Southern Financial Group, Inc., Richard M. Wooten, Charles Dennis McKittrick and Gerald F. Hunter, Jr.

Litigation Release No. 17535 / May 28, 2002

SECURITIES AND EXCHANGE COMMISSION V. SOUTHERN FINANCIAL GROUP, INC., RICHARD M. WOOTEN, CHARLES DENNIS MCKITTRICK AND GERALD F. HUNTER, JR., United States District Court for the District of South Carolina, Charleston Division, Civil Action File No. 2:02-1806-18 (Filed May 24, 2002)

The Securities and Exchange Commission ("Commission") announced that on May 24, 2002, the Honorable David C. Norton, United States District Judge for the District of South Carolina, Charleston Division, entered an order temporarily restraining Southern Financial Group, Inc. ("Southern"), Richard M. Wooten ("Wooten"), Charles Dennis McKittrick ("McKittrick") and Gerald F. Hunter, Jr. ("Hunter") from violating the anti-fraud provisions of the federal securities laws. The order also temporarily restrains Southern, Wooten and McKittrick from violating, or aiding and abetting violations of, the broker-dealer net capital and books and records provisions of the federal securities laws, freezes the assets of the defendants as well as the assets of Springdale Investments, Inc., a relief defendant, and grants other expedited relief.

The Commission's complaint alleges the defendants have raised at least $25 million through a fraudulent scheme involving the sale of short-term notes on behalf of UC Properties LLC. The complaint alleges that the defendants have been operating these note offerings as a Ponzi scheme, using funds raised from current note offerings to pay principal and interest to investors in prior offerings. The complaint further alleges that Southern has been operating in violation of the net capital rule since at least October 2001, and that the firm's FOCUS reports and other books and records have been inaccurate since that time.

The complaint seeks preliminary and permanent injunctions against the defendants to prevent future violations of Section 17(a) of the Securities Act of 1933, and Sections 10(b), 15(c)(3) and 17(a)(1) of the Securities Exchange Act of 1934 and Rules 10b-5, 15c3-1, 15c3-3, 17a-3, 17a-5 and 17a-11 thereunder. The complaint also seeks an accounting of funds, disgorgement of ill gotten gains with prejudgment interest thereon and civil penalties.