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Univ. of Toledo College of Law

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Wednesday, December 19, 2007

SEC Obtains Order in Alleged $250 Million Offering Fraud

The SEC obtained a partial final judgment and order for permanent injunction and other relief against Edward P. May ("May") and E-M Management Company LLC ("E-M"), in connection with an alleged $250 million offering fraud that allegedly involved phony Las Vegas casino and resort telecommunication deals and may have involved as many as 1,200 investors, many of whom are senior citizens. May and E-M consented to the Order without admitting or denying the allegations of the SEC's complaint. The Order indicates that the Court will determine the specific amounts, if any, of disgorgement and civil penalties against May and E-M at a separate hearing upon notice and motion by the SEC.

The SECalleged that May, through E-M, raised as much as $250 million between 1998 and July 2007 from investors living in Michigan, California, Florida, Illinois, New York, Ohio and New Jersey. According to the allegations of the complaint, May and E-M sold securities in the form of interests in limited liability companies ("LLCs"), and told investors that these LLCs had been contracted to install and provide telecommunications equipment and services to major Las Vegas hotel chains and casinos.The complaint goes on to allege that May and E-M, both orally and in writing, promised returns in the form of monthly payments to investors for a period as long as 12 to 14 years, and "guaranteed" that investors, at a minimum, would receive the promised payments for approximately the first 20 to 24 months after they invested.  The SEC's complaint further alleged that, in reality, the LLCs did not have any telecommunication contracts with the establishments identified in offering materials provided by May and E-M.

http://lawprofessors.typepad.com/securities/2007/12/sec-obtains-ord.html

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