Taft Womack and Frank Gaines

SECURITIES EXCHANGE ACT OF 1934
Release No. 42261 / December 21, 1999

ADMINISTRATIVE PROCEEDING
File No. 3-10064

The Securities and Exchange Commission (Commission) initiated this proceeding on September 30, 1999, by an Order Instituting Proceedings (OIP), pursuant to Section 15(b) the Securities Exchange Act of 1934 (Exchange Act).

The OIP was served on Respondent Taft Womack (Womack) on October 5, 1999. Respondent Frank Gaines (Gaines) was served on November 5, 1999. By the terms of the OIP and Rule 220(b) of the Commission's Rules of Practice, 17 C.F.R. § 201.220(b), Respondents' Answers were due twenty days after service of the OIP. To date, neither has filed an Answer or other responsive pleading in this matter.

Pursuant to Rules 155(a)(2) and 220(f), a respondent that fails to file an Answer to the OIP or otherwise defend the proceeding may be deemed to be in default. The administrative law judge may determine the proceeding against the respondent upon consideration of the record, including the OIP, the allegations of which may be deemed to be true. On November 2, I ordered Womack to show cause, within fifteen days, why he should not be held in default and why I should not impose the remedies the Division of Enforcement (Division) requested. No Answer or other responsive pleadings were received from Womack. On December 1, 1999, the Division filed a Motion for Default against Gaines. As with Womack, no Answer or other responsive pleadings were received from Gaines.

Womack and Gaines are in default within the meaning of Rule 155(a). Both failed to answer the OIP and have not otherwise defended the proceeding. See Rules 155(a)(2) and 220(f). Accordingly, I find that the allegations in the OIP are true:

A. During the period from at least 1994 through 1997, Gaines was not registered with the Commission as a broker or dealer. During all relevant times, Gaines effected transactions in, or induced or attempted to induce the purchase or sale of securities at a time when he was not registered with the Commission as a broker or dealer pursuant to the Exchange Act.

B. During the period from at least 1994 through 1997, Womack was not registered with the Commission as a broker or dealer. During all relevant times, Womack effected transactions in, or induced or attempted to induce the purchase or sale of securities at a time when he was not registered with the Commission as a broker or dealer pursuant to the Exchange Act.

C. On July 27, 1999, in the case of SEC v. Shane T. Vaessen, et al., No. 98-1964-CIV-T-26F (M.D. Fla.), the United States District Court for the Middle District of Florida entered a final judgment of permanent injunction, by default, against Gaines and Womack, enjoining Gaines and Womack from violating Sections 5(a), 5(c), 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. The Court found that Gaines and Womack had failed to answer the complaint filed by the Commission against them.

D. The Commission's complaint, filed on September 24, 1998, alleged, among other things, as follows:

1. Gaines, Womack, and others offered and sold $3.3 million of International Capital Corporation 2000 ("ICC 2000") investment contracts from at least 1994 through 1997, made misrepresentations of material fact, and failed to disclose material information concerning the use of investor funds and the risks associated with the investment.

2. Neither Gaines nor Womack were registered with the Commission pursuant to Section 15(a) of the Exchange Act while they were offering and selling, directly and indirectly, investment contracts offered by ICC 2000.

3. Gaines and Womack represented to investors that their funds were pooled in bank accounts and offered to "Major Brokerage Companies" as collateral to purchase and sell Guaranteed Insurance Contracts ("GICs").

4. Among other things, Gaines and Womack misrepresented to investors: i) that ICC 2000 investment contracts were secure and risk-free because investor funds were deposited and maintained in bank accounts; and ii) that ICC 2000 provided invested funds to "Major Brokerage Companies" as collateral for the purchase of GICs. In fact, investor funds were not secure and risk-free because investor funds were withdrawn from the bank accounts into which they had been deposited and were used to pay off earlier investors, to pay sales commissions, and to pay for personal expenditures of other individuals involved in the sale of ICC 2000 investment contracts. No investments in GICs were ever made.

5. None of the ICC 2000 investment contracts sold by Gaines or Womack were ever registered with the Commission.

E. Based on the conduct described above, Gaines and Womack willfully violated Sections 5(a) and 5(c) of the Securities Act, in that they, directly or indirectly: i) made use of the means or instruments of transportation or communication in interstate commerce or of the mails to sell securities as described herein, through the use or medium of a prospectus or otherwise; and/or ii) made use of the means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of any prospectus or otherwise, as described herein, without a registration statement having been filed or being in effect with the Commission as to such securities.

F. Based on the conduct described above, Gaines and Womack willfully violated Section 17(a)(1) of the Securities Act, in that they, directly or indirectly, by use of the means or instruments of transportation or communication in interstate commerce or by use of the mails, in the offer or sale of securities, as described herein, have: knowingly, willfully, or recklessly employed devices, schemes, or artifices to defraud.

G. Based on the conduct described above, Gaines and Womack willfully violated Sections 17(a)(2) and 17(a)(3) of the Securities Act, in that they, directly or indirectly, by use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails, in the offer or sale of securities, as described herein, have: i) obtained money or property by means of untrue statements of material facts and omissions to state material facts necessary to make the statements made, in light of the circumstances under which they were made, not misleading; and/or ii) engaged in transactions, practices and courses of business which have operated, are now operating and will operate as a fraud or deceit upon purchasers and prospective purchasers of such securities.

H. Based on the conduct described above, Gaines and Womack willfully violated Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder, in that they, directly or indirectly, by use of the means or instruments of transportation or communication in interstate commerce or of the mails, in connection with the purchase or sale of securities have knowingly, willfully, and/or recklessly: i) employed devices, schemes, or artifices to defraud; ii) made untrue statements of material facts and omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and/or iii) engaged in acts, practices, and courses of business which have operated, are now operating and will operate as a fraud upon the purchasers of such securities.

I. Based on the conduct described above, Gaines and Womack willfully violated Section 15(a)(1) of the Exchange Act, in that they, directly or indirectly, by use of the means and instrumentality of interstate commerce, and of the mails, have each engaged in the business of effecting transactions in securities for the accounts of others and have induced and effected the purchase and sale of securities while not themselves registered with the Commission.

The Division requests that, pursuant to Sections 15(b) and 19(h) of the Exchange Act, I bar Gaines and Womack from association with any broker, dealer, or member of national securities exchange or registered securities association. The OIP, however, makes no mention of Section 19(h). Moreover, the Division never sought to amend the OIP to include Section 19(h) as statutory authority for their allegations. Accordingly, any sanction imposed against Gaines and Womack must be based solely on Section 15(b).

In view of the foregoing, and consistent with the factors articulated in Steadman v. SEC, 603 F.2d 1126, 1140 (5th Cir. 1979), I find it in the public interest to bar Gaines and Womack from association with any broker or dealer.

Accordingly, it is ordered that Frank Gaines and Taft Womack are barred from association with any broker or dealer.

____________________________________
James T. Kelly
Administrative Law Judge