rom a 15% to 50% rate of
retun on their investment. Martin personally guaranteed the promissory notes he
gave investors and, in several instances, told investors that their pincipal was
insured. In a few instances, the promissory notes given to investors were made in
the name of DM Enterprises.
16. Martin met most investors through word of mouth. He oten told
them that he was in the business of taking companies public. In that regard, Martin*
wrote to investors on occasion updating the status of their investments on DM
Enterpises letterhead.
17. In one instance, Martin told an investor that the money would be used
to provide working capital for a company. Subsequently, in March 2001, the
investor wrote DM Ventures a check which Martin deposited into his bank
account.
6
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18. Subsequently, the investor again invested with Martin and was told he
was providing working capital for the same company and wrote a second check to
DM Ventures.
19. When the investor did not receive the promised returns on his
investment, Martin agreed to give the investor a promissory note in the amount of
$200~000, which he personally guaranteed. This note promised a 25% return and
had a twelve-month term.
20. In total~ the investor gave Martin a total of$700~000~ most of which
has never been repaid.
21. Another investor met Martin through a mutual friend and between the
years of 1998 and 2003 invested more than $450,000 in a series of transactions
where Martin gave him promissory notes purporting to pay a 20% annual return.
Martin told the investor that Martin would personally guarantee the investment
and the investor's principal would be insured. While Martin guaranteed the
investor a 20% annual return, he did not explain to the investor how the return
would be generated.
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18. Subsequently, the investor again invested with Martin and was told he
was providing working capital for the same company and wrote a second check to
DM Ventures.
19. When the investor did not receive the promised returns on his
investment, Martin agreed to give the investor a promissory note in the amount of
$200,000, which he personally guaranteed. This note promised a 25% return and
had a twelve-month term.
20. In total, the investor gave Martin a total of $700,000, most of which
has never been repaid.
21. Another investor met Martin through a mutual riend and between the
years of 1998 and 2003 invested more than $450,000 in a seies of transactions
where Martin gave him promissory notes purporting to pay a 20% annual return
Martin told the investor that Martin would personally guarantee the investment
and the investor's principal would be insured. While Martin guaranteed the
investor a 20% annual retun, he did not explain to the investor how the return
would be generated.
7
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22. Martin told a least one other investor that the investors funds would
be used to provide working capital to a company: Between 2000 and 2008, the
investor made a series of investments with Martin totaling $1,185,000, which
Martin guaranteed would pay 25% per year. In one instance in 2004, Martin told
the investor he would be investing in a profitable company, when, in fact, the
company disclosed in its publicfilings that it had lost more than $2 million in that'
year.
23. Martin pooled investor funds in the bank accounts ofDM Enterprises
and DM Ventures and used those funds as they were received from later investors
to pay the returns he promised to earlier investors.
MISREPRESENTATIONS
24. Martin falsely told investors that their funds would be invested with
companies when, in fact, he used the funds he received from investors to finance
his life style and to pay Ponzi returns to earlier investors.
25. Martin failed to tell investors that:
a. he was not investing their money as he claimed in taking
companies public or to provide working capital for companies;
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22. Martin told a least one other investor that the investors funds would
be used to provide working capital to a company. Between 2000 and 2008, the
investor made a seies of investments with Martin totaling $1,185,000, which
Martin guaranteed would pay 25% per year. In one instance in 2004, Martin told
the investor he would be investing in a profitable company, when, in fact, the
company disclosed in its public filings that it had lost more than $2 million in that
year.
23. Martin pooled investor funds in the bank accounts of DM Enterpises
and DM Ventures and used those funds as they were received rom later investors
to pay the retuns he promised to earlier investors.
MISREPRESENTATIONS
24. Martin falsely told investors that their funds would be invested with
companies when, in fact, he used the funds he received rom investors to finance
his life style and to pay Ponzi retuns to earlier investors.
25. Martin failed to tell investors that:
a. he was not investing their money as he claimed in taking
companies public or to provide working capital for companies;
8
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b. that he was using funds from later investors to pay returns to
earlier investors; and
c. that he was using investor funds for his personal benefit.
COUNT I-FRAUD
Violations of Section 17(a)(I) of the Securities Act 115 U.S.C. § 77q(a)(l)J. .
26. Paragraphs 1 through 25 are hereby realleged and are incorporated
herein by reference.
27. From at least 1998 through the present, the defendants Martin, DM
Enterprises and DM Ventures, in the offer and sale of the securities described
herein, by the use ofmeans and instruments of transportation and communication in
interstate commerce and by use of the mails, directly and indirectly, employed
devices, schemes and artifices to defraud purchasers of such securities, all as more
particularly described above.
28. Defendants knowingly, intentionally, and/or recklessly engaged in the
aforementioned devices, schemes and artifices to defraud.
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b. that he was using funds rom later investors to pay retuns to
earlier investors; and
c. that he was using investor funds for his personal benefit.
COUNT I—FRAUD
Violations of Section 17(a)(1) of the Securities Actf!5 U.S.C S 77q(a)(l)1
26. Paragraphs 1 through 25 are hereby realleged and are incorporated
herein by reference.
27. From at least 1998 through the present, the defendants Martin, DM
Enterpises and DM Ventures, in the offer and sale of the secuities descibed
herein, by the use of means and instruments of transportation and communication in
interstate commerce and by use of the mails, directly and indirectly, employed
devices, schemes and artifices to deraud purchasers of such secuities, all as more
particularly descibed above.
28. Defendants knowingly, intentionally, and/or recklessly engaged in the
aforementioned devices, schemes and artifices to deraud.
9
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29. While engaging in the course of conduct described above, the
defendants acted with scienter, that is, with an intent to deceive, manipulate or
defraud or with a severe reckless disregard for the truth.
30. By reason of the foregoing, the defendants, directly and indirectly, have
violated and, unless enjoined, will continue to violate Section 17(a)(1) of the
Securities Act [15 U.S.C. § 77q(a)(1)].
COUNT II-FRAUD
Violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act[15 U.S.C. §§ 77g(a)(2) and 77g(a)(3)1
31. Paragraphs 1. through 25 are hereby realleged and are incorporated
herein by reference.
32. From at least 1998 through the present, the defendants Martin, DM
Enterprises and DM Ventures, in the offer and sale of the securities described
herein, by use ofmeans and instruments of transportation and communication in
interstate commerce and by use of the mails, directly and indirectly:
a. obtained money and property by means of untrue statements of
material fact and omissions to state material facts necessary in order to make the
10
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29. While engaging in the course of conduct descibed above, the
defendants acted with scienter, that is, with an intent to deceive, manipulate or
deraud or with a severe reckless disregard for the truth.
30. By reason of the foregoing, the defendants, directly and indirectly, have
violated and, unless enjoined, will continue to violate Section 17(a)(1) of the
Securities Act [15 U.S.C. § 77q(a)(l)].
COUNT II—FRAUD
Violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act[15 U.S.C.77q(aV2) and 77q(a)(3)l
31. Paragraphs 1. through 25 are hereby realleged and are incorporated
herein by reference.
32. From at least 1998 through the present, the defendants Martin, DM
Enterpises and DM Ventures, in the offer and sale of the secuities descibed
herein, by use of means and instruments of transportation and communication in
interstate commerce and by use of the mails, directly and indirectly:
a. obtained money and property by means of untrue statements of
mateial fact and omissions to state mateial facts necessary in order to make the
10
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statements made, in light of the circumstances under which they were made, not
misleading; and
b. engaged in transactions, practices and courses ofbusiness
which would and did operate as a fraud and deceit upon the purchasers of such
securities,
all as more particularly described above.
33. By reason of the foregoing, the defendants, directly and indirectly, have
violated and, unI~ss enjoined, will continue to violate Sections 17(a)(2) and 17(a)(3)
ofthe Securities Act [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)].
COUNT DI-FRAUD
Violations of Section 1O(b) of the Exchange Act 115 U.S.C. § 78j(b)]and Rule lOb-5 thereunder [17 C.F.R. § 240.10b-51
34. Paragraphs 1 through 25 are hereby realleged and are incorporated
herein by reference.
36. From at least 1998 through the present, the defendants .Martin, DM
Enterprises and DM Ventures, in connection with the purchase and sale of securities
described herein, by the use of the means and instrumentalities of interstate
commerce and by use of the mails, directly and indirectly:
11
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statements made, in light of the circumstances under which they were made, not
misleading; and
b. engaged in transactions, practices and courses of business
which would and did operate as a raud and deceit upon the purchasers of such
securities,
all as more particularly descibed above.
33. By reason of the foregoing, the defendants, directly and indirectly, have
violated and, unless enjoined, will continue to violate Sections 17(a)(2) and 17(a)(3)
of the Secuities Act [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)].
COUNT HI—FRAUD
Violations of Section 10(b) of the Exchange Act[15 U.S.C. § 78i(b)1and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-51
34. Paragraphs 1 through 25 are hereby realleged and are incorporated
herein by reference.
36. From at least 1998 through the present, the defendants Martin, DM
Enterprises and DM Ventures, in connection with the purchase and sale of secuities
descibed herein, by the use of the means and instrumentalities of interstate
commerce and by use of the mails, directly and indirectly:
11
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a. employed devices, schemes, and artifices to defraud;
b. made untrue statements of material facts and omitted to state
material facts necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; and
c. engaged in acts, practices, and courses ofbusiness which
would and did operate as a fraud and deceit upon the purchasers of such securities,
all as more particularly described above.
37. The defendants knowingly, intentionally, and/or recklessly engaged in
the aforementioned devices, schemes and artifices to defraud, made untrue
statements ofmaterial facts and omitted to state material facts, and engaged in
fraudulent acts, practices and courses ofbusiness. In engaging in such conduct, the
defendants acted with scienter, that is, with an intent to deceive, manipulate or
defraud or with a severe reckless disregard for the truth.
38. By reason ofthe foregoing, the defendants, directly and indirectly, have
violated and, unless enjoined, WIll continue to violate Section IO(b) of the Exchange
Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.1 Ob-5].
12
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a. employed devices, schemes, and artifices to deraud;
b. made untrue statements of mateial facts and omitted to state
mateial facts necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; and
c. engaged in acts, practices, and courses of business which
would and did operate as a raud and deceit upon the purchasers of such secuities,
all as more particularly descibed above.
37. The defendants knowingly, intentionally, and/or recklessly engaged in
the aforementioned devices, schemes and artifices to deraud, made untrue
statements of mateial facts and omitted to state mateial facts, and engaged in
raudulent acts, practices and courses of business. In engaging in such conduct, the
defendants acted with scienter, that is, with an intent to deceive, manipulate or
deraud or with a severe reckless disregard for the truth,
38. By reason of the foregoing, the defendants, directly and indirectly, have
violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange
Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
12
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COUNT IV-FRAUD
Violations of Section 206(1) of the Advisers Act .lIS U.S.C. § 80b-6(l)l
39. Paragraphs 1 through 25 are hereby realleged and are incorporated
herein by reference.
40. From at least as early 1998 through the present, defendant Martin,
acting as an investment adviser, using the mails and the means and instrumentalities
of interstate commerce, directly and indirectly, employed devices, schemes and
artifices to defraud one or more advisory clients and/or prospective clients.
41. Defendants knowingly, intentionally, and/or recklessly engaged in the
aforementioned devices, schemes and artifices to defraud. In engaging in such
conduct, defendant Martin acted with scienter, that is, with intent to deceive,
manipulate or defraud or with a severe reckless disregard for the truth.
42. By reason of the foregoing, defendant Martin, directly and indirectly,
has violated, and unless enjoined, will continue to violate Section 206(1) of the
Advisers Act [15 U.S.C. § 80b-6(1)].
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COUNT IV—FRAUD
Violations of Section 206(1) of the Advisers Actf!5 U.S.C. § 80b-6(l)l
39. Paragraphs 1 through 25 are hereby realleged and are incorporated
herein by reference.
40. From at least as early 1998 through the present, defendant Martin,
acting as an investment adviser, using the mails and the means and instrumentalities
of interstate commerce, directly and indirectly, employed devices, schemes and
artifices to deraud one or more advisory clients and/or prospective clients.
41. Defendants knowingly, intentionally, and/or recklessly engaged in the
aforementioned devices, schemes and artifices to deraud. In engaging in such
conduct, defendant Martin acted with scienter, that is, with intent to deceive,
manipulate or deraud or with a severe reckless disregard for the truth.
42. By reason of the foregoing, defendant Martin, directly and indirectly,
has violated, and unless enjoined, will continue to violate Section 206(1) of the
Advisers Act [15 U.S.C. § 80b-6(l)].
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Case 5:09-cv-00022-RLV-CH Document 1 Filed 03/06/2009 Page 14 of 17
COUNT V-FRAUD
Violations of Section 206(2) of the Advisers Act 115 U.S.C. § 80b-6(2ll
43. Paragraphs I through 25 are hereby realleged and are incorporated
herein by reference.
44. From at least as early as 1998 through the present, defendant Martin,
actmg as an investment adviser, by the use of the mails and the means and
instrumentalities of interstate commerce, directly and indirectly, engaged in
transactions, practices, and courses ofbusiness which would and did operate as a
fraud and deceit on one or more advisory clients and/or prospective clients.
45. By reason of the foregoing, defendant Martin, directly and indirectly,
has violated and, unless enjoined, will continue to violateand aid and abet
violations ofSection 206(2) of the Advisers Act [15 U.S.C. § 80b-6(2)].
PRAYER FOR RELIEF
WHEREFORE, PlaintiffCommission respectfully prays for:
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COUNT V—FRAUD
Violations of Section 206(2) of the Advisers Act[15 U.S.C. $ 80b-6(2)1
43. Paragraphs 1 through 25 are hereby realleged and are incorporated
herein by reference.
44. From at least as early as 1998 through the present, defendant Martin,
acting as an investment adviser, by the use of the mails and the means and
instrumentalities of interstate commerce, directly and indirectly, engaged in
transactions, practices, and courses of business which would and did operate as a
raud and deceit on one or more advisory clients and/or prospective clients.
45. By reason of the foregoing, defendant Martin, directly and indirectly,
has violated and, unless enjoined, will continue to violate and aid and abet
violations of Section 206(2) of the Advisers Act [15 U.S.C. § 80b-6(2)].
PRAYER FOR RELIEF
WHEREFORE, Plaintiff Commission respectfully prays for:
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Case 5:09-cv-00022-RLV-CH Document 1 Filed 03/06/2009 Page 15 of 17
I.
Findings of Fact and Conclusions of Law pursuant to Rule 52 of the Federal
Rules of Civil Procedure, finding that the defendants named herein committed the
violations alleged herein.
II.
A temporary restraining order, preliminary and permanent injunctions
enjoining the defendants, their officers, agents, servants, employees, and attorneys,
and those persons in active concert or participation with them who receive actual
notice ofthe order of injunction, by pers.onal service or otherwise, and each of them,
from violating, directly or indirectly, Section 17(a) of the Securities Act [15 U.S.C.
77q(a)], Section IO(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule lOb-5 [17
C.F.R. 240.l0b-5] promulgated thereunder, and enjoining Martin from violating
Sections 206(1) and 206(2) ofthe Advisers Act [15 U.S.C. 80b-6(1) and 80b-6(2)].
III.
An order requiring disgorgement by the defendants of all ill-gotten gains or
unjust enrichment with prejudgment interest, to effect the remedial purposes of the
federal securities laws.
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L
Findings of Fact and Conclusions of Law pursuant to Rule 52 of the Federal
Rules of Civil Procedure, finding that the defendants named herein committed the
violations alleged herein.
II.
A temporary restraining order, preliminary and permanent injunctions
enjoining the defendants, their oicers, agents, servants, employees, and attoneys,
and those persons in active concert or participation with them who receive actual
notice of the order of injunction, by personal service or otherwise, and each of them,
rom violating, directly or indirectly, Section 17(a) of the Securities Act [15 U.S.C.
77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17
C.F.R. 240.10b-5] promulgated thereunder, and enjoining Martin rom violating
Sections 206(1) and 206(2) of the Advisers Act [15 U.S.C. 80b-6(l) and 80b-6(2)].
m.
An order requiring disgorgement by the defendants of all ill-gotten gains or
unjust enrichment with prejudgment interest, to effect the remedial purposes of the
federal securities laws.
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Case 5:09-cv-00022-RLV-CH Document 1 Filed 03/06/2009 Page 16 of 17
IV.
An order pursuant to Section 20(d) of the Securities Act [15 U.S.C. 77t(d)],
Section 21(d)(3) of the Exchange Act [15 U.S.C. 78u(d)(3)] and, as against
defendant Martin, Section 209(e) of the Advisers Act [15 U.S.C. 80b-9(e)] imposing.
civil penalties against the defendants.
V.
Such other and further relief as this Court may deem just, equitable, and
appropriate in cotmection with the enforcement of the federal securities laws and for
the protection of investors..
Dated: March 5, 2009
Respectfully submitted,
tvA (IlLWilliam P. Hicks Regional Trial Counsel Georgia Bar No. 351649 E-mail: [email protected]
(AC;7~ Alex Rue Senior Trial Counsel Georgia Bar No. 618950 E-mail: [email protected]
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Case 5:09-cv-00022-RLV-CH Document 1 Filed 03/06/2009 Page 16 of 17
IV.
An order pursuant to Section 20(d) of the Securities Act [15 U.S.C. 77t(d)],
Section 21 (d)(3) of the Exchange Act [15 U.S.C. 78u(d)(3)] and, as against
defendant Martin, Section 209(e) of the Advisers Act [15 U.S.C. 80b-9(e)] imposing
civil penalties against the defendants.
V.
Such other and further relief as this Court may deem just, equitable, and
appropiate in connection with the enforcement of the federal securities laws and for
the protection of investors.
Dated: March 5,2009
Respectfully submitted,
/
i<dZWilliam P. HicksRegional Trial CounselGeorgia Bar No. 351649E-mail: [email protected](404) 842-7675
Alex RueSenior Trial CounselGeorgia Bar No. 618950E-mail: Ruea(%sec.gov
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Case 5:09-cv-00022-RLV-CH Document 1 Filed 03/06/2009 Page 17 of 17
Tel: (404) 842-7616
Counsel for Plaintiff Securities and Exchange Commission 3475 Lenox Road, N.E. Suite 500 Atlanta, Georgia 30326-1232 Fax: (404) 842-7679
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Tel: (404) 842-7616
Counsel for PlaintiffSecuities and ExchangeCommission3475 Lenox Road, N.E,Suite 500Atlanta, Georgia 30326-1232Fax: (404) 842-7679
17
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