Elfindepan

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08/00 - The SEC filed a fraud case against Elfindepan, S.A., Southern Financial Group, Tracy Calvin Dunlap, Jr. and Barry Lowe alleging that from as early as March 1999 to the present, they defrauded investors nationwide of at least $13.5 million in an apparent Ponzi/Prime Bank scheme involving the unregistered sale of securities of Elfindepan, a supposed Costa Rican financial company with offices in Greensboro, North Carolina.

They solicited investors through a website, through organized investor meetings, and through personal contacts by individuals acting as agents or "distributors". Investors were encouraged to take money from their retirement accounts but not told that it was going into non-custodial accounts.

Southern Financial Group was a business trust organized by Mr. Dunlap to obtain these rollovers from IRA accounts but as it was not a registered custodian of IRAs, the rollovers will constitute a taxable event in addition to the loss of principal.

They promised investors highly favorable returns (as much as 40-50% per month), without any reasonable basis for such claims, and falsely stated that the investments were secure, including false claims that Elfindepan investments were associated with and guaranteed by the International Monetary Fund and the World Bank, and had been in business for 23 years, when in fact the company was less than a year and a half old.

While they claimed Elfindepan provided loans to businesses and individuals, and engaged in factoring for companies with large receivables and cash-flow problems, they failed to disclose any of the financial information or risks inherent in such activities and therefore in the investment, even if it were true.

Investors further had the opportunity to obtain debit cards through an account at Bantec, a bank organized and existing under the laws of Costa Rica. Each of the investors in Elfindepan purchasing the debit cards, also received a share certificate in Elfindepan. These bearer shares were not legal under the laws of Costa Rica, nor were they legal under the laws of the United States. As such, these shares have no value.

Investors were not told that proceeds from later investors was being used to pay early investors and distributors, in classic Ponzi scheme fashion; that Dunlap had complete control of Elfindepan's finances which he was simply paying out to his family members, and to support his personal living expenses.

Dunlap, allegedly acting through Strategic Asset Funds, S.A., incorporated by Dunlap in Panama in May 2000 but with a business address in North Carolina, perpetrated over the Internet a variation of his Elfindepan scam which guaranteed returns up to 30% monthly but actually misappropriated over $6.5 million dollars from more than 860 investors across the United States.

On March 15, 2001, Elfindepan, Southern, Dunlap were considered to be in civil contempt of court based on their refusal to obey court orders requiring them to produce documents, and account for and repatriate investor funds. Though given five more days before a penalty was assessed, he was incarcerated when he still refused to comply based on the assertion of his personal Fifth Amendment privilege against self-incrimination.

Recognizing that artificial entities like Elfindepan and Southern Financial Group have no privilege against self-incrimination, the U.S. Court of Appeals ruled that Dunlap could not assert his personal privilege to avoid his representative obligation to cause Elfindepan and Southern Financial Group to comply with the U.S. District Court's orders and so he remained incarcerated.

An amended complaint alleges that James L. McCall, age 67, a retired chiropractor and self-styled "tax consultant" from Lafayette, Indiana, acting on his own and with Dunlap and Elfindepan, also misappropriated millions of dollars from investors.

It also alleges that Edmund Menden, age 66, an insurance salesman and registered securities broker, his son Michael Menden, age 42, a former insurance salesman and network/multi-level marketing salesman, and Michael Zieglmeier, age 50, Michael Menden's business partner in their network/multi-level marketing activities, all three from the Minneapolis, Minnesota area, sold the fraudulent investment products of McCall, Dunlap and Elfindepan.

The amended complaint also alleges that relief defendants C.R.C.C., a limited liability company registered in Wyoming, with its office in San Diego, California, and Patrick Wilson, the control person of C.R.C.C., based in Georgia, received $7 million in proceeds of Dunlap and Elfindepan's fraudulent activities and will be unjustly enriched at the expense of innocent investors if allowed to keep these funds.

Related Parties:

Elfindepan, S.A., Southern Financial Group, Tracy Calvin Dunlap, Jr., Katherine M. Kennedy, James L. McCall, Tracy Calvin Dunlap, III, Trina Dunlap, Deana Dunlap, Nina Dunlap, Tonda Mesa, S.A., Strategic Asset Funds, S.A., Consultorias Okama, S.A., Global Asset Management, S.A., International Asset Management Corporation, S.A., HDKY Corp., Panatos, Barry W. Lowe, Edmund Menden, Michael Menden, Michael Zieglmeier, CRCC, LLC , Patrick Wilson, Acorn Enterprise Group, Acorn Group Limited, Acorn Enterprises Limited, Acorn Investment Enterprises, Global Asset Management Group, Georgia Trust, HISway Financial Associates, HISway Financial Inc., HISway International Ministries, Spirit Enterprises, Club Diplomatique International, The Disciple’s Purse, Lulatica Ryl, S.A., Elfindepan International, S.A., Corporation Nenelule S.A., Corporation Maxima S.A., Administradora de Bienes Zulu S.A., Las Bolsas de los Discipulos S.A., Inversiones Onewa S.A., Servicios Oglik S.A.,

Distributors:

CCI, S.A., Empire, Terragraph, JDKY, Aegis, Obesity, CDKY, DBI, Inc., Robles, IS, L.L.P., FDKY, Benson, GDKY, FBCY, Carivest (Peter Harrison & Candy Harrison), Dove Training (Rana Vijay), Ed Brock (d/b/a International Benefits), Paul Brodhagen, W. Paul Davis, Robert Ector (d/b/a Income Solutions RLLP), Carol Hinson (d/b/a Carolina Financial Services), Gary Jenkins, Carl McCall, Edmund Menden (d/b/a Menden Insurance Agency), Mike Menden (d/b/a Big Planet), James Miller, Karen Schipani-Tedrahn, Art Sutton (Sutton & Associates), Leslie Thompson, Michael J. Zieglemeier (Big Planet), Gerry Thorne (a/k/a William G. Thorne), Tom Dyar, Richard Dyar, Bobby Eubanks and Donnis Short (d/b/a DBI, Inc.)

Elfindepan Court Ruling

 

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