Penny Stock Fraud Proceeds to Be Used for Investor Education
Funds Remaining in Receivership to Promote Financial Literacy
WASHINGTON, May 30 /PRNewswire/ -- In an ironic twist, the nonprofit
Investor Protection Trust (IPT) has been awarded by a federal court in
Illinois more than $100,000, the remainder of the receivership fund in the
long-running penny stock fraud case, Securities and Exchange Commission v.
Arnold Kimmes, et al. The funds will be used to support such IPT activities
as its two-year-old Financial Literacy 2001 high school program
(http://www.fl2001.org ) and the popular Web-based Investing Online Resource
Center (http://www.investingonline.org ).
The SEC brought the widely publicized case on August 3, 1989 against 14
individuals and two corporations that were accused of a massive securities
fraud operation in the marketing and sale of low-priced penny stocks in "blind
pool" companies. The individuals and corporations involved in the SEC action
were tied to the now defunct Denver-based penny stock firm Blinder Robinson &
Co., Inc., which was nicknamed "Blind 'em and Rob 'em" by some financial
publications.
"As a securities regulator, I appreciate seeing funds that have been taken
from investors by a penny stock firm now being used for good: educating other
investors," said IPT Trustee Craig Goettsch, who also serves as superintendent
of securities for the Iowa Securities Bureau. "This is a far better way to
handle unclaimed funds than to turn them back to the individuals who stole
them in the first place. The Investor Protection Trust is intently interested
in working with any attorney or court that can direct additional unclaimed
funds, penalties, judgments, and other monies to our important investor
education work."
The order transferring funds to IPT was signed by Judge Milton I. Shadur
of the U.S. District Court for the Northern District of Illinois Eastern
Division. Judge Shadur handled the SEC v. Arnold Kimmes, et. al., from 1989
through its conclusion in the year 2000. The transfer of funds to the
Investor Protection Trust was recommended by attorney Steven S. Scholes, the
receiver in the case. Scholes is a partner in the Trial Department of
McDermott, Will & Emery in Chicago.
Scholes said: "We at McDermott, Will & Emery were very pleased to recover
over $2,300,000 on behalf of the Kimmes receivership estate, including the
recovery of a Florida vacation home in the name of Mr. Quinn's common-law
wife. Over $1.5 million of that was distributed to the victims of the
securities fraud. This was an excellent result in a very difficult and hotly
contested receivership. These results are attributable in substantial part to
the aggressive efforts of the Chicago Office of the Securities and Exchange
Commission to right the very difficult situation."
The long-running Kimmes case suffered delays in the early 1990s as one of
the principals, Thomas Quinn, was held in custody at the Maison d'Arret de la
Sante prison in France. Of the $2.3 million originally involved in the case,
a total of $104,876.52 remained at the end of 2000 and has now been
transferred to IPT.
ABOUT IPT
Established in 1993, the Investor Protection Trust is a major source of
non-commercial investor education. IPT was chartered to fulfill two major
functions: (1) to serve as an independent source of investor education
materials and (2) to assist in the prosecution of securities fraud. The
Trust conducts research to determine gaps in investor knowledge and also
produces top-quality investor education materials that are made available to
state securities agencies, civic groups, libraries, schools, adult education
classes, and individuals.
The nonprofit Investor Protection Trust is perhaps best known for its
leadership role in Financial Literacy 2001 (http://www.fl2001.org ), which is
a joint undertaking with the National Association of Securities Dealers
(NASD), the North American Securities Administrators Association (NASAA) and
the National Institute for Consumer Education. FL2001's first high school
teaching guide, The Basics of Saving and Investing, has been shipped at no
cost to over 27,000 targeted teachers in all 50 states. As of March 31, 2001,
an estimated 7,000 teachers had participated in 259 FL2001 training sessions
held in 47 states. A new teaching guide for high school economics teachers,
Personal Finance for the Economics Classroom, is now in production and will be
delivered during 2001 at no cost to more than 11,000 teachers.
Launched on December 15, 1999 with the assistance of over 30 online
brokerage firms, the Investing Online Resource, at
investingonline.org , logged more than 10 million hits in its first
year. Initially a joint project of Washington State Department of Financial
Institutions and the Investor Protection Trust, IORC now also involves NASAA
as a full partner. IORC is now being substantially upgraded and is due to be
relaunched in the summer of 2001.
Past IPT projects have included:
* "What Every Investor Needs to Know: How to Prevent and Resolve Problems
with Financial Professional." This 22-minute videotape and related
brochure and designed to help educate investors about dealing with
investment professionals and how to resolve disputes, should they
arise. Tens of thousands of copies of this high-quality,
professionally produced package have been distributed to schools, civic
groups, libraries, and other outlets in all 50 states.
* Television and radio public service announcements (PSAs). A total of
44 states participated in this first major project of the Trust, which
involved state-customized packages of television and radio public
service announcements. This highly sophisticated, state-customized
public education effort was designed to alert typical consumers, and
particularly older Americans, about the dangers of investment fraud and
how to avoid it. These award-winning PSAs aired over 80,000 times in
the 44 participating states. If state securities agencies had paid for
the air time accounted for by the PSAs, the cost would have been over
$4.43 million, more than 40 times what it cost IPT to produce,
customize, and distribute the PSAs.
In addition to contributions directed to IPT from the courts, it also
seeks funds from corporations, foundations and individuals. Information about
how financial support can be provided to the Investor Protection Trust is
available from IPT Project Director Heather Greenwood at 703-276-3259.
FOR MORE INFORMATION, CONTACT: Scott Stapf of The Hastings Group,
703-276-1116, ext. 256, or sstapf@hastingsgroup.com, for the Investor
Protection Trust.
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SOURCE Investor Protection Trust
-0- 05/30/2001
/CONTACT: Scott Stapf of The Hastings Group, 703-276-1116, ext. 256, or
sstapf@hastingsgroup.com, for the Investor Protection Trust/
/Web site: fl2001.org
investingonline.org
CO: Investor Protection Trust; Securities and Exchange Commission; Blinder
Robinson & Co., Inc.
ST: District of Columbia, Colorado
IN: FIN EDU
SU: LAW NPT
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