Securities Law Prof Blog

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

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Tuesday, February 8, 2011

SEC Charges Two California Residents and Their Attorney with Prime Bank Fraud

The SEC today charged Curtis Peterson and Eric Maher, two California residents, for operating a fraudulent, high-yield, “prime bank” investment scheme that defrauded investors out of more than $3 million. The SEC also charged Ronald White, a California-based attorney, for aiding in the scheme.

Prime bank schemes lure investors with false promises of enormous profits and an exclusive opportunity to participate in an international investing program. The SEC alleges that Peterson and Maher solicited investors nationwide in late 2009. Promising exorbitant returns of as much as 1000 percent per month, Peterson and Maher falsely told investors that their investments would be pooled to purchase international bank instruments that would then be “leased” to “top 25” international banks willing to pay substantial fees for the right to place the instruments on their balance sheets for a brief period of time.

According to the SEC’s complaint, Peterson and Maher were aided and abetted by White, who controlled the trust account into which investors were instructed to wire their monies. White then converted those funds into cashier’s checks payable to Peterson, thus allowing Peterson to dissipate investor funds for undisclosed purposes.

The SEC alleges that about 20 percent of investor funds were wired to a bank in Hungary, but none of that money was ever used to purchase any international bank instruments. Peterson used the remaining 80 percent of investor funds to pay his personal expenses and to pay third parties with no legitimate claim to the investor funds.

The seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest thereon, and financial penalties, against each of them.

http://lawprofessors.typepad.com/securities/2011/02/sec-charges-two-california-residents-and-their-attorney-with-prime-bank-fraud.html

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