From today's SEC Digest:
COMMISSION OBTAINS DEFAULT JUDGMENT AS TO DEFENDANT LARRY SMITH
The Commission announced today that the Honorable Richard W. Story, United States District Court Judge for the Northern District of Georgia, entered a Default Judgment As To Defendant Larry G. Smith (Smith) restraining and enjoining him from further violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Court also ordered disgorgement against Smith in the amount of $1,367,235 with prejudgment interest, and imposed a civil penalty of $110,000.
The Commission's complaint, filed on March 16, 1998, alleged that beginning in April, 1995, International Heritage, Inc. (IHI), a North Carolina corporation, through Smith and others, solicited individuals throughout the United States to invest in a pyramid scheme. IHI raised more than $150 million from over 155,000 investors. The complaint alleges that interests in the program, which are described by IHI as business centers, are securities. In addition to selling interests in the pyramid scheme, between July 17, 1997 and November 1, 1997, the defendants sold $5 million in notes convertible into shares of IHI common stock. The defendants knowingly misrepresented IHI's financial condition to investors and concealed the fact that IHI was operating a pyramid scheme. Smith was a founder and director of IHI. [SEC v. International Heritage, Inc., Stanley H. Van Etten, Claude W. Savage, Larry G. Smith, and International Heritage, Incorporated, Civil Action No. 1:98-0803-CV-RWS, NDGA] (LR-16407)
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