Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Monday, April 9, 2007

SEC Charges in Unregistered Securities over the Internet

The SEC announced today that it filed a complaint on April 5 in the United States District Court for the Northern District of  Georgia to halt the sale of unregistered securities by Global  Online  Direct, Inc., a Nevada corporation  headquartered  in  Union,  Ore.,  and  its principals, Bryant E. Behrmann of Las Vegas, Nev., and Larry "Buck" E. Hunter of La Grande, Ore.  The SEC charges that, since at least  October 2005, Global, Behrmann  and  Hunter  have  conducted  an  unregistered offering of securities through the provision of interests in  Global's "Secured Profit Inventory Program" (SPIP). The complaint alleges  that Global, Behrmann and Hunter primarily promoted Global's  SPIP  through the internet and solicited investors to "loan" Global funds for a term of one-year in exchange for  promised  daily  interest  payments.  The greater the amount of the purported loan,  the  greater  the  interest    payments Global offered to investors. Global initially  offered  daily interest rates to investors of 0.20% per day for amounts up  to  $100,  which it referred to as the "Start-Up" plan, and for investors willing    to invest $10,000 or more, they could  participate  in  Global's  "Big Dawgs Club" and receive 1.00% daily interest. Global  further  offered investors the ability to lock-up access to their interest payments for    one-year in exchange  for  100%  daily  compounding  on  all  interest payments. Global therefore offered investors effective annual rates of return of more than 1,100%. In order to generate revenue sufficient to pay investors their promised returns, Global claimed to pool  investor proceeds to purchase discounted and low-cost inventory,  which  Global then purported to resell  through  various  online auction  websites, including Ebay and Yahoo! Auctions, as well as through  flea  markets, street sales and retail storefronts. From October 2005  through  March 2007, the complaint  alleges  that  Global  raised  approximately  $15 million from more than 8,000 investors.

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