Craig Freeman, William Lashbrook, and Robert Sewell
SECURITIES EXCHANGE ACT OF 1934
Release No. 41739 / August 13, 1999
ADMINISTRATIVE PROCEEDING
File No. 3-9869
| In the Matter of CRAIG FREEMAN, |
ORDER MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS |
I.
On April 9, 1999, the Securities and Exchange Commission (Commission) deemed it appropriate and in the public interest to institute public administrative proceedings against Craig Freeman, William Lashbrook (Lashbrook), and Robert Sewell (Sewell), pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 (Exchange Act).
In response to the institution of these administrative proceedings, Craig Freeman, Lashbrook, and Sewell have submitted Offers of Settlement which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to jurisdiction, the facts set forth in paragraphs II.A. and II.D. below, which are admitted by Craig Freeman, the facts set forth in II.B. and II.E. below, which are admitted by Lashbrook, and the facts set forth in paragraphs II.C. and II.F. below, which are admitted by Sewell, Craig Freeman, Lashbrook, and Sewell consent to the entry of this Order Making Findings and Imposing Remedial Sanctions (Order).
II.
On the basis of this Order and the Offers of Settlement submitted by Craig Freeman, Lashbrook, and Sewell, the Commission makes the following findings:
A. Craig Freeman, age 45, resides in San Carlos, California. Craig Freeman was at all relevant times the Vice President of Freeman Financial Services Corp. (FFSC). FFSC was a broker-dealer registered with the Commission from 1986 until February 1997 with its principal place of business in San Mateo, California.
B. Lashbrook, age 62, resides in California. Lashbrook was at all relevant times a registered representative associated with FFSC. Through December 1, 1995, Lashbrook was also associated with Wellington Securities, Inc. (Wellington). Wellington is a broker-dealer registered with the Commission with its principal place of business in San Francisco, California.
C. Sewell, age 41, resides in St. Charles, Missouri. At all relevant times, Sewell was acting as a broker as defined by Section 3(a)(4) of the Exchange Act.
D. On June 14, 1996, Craig Freeman was criminally convicted, pursuant to his guilty plea, of one count of money laundering (18 U.S.C. § 1957) in the case of United States v. James G. Freeman, et al., No. S1-4:95 CR 186 (JCH) (E.D. Mo. 1996). Craig Freeman was sentenced to 2 years in prison and was ordered to make restitution of $1800 to investors, in addition to any interest he had in the $13,822,451.84 frozen and seized by the government in connection with the investigation of the case plus all earned interest.
E. On June 14, 1996, Lashbrook was criminally convicted, pursuant to his guilty plea, of one count of money laundering (18 U.S.C. § 1957) and one count of wire fraud (18 U.S.C. § 1343) in the case of United States v. James G. Freeman, et al., No. S1-4:95 CR 186 (JCH) (E.D. Mo. 1996). Lashbrook was sentenced to 37 months in prison and two years supervised release and was ordered to make partial restitution of $9000 to investors, in addition to any interest he had in the $13,822,451.84 frozen and seized by the government in connection with the investigation of the case plus all earned interest.
F. On June 27, 1996, Sewell was criminally convicted, pursuant to his guilty plea, of one count of mail fraud (18 U.S.C. § 1341) in the case of United States v. James G. Freeman, et al., No. S1-4:95 CR 186 (JCH) (E.D. Mo. 1996). Sewell was sentenced to 3 years probation and was ordered to make restitution of $1800 to investors, in addition to any interest he had in the $13,822,451.84 frozen and seized by the government in connection with the investigation of the case plus all earned interest.
G. The criminal indictment upon which Craig Freeman's, Lashbrook's, and Sewell's criminal convictions were based alleged that beginning on or about June 1, 1994, Craig Freeman, Lashbrook, and Sewell participated with James G. Freeman (Freeman) and others in the marketing and sales of approximately $24 million in unregistered promissory notes (the Freeman notes). The indictment further alleged that in connection with the offer and sale of the Freeman notes, Craig Freeman, Lashbrook, and Sewell, directly and indirectly, misrepresented and omitted to state material facts regarding, among other things, the nature of the investments, the risks involved, the use of investor proceeds, the commissions to be paid, and the returns on the investment. The indictment also alleged that among other things, Craig Freeman, Lashbrook, and Sewell, directly and indirectly, represented to investors that their funds would be invested in various European trading programs, when in fact, Freeman at all times remained in control of such funds, which were used to make "interest" payments to investors and to pay "commissions" to marketing agents. The indictment further alleged that among other things, Craig Freeman participated in a wire transfer of approximately $150,079.60 of investors' monies to the account of one of the marketing agents, which funds were derived from mail and wire fraud. The indictment further alleged that among other things, Lashbrook participated in a facsimile transmission detailing and confirming the payment of approximately $214,608.53 of investor funds to another marketing agent as commissions, and received via a check payable to an account controlled by him approximately $150,000 of investor funds as a "commission and advance." The indictment further alleged that among other things, Sewell together with others, knowingly and willfully placed in the mail a letter dated October 5, 1994, to Steve Keller, in Casselberry, Florida, which referenced the Freeman notes and stated that "all bank notes with which Freeman and Associates are involved are backed 100% by Letters of Credit from the major banks, guaranteeing the safety of your clients money at all times."
III.
In view of the foregoing, it is in the public interest to impose the sanctions specified in the Offers of Settlement.
Accordingly, IT IS HEREBY ORDERED that:
Craig Freeman be, and hereby is, barred from association with any broker or dealer.
William Lashbrook be, and hereby is, barred from association with any broker or dealer.
Robert Sewell be, and hereby is, barred from association with any broker or dealer.
For the Commission, by its Secretary, pursuant to delegated authority.
Jonathan G. Katz
Secretary