SEC v. Francis E. Wilde, Steven E. Woods, Mark A. Gelazela, Bruce H. Haglund, Matrix Holdings LLC, BMW Majestic LLC, IDLYC Holdings Trust LLC, and IDLYC Holdings Trust, et al., Case No. SACV 11-315 DOC (AJWx ) (C.D. Cal.).  On January 15, 2013, the SEC announced it obtained summary judgment against all defendants and relief defendants in a fraud case alleging “prime bank” schemes in which investors lost more than $11 million.  The SEC alleged that Wilde conducted two fraudulent investment schemes.  The first scheme involved Wilde getting a U.S. Treasury bond with a market value of nearly $5 million from an investor by promising excessive returns.  Wilde used the bond to secure a line of credit used to pay personal expenses, investors, creditors and debt holders of his public company.  According to the SEC, the second scheme involved a “bank guarantee funding” program in which the defendants obtained $6.3 million from investors to secure financial instruments.  Rather than secure any financial instruments, however, Wilde took the investors’ money in the form of undisclosed fees.

The court found that Wilde, Woods, Gelazela, Matrix, BMW Majestic, IDLYC, and IDLYC LLC violated Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5 thereunder.  The court also found that Woods and Gelazela violated Section 15(a) of the Exchange Act, and that Haglund and Wilde aided and abetted the other defendants’ violations of Section 10(b) and Rule 10b-5.  The judgment permanently enjoins defendants against future violations of the federal securities laws.  In addition, Wilde and Matrix must pay disgorgement of $12,106,810.75 plus pre-judgment interest, for a total of $13,589,505.56 and a civil penalty equal to the amount of disgorgement plus prejudgment interest.  Woods, Gelazela, Haglund, BMW Majestic, IDLYC and IDLYC LLC must pay disgorgement of $6,195,908 plus pre-judgment interest, for a total of $6,744,083.49 and a civil penalty equal to the amount of disgorgement plus prejudgment interest.  The judgment also permanently bars Wilde and Haglund from acting as an officer or director of a public company.  Lastly, the court ordered several relief defendants, all of which are related to defendants, to disgorge a total of $2,153,000 in ill-gotten gains that they received.