SEC Action Against
Prime Bank Scam Investment Fraud Scheme Pertaining to TLC Investments
Offering High-Yield Instruments
Did The Scammers Get Scammed?
10/00 - The SEC issued a temporary restraining
order halting an ongoing multimillion dollar securities fraud by Ernest
F. Cossey and Gary W. Williams, entities
controlled by them, and Thomas G. Cloud and his
company, who were using the Internet to sell the fraudulent securities.
They allege that since 1998, TLC Investments & Trade
Co., TLC America, Inc. dba Brea Development
Company, TLC Brokerage, Inc., dba TLC Marketing,
TLC Development, Inc, and TLC Real Properties RLLP-1 have
raised at least $151 million from more than 1,800 investors,
mostly senior citizens, purportedly for the purpose of investing
in distressed real estate. Investors were promised a safe,
liquid investment that would pay guaranteed returns of 8 to 15%.
In fact, Cossey, Williams and the TLC Entities were operating
an undisclosed Ponzi scheme using client funds to make interest
payments. In addition, Cossey and Williams have misused at least
$28.3 million in investor funds to pay other investors, invest
in a prime bank scheme, buy racehorses and wire funds overseas. The
Receiver's initial status report indicates what remains is only
approximately $2.5 million in cash and real estate purchased and
developed at a cost of approximately $61 million.
Cloud and his company, Cloud & Associates Consulting,
Inc., misrepresented, among other things, that they
had received no commissions when, in fact, they received at least
The SEC is seeking a final judgment enjoining them from future
violations, order them to disgorge all ill-gotten gains, and assess
civil penalties against them.
08/01 - Williams is required to pay $248,145 in disgorgement and
Cossey is required to pay $10,690,697 in disgorgement, $271, 921.53
in prejudgment interest and $110,000 in civil penalties (totaling