Thursday, March 27, 2008
The SEC filed a complaint in the United States District Court for the Northern District of Texas against Gary L. McDuff, Gary L. Lancaster, and Robert T. Reese, for their roles in the fraudulent and unregistered offer and sale of interests in the Lancorp Financial Fund Business Trust (Lancorp Fund). The SEC alleges that between at least March 2003 and July 2005, Reese, McDuff and Lancaster offered and sold interests in the Lancorp Fund with false promises concerning the permissible investments, the payment of commissions, and the payment of management fees. Instead, the Complaint alleges that the defendants directed the Lancorp Fund to invest over $9 million in a fraudulent, high-yield Ponzi scheme, paid McDuff and Reese over $300,000 in undisclosed commissions, and paid Lancaster a management fee well in excess of that allowed by the PPM.
Without admitting or denying the allegations set forth in the Complaint, defendants Lancaster and Reese have consented to the entry of a final judgment permanently enjoining them from engaging in securities violations Lancaster has agreed to an order finding him liable for disgorgement of $336,229, plus prejudgment interest of $56,156.39, and Reese has agreed to an order finding him liable for disgorgement of $26,792, plus prejudgment interest of $4,474.75. However, payment of those amounts will be waived, and no civil penalties imposed, based on their respective sworn statements of financial condition and other documents. The Commission's action against McDuff is continuing.