UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 36802 / February 1, 1996 ADMINISTRATIVE PROCEEDING File No. 3-8810 ______________________________ : : In the Matter of : ORDER MAKING FINDINGS : AND IMPOSING REMEDIAL RAYMOND CHARLES GROSS and : SANCTIONS JAMES EUGENE HAMMONDS : : ______________________________: I. In these proceedings instituted pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 ("Exchange Act"), Respondent Raymond Charles Gross ("Gross") and James Eugene Hammonds ("Hammonds") (collectively "Respondents") have submitted Offers of Settlement ("Offers") which the Commission has determined to accept.1/ II. Solely for the purpose of these proceedings and any other proceedings brought by, or on behalf of, the Commission, or to which the Commission is a party, prior to a hearing pursuant to the Commission's Rules of Practice [17 C.F.R.  201.100 et seq.], and under the terms of the Offer, Respondents, without admitting or denying the findings set forth below, except that Respondents admit to the jurisdiction of the Commission over them and over the subject matter of this proceeding and to the entry of an Order of Permanent Injunction and Other Relief, consent to the entry of this Order Making Findings and Imposing Sanctions ("Order"). 1/ An Order Instituting Public Administrative Proceeding Pursuant to Sections 15(b) and 19(h) of the Securities Exchange Act of 1934 against Respondents was issued by the Commission on September 13, 1995, Admin. Proc. File No. 3- 8810. ==========================================START OF PAGE 2====== III. On the basis of this Order and Respondents' Offers, the Commission finds that:2/ A. On November 18, 1994, an Order of Permanent Injunction and Other Relief was entered permanently enjoining Respondents from future violations of Sections 17(a) of the Securities Act of 1933 ("Securities Act"), Sections 10(b) and 15(c) of the Exchange Act and Rules 10b-5 and 15c1-2 thereunder. It also required Respondents to disgorge, together with prejudgment interest, their gain resulting from the offer and sale of Sunrise Energy Ltd. VII-XI Partnerships, in an amount to be determined by the Court. Respondents were also required to pay civil penalties in an amount to be determined by the Court. Respondents consented to the entry of said Order of Permanent Injunction and Other Relief without admitting or denying the allegations in the Commission's Complaint. Securities and Exchange Commission v. Southern California Securities, Inc., et al., Civil Action No. 94-6156 HLH (GHKx) (C.D. Cal.). B. The Commission's Complaint in the civil action referenced in subparagraph III.A., above, alleged that from about January 1993 through August 1994, the Respondents, through Southern California Securities, Inc. ("SCSI"), a broker-dealer formerly registered with the Commission (File No. 8-42575), raised over $4.07 million from about 196 investors through a scheme involving the fraudulent offer and sale of unregistered limited partnership interests in five oil and gas limited partnerships named Sunrise Energy Partnerships Ltd. VII-XI ("Partnerships" or "Sunrise VII-XI") managed by Buckeye Development Co. dba Western Reserve Development Co. ("Western") and operated by Grizzly Operating Co. dba Cherokee Operating Co. ("Cherokee"). Respondents jointly owned Western and Cherokee during the same time period. As alleged in the Complaint, in the offer and sale of these Partnerships' securities, Respondents made misstatements and omissions to investors and prospective investors. The Complaint alleged more specifically: 1. In promoting the investments, Respondents represented that investor funds would be used for oil and gas- related expenses, lease acquisition costs, sales commissions, Western's fees, working capital and investing in "U.S. Government obligations." In fact, Respondents misused and misappropriated $1,415,900, or 41.5%, of the $3,410,000 raised from Sunrise VII-X investors to pay the overhead and operating expenses of SCSI and Cherokee and to pay themselves. Respondents also misused and 2/ The findings herein are made pursuant to Respondents' Offers and are not binding on any other person or entity named as a respondent in this or any other proceeding. ==========================================START OF PAGE 3====== misappropriated $108,590 of the funds raised from Sunrise IX and XI to pay the overhead and operating expenses of SCSI and Cherokee. Respondents also misused and misappropriated at least $164,300 of Sunrise IX and XI investor proceeds to pay themselves. 2. The Sunrise VII-X offering documents represented that Cherokee, as Partnership Operator, would acquire rights to oil and gas properties for the Partnerships. Even though Cherokee and Respondents purportedly acquired the interests in oil and gas properties in Cherokee's name, Respondents failed to transfer oil and gas properties to the Partnerships. 3. Respondents represented both in the Sunrise VII-X offering documents and orally to investors that investors' principal would be backed by "U.S. Government Obligations." Respondents, however, failed to invest any portion of Sunrise VII-X investor proceeds in U.S. government obligations. 4. SCSI's sales agents and Gross orally represented to prospective investors that the projected income of the Partnership interests was 12% per year. Respondents, however, undisclosed to investors, supplemented distributions to investors with "advances" from various sources to pay investors the represented 12%. IV. Based upon the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified by the Respondents in their Offers. Accordingly, IT IS HEREBY ORDERED, effective immediately, that Gross and Hammonds be barred from association with any broker, dealer, investment company, investment advisor or municipal securities dealer. For the Commission, by its Secretary, pursuant to delegated authority. Jonathan G. Katz Secretary