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UNITED STATES DISTRICT COURT
CASE NO.
COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF Plaintiff, Securities and Exchange Commission ("SEC" or "Commission") alleges that: INTRODUCTION 1. The Commission brings this action to restrain and enjoin Defendants from continuing to violate the federal securities laws in connection with their ongoing, fraudulent, unregistered offer and sale of securities in the form of promissory notes and investment contracts. Unless immediately restrained and enjoined, Defendants will continue to defraud the investing public and place investor funds at serious risk of diversion and theft. DEFENDANTS 2. Defendant Starcash, Inc. ("Starcash") is a Florida corporation incorporated in September 2001, with principal offices located at 5355 Town Center Road, Suite 102, Boca Raton, Florida 33486. 3. Defendant Infinity Consulting Services, Inc. ("Infinity") is a Florida corporation incorporated in May 2000, with principal offices located at 6555 N.W. 9th Avenue, Suite 204, Fort Lauderdale, Florida 33309. Infinity's mailing address is the same as Starcash's principal office location. 4. Defendant Jean B. Leclercq ("Leclercq") is 51 years old and resides in Boca Raton, Florida. Leclercq is Starcash's chief executive officer and the president of Infinity. Leclercq manages the day-to-day operations of both companies. Leclercq is a convicted felon and is apparently using several social security numbers. 5. Defendant Kip Marsique ("Marsique") is 47 years old and resides in Fort Lauderdale, Florida. Marsique is Starcash's vice president of sales. Marsique manages sales operations of Starcash and Infinity and supervises Starcash's independent sales agents. 6. Defendant Frederick J. Shapiro ("Shapiro") is 58 years old and resides in Coconut Creek, Florida. Shapiro is Starcash's chief financial officer. RELIEF DEFENDANTS 7. Relief Defendant Starcash Consulting, Inc. ("Starcash Consulting") is a Florida corporation incorporated in January 2002, located at 3649 Boynton Beach, Florida 33435. 8. Relief Defendant Starcash Industries, Inc. ("Starcash Industries") is a Florida corporation incorporated in January 2002 located at 6555 N.W. 9th Avenue, Suite 204, Fort Lauderdale, Florida 33309. Starcash Industries'corporate offices are located at the same address as Infinity. Starcash Industries was set up by Leclercq to distribute investor deposits among Starcash's bank accounts. 9. Starcash Media, Inc. ("Starcash Media") is a Florida corporation incorporated in January 2002, located at 5355 Town Center Road, Suite 102, Boca Raton, Florida 33486. Starcash Media's corporate offices are located at the same address as Starcash. Starcash Media was set up by Leclercq to distribute investor deposits among Starcash's bank accounts. JURISDICTION AND VENUE 10. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d) and 22(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. §§ 77t(b), 77t(d) and 77v(a); and Sections 21(d), 21(e), and 27 of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §§ 78u(d), 78u(e) and 78aa. 11. This Court has personal jurisdiction over the Defendants and venue is proper in the Southern District of Florida because many of the Defendants' acts and transactions constituting violations of the Securities Act and the Exchange Act occurred in the Southern District of Florida. In addition, the principal offices of Defendants Starcash and Infinity are located in the Southern District of Florida, and Defendants Leclercq, Marsique and Shapiro reside in the Southern District of Florida. Relief Defendants Starcash Consulting, Starcash Industries and Starcash Media's principal offices are located in the Southern District of Florida. 12. Defendants, directly and indirectly, have made use of the means and instrumentalities of interstate commerce, the means and instruments of transportation and communication in interstate commerce, and the mails, in connection with the acts, practices, and courses of business set forth in this Complaint. THE FRAUDULENT SCHEME I. Starcash's Unregistered Offering 13. Starcash purportedly provides consumers with payday advances in the form of short-term loans obtained through retail stores. The Defendants claim in written materials disseminated to potential investors that Starcash's "advances are conveniently available by Internet, telephone, or one of our many retail outlets located across the country." The Defendants also claim in these written materials that Starcash's ATM card, termed a "Starcash Insta-Cash ATM," allows loan customers "to gain access to virtually every ATM machine worldwide, making Starcash the most convenient source for accessing instant money anywhere." 14. To fund Starcash's payday advance loans, the Defendants purport to raise money from the general public by offering potential investors securities in the form of "accounts receivable purchase agreements." The Defendants have been offering these securities to the general public since at least October 2001, and to date claim to have raised $6 million from an unknown number of investors. The Defendants solicited these investors nationwide and internationally. According to both their written offering materials and oral representations made to potential investors, the Defendants seek to raise $12 million by through the sale of these securities. 15. The Defendants promise investors returns ranging from 30% to 36% annually. The Starcash investment has a term of 12 months and interest is paid monthly at a rate of 2.5% to 3% during the term of the investment. However, the Defendants tell investors that they can earn a higher annual return ranging from 42% to 46% if their interest is left to accrue. 16. The Defendants offer and sell Starcash's securities to the general public through Infinity and a network of other boiler rooms and sales agents located throughout the country. Starcash solicits investors through its Internet website, other Internet advertisements, and through unsolicited emails and telephone calls by sales agents of Starcash and Infinity to investors. The sales agents solicit funds by emphasizing the profitability and safety of Starcash's payday advance loan business. During these solicitations, Starcash's and Infinity's sales agents tout, among other things, the company's expansion efforts and its purported joint venture partners. The sales agents use high-pressure sales techniques designed to create a sense of urgency when soliciting prospects. The sales agents make no inquiry into the investors' income or net worth. 17. After a sales agent introduces Starcash's investment opportunity to the prospect, the sales agent sends the prospect the Defendants' offering materials by overnight delivery or by e-mail. The offering materials include, among other things, a color sales brochure, an introductory letter to investors from Leclercq, the "Accounts Receivable Purchase Agreement," that all investors must sign in before investing money, a "Frequently Asked Questions" section, a "Due Diligence Checklist" and information regarding Starcash's "strategic partners." The Defendants also provide investors with a "Trust Agreement," and a letter from Starcash's corporate attorney. Starcash's website contains materials that are nearly identical to those provided to prospective investors. 18. Once prospects are persuaded to invest, the sales agents tell the investors to sign the "Accounts Receivable Purchase Agreement" along with certain other documents included in the offering materials, and return them along with their money to Starcash. The sales agents tell investors that Starcash will use their funds to advance capital to loan customers. In addition, the sales agents and the Defendants represent to investors that their investment is secured by accounts receivable purchased by Starcash on their behalf. 19. Starcash pays its sales agents commissions on the investor's principal investment ranging from 35% to 38%. Leclercq pays the sales agents working for Infinity, her boiler room operation, commissions of 20%. 20. No registration statement has been filed or is in effect with the Commission in connection with the securities offered by Starcash. In addition, Starcash does not require that its sales agents be licensed. Although the materials tell investors that the minimum investment is $10,000, Starcash has accepted funds from investors for less than that amount. II. Material Misrepresentations and Omissions in
A. Use of Investor Proceeds 21. Starcash's written offering materials falsely represent to investors that all their money will be used to purchase accounts receivable and to fund the company's payday advance operation. For example, in an introductory letter from Leclercq to prospective investors, she describes investors as "factors" and tells them that their "factored capital will be used strictly as advancing capital and the accounts receivable purchase agreement is used solely for this purpose." In addition, the materials claim that "all investor dollars ... are accessed only for funding advances and earning fees supported by pre-approvals from TeleCheck and Teletrack." These offering materials are distributed at the direction of and with the knowledge of Leclercq, Marsique and Shapiro. 22. Starcash's and Infinity's sales agents, with the knowledge of Leclercq, Marsique and Shapiro, repeat the same representations regarding use of investor proceeds in oral statements to potential investors. In fact, Leclercq and Marsique regularly participate in soliciting potential investors. 23. These representations are false and misleading. In fact, Starcash is failing to tell investors that a significant portion of investor funds are being used to pay exorbitant commissions to the company's network of sales agents and boiler rooms. In addition, Starcash is failing to disclose to investors that Leclercq, Marsique, Shapiro, and at least one other person in management, are each receiving a 2% "management fee," for a total of 8%, on all investor funds raised. B. Safety and Security of the Starcash Investment 24. Starcash's written materials tell potential investors that Starcash is a safe and secure investment. In Leclercq's introductory letter to investors, she tells them that their "investment will be secured by accounts receivable checks." In addition, the "Frequently Asked Questions" section of the materials describes the investment as being "extremely secure" because of the accounts receivable purchased for the investor. Further, the materials assure investors that before any investor funds are lent out, the borrower's application is pre-approved with Teletrack, a credit reporting agency, and TeleCheck, a company that provides information on lost or stolen checks. 25. Leclercq, Marsique, Shapiro and Starcash's and Infinity's sales agents (at the direction of Leclercq, Marsique and Shapiro) are also making blatantly false and misleading oral statements to prospective investors concerning the safety of investing in the company's payday advance business. Like the materials, they are telling investors that the investment is backed by accounts receivable and is a safe and virtually risk-free investment. 26. The written and oral statements to investors that their investment is secured by accounts receivable and safe are false and misleading. Teletrack reported only 167 inquiries by Starcash from October 2001 through April 2002. Further, TeleCheck reported that Starcash only made two (2) inquiries over the same time period. Using a best case scenario, even if all 169 inquiries were to result in loans at the maximum loan amount of $500 per loan, this would translate to a mere $84,500 in loans available to secure investor monies. Given the representations of Leclercq, Marsique and Shapiro that Starcash has raised at least $6 million from investors, these investor funds are not adequately secured by accounts receivable and the investment is not safe. In fact, according to the Defendants' own representations, the investors' funds are grossly under-secured. C. Starcash's Revenue Projections 27. The Defendants make false and misleading revenue projections in Starcash's written offering materials. The materials project that Starcash's payday advance business could "conservatively" generate up to $80 million in revenues per year. This is based upon the company estimates that if just one loan of $220 is processed at 1,000 retail locations over 360 days, it will make $80 million yearly. 28. Starcash's revenue projection is baseless because it is predicated on the assumption that 100% of investor funds will go towards funding and capitalizing the company's payday advance business. In fact, far less than that amount is going to the payday business because Starcash is using as much as 46% of investors funds to pay commissions to its sales agents and principals. In addition, the projection is baseless considering the company has made, at most, only $84,500 in loans thus far. D. Authority to Transact a Payday Advance Business 29. The Defendants' written offering materials fail to disclose to investors that Starcash is not authorized and licensed by the State of Florida to operate a payday advance business. In addition, sales agents of Starcash and Infinity are representing to investors that Starcash is properly licensed in Florida. However, these statements are false. Under Florida law, a company operating as a payday advance business is required to be registered with the state as such. Starcash is headquartered in Florida, but in fact has never been licensed with Florida to operate its payday advance business. E. Backgrounds of Principals 30. Starcash's offering materials fail to disclose material information about the backgrounds of its principals. The materials and website contain biographical information about the backgrounds and experiences of Leclercq, Shapiro, and Marsique. The materials, however, fail to disclose that numerous states have issued cease-and-desist orders against Starcash, Leclercq, Shapiro and Marsique in connection with the Starcash offering for violations of the registration and anti-fraud provisions of their respective state securities laws. From January through April 2002, six states have issued cease-and-desist orders against Starcash and its principals for selling unregistered securities and, in some cases, for fraud. 31. Moreover, Starcash's offering materials fail to disclose that Leclercq is convicted felon. Specifically, in 1997, Leclercq was convicted of, among other things, attempted racketeering and operating a prostitution establishment as part of her role in running an escort service in Florida. She was sentenced to thirty days in jail and given five year's probation. F. Partnerships with Starcash 32. Sales agents of Starcash and Infinity, at the express direction of Leclercq, Marsique and Shapiro, told prospects that Starcash "had available to it," through a joint venture partner, 10,000 7-Eleven, Inc. ("7-Eleven") convenience store locations throughout North America as well as other potential partners. In fact, 7-Eleven and the other alleged partners have never signed any agreement nor have done any business with Starcash. III. ROLE OF PRINCIPALS 33. Leclercq is the mastermind behind the Starcash offering and as the CEO of Starcash, has knowingly or recklessly made, and directed and authorized to be made, the material misrepresentations and omissions to prospective and actual investors set forth above. Starcash's offering materials and its website list Leclercq as the company's "CEO." She is also the president of Infinity. 34. Leclercq manages the day-to-day operations of both Starcash and Infinity. She also has signature authority over Starcash's bank accounts and, along with Shapiro, controls the movement of funds in those accounts. Leclercq has signature authority and controls Infinity's bank accounts as well. Leclercq signs the "Accounts Receivable Purchase Agreement" on behalf of Starcash. 35. Leclercq participates in sales solicitations of investors. In fact, Leclercq has told her sales staff that she is available to talk to prospects, particularly high-dollar investors. She also solicits investors in writing. For example, in the introductory letter included in the offering materials, Leclercq boasts about how investors will enjoy "substantial monthly returns" with Starcash and that Starcash "expect[s] exponential growth in the months and years ahead." She concludes the letter by saying she hopes the investor joins this "very exciting and profitable opportunity." In one version of the letter, Leclercq touts Starcash's monthly return of 2.5%. 36. Leclercq also interviews and recruits potential sales agents to sell the Starcash investment. While interviewing one particular sales agent, she told him that she "runs the show" at Starcash and that "her word is final." 37. Marsique is the vice president of sales and marketing for Starcash. As vice president of sales, he conducts sales meetings and supervises Starcash's and Infinity's sales agents and boiler rooms. Marsique keeps a sales board in his office that tracks the sales of all the boiler rooms and agents selling the Starcash offering. Marsique also participates in interviewing and recruiting potential sales agents. Further, he regularly takes part in soliciting funds from prospects.. As set forth above, Marsique directs or authorizes Starcash's sales agents to disseminate Starcash's materially false and misleading offering materials. 38. Shapiro is Starcash's CFO and has signature authority on Starcash bank accounts. Along with Leclercq, Shapiro controls the company's accounts and the movement of investor funds. He also conducts broker sales meetings and solicits funds from investors. As set forth above, Shapiro directs or authorizes Starcash's sales agents to disseminate Starcash's materially false and misleading offering materials. COUNT I SALE OF UNREGISTERED SECURITIES IN VIOLATION OF
39. The Commission repeats and realleges paragraphs 1 through 38 of this Complaint. 40. No registration statement was filed or in effect with the Commission pursuant to the Securities Act and no exemption from registration exists with respect to the securities and transactions described in this Complaint. 41. Since a date unknown but since at least October 2001 through the present, Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro, directly and indirectly, have been: (a) making 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; (b) carrying securities or causing such securities, as described in this Complaint, to be carried through the mails or in interstate commerce, by any means or instruments of transportation, for the purpose of sale or delivery after sale; and/or (c) making 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 in this Complaint, without a registration statement having been filed or being in effect with the Commission as to such securities. 42. By reason of the foregoing, Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro directly and indirectly, have violated, and unless enjoined, will continue to violate Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c). COUNT II FRAUD IN VIOLATION OF
43. The Commission repeats and realleges paragraphs 1 through 38 of its Complaint. Since a date unknown but since at least October 2001 through the present, Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro directly and indirectly, by use of the means or instruments of transportation or communication in interstate commerce and by use of the mails, in the offer or sale of securities, as described in this Complaint, have been, knowingly, willfully or recklessly employing devices, schemes or artifices to defraud. 44. By reason of the foregoing, Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro, directly and indirectly, have violated and, unless enjoined, will continue to violate Section 17(a)(1) of the Securities Act, 15 U.S.C. § 77q(a)(1). COUNT III FRAUD IN VIOLATION OF SECTION 10(b)
45. The Commission repeats and realleges paragraphs 1 through 38 of its Complaint. 46. Since a date unknown but since at least October 2001 through the present, Defendants, Starcash, Infinity, Leclercq, Marsique and Shapiro, directly and indirectly, by use of the means and instrumentality of interstate commerce, and of the mails in connection with the purchase or sale of the securities, as described in this Complaint, have been, knowingly, willfully or recklessly: (a) employing devices, schemes or artifices to defraud; (b) making untrue statements of material facts and omitting to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and/or (c) engaging 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. 47. By reason of the foregoing, Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro, directly or indirectly, have violated and, unless enjoined, will continue to violate Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240. 10b-5, thereunder. COUNT IV FRAUD IN VIOLATION OF
48. The Commission repeats and realleges paragraphs 1 through 38 of its Complaint. 49. Since a date unknown but since at least October 2001 through the present, Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro, directly and indirectly, by use of the means or instruments of transportation or communication in interstate commerce and by the use of the mails, in the offer or sale of securities, as described in this Complaint, have been: (a) obtaining money or property by means of untrue statements of material facts and omissions to state material facts necessary to make the statements made, in the light of the circumstances under which they were made, not misleading; and/or (b) engaging in transactions, practices and courses of business which are now operating and will operate as a fraud or deceit upon purchasers and prospective purchasers of such securities. 50. By reason of the foregoing, Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro, directly and indirectly, have violated and, unless enjoined, will continue to violate Sections 17(a)(2) and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77(q)(a)(2) and 77(q)(a)(3). COUNT V UNREGISTERED BROKER-DEALER IN VIOLATION OF
51. The Commission repeats and realleges paragraphs 1 through 38 of its Complaint. 52. Since a date unknown but since at least October 2001 through the present, Defendants Infinity, Leclercq, Marsique and Shapiro, directly and indirectly, by use of the mails or any means or instrumentality of interstate commerce, while acting as brokers or dealers engaged in the business of effecting transactions in securities for the accounts of others, have been effecting transactions in securities, or induced or attempted to induce the purchase or sale of securities, without registering as broker-dealers in accordance with Section 15(b) of the Exchange Act, 15 U.S.C. § 78o(b). 53. By reason of the foregoing, Defendants Infinity, Leclercq, Marsique and Shapiro, directly and indirectly, has violated and, unless enjoined, will continue to violate Section 15(a)(1) of the Exchange Act, 15 U.S.C. § 78o(a)(1). RELIEF REQUESTED WHEREFORE, the Commission respectfully requests that the Court: I. Declaratory Relief Declare, determine and find that Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro committed the violations of the federal securities laws alleged in this Complaint. II. Temporary Restraining Order, Preliminary and Permanent Injunctive Relief Issue a Temporary Restraining Order, a Preliminary Injunction and a Permanent Injunction, restraining and enjoining Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro, their officers, agents, servants, employees, attorneys, and all persons in active concert or participation with them, and each of them, from violating: (a) Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c); (b) Section 17(a)(1) of the Securities Act, 15 U.S.C. § 77q(a); (c) Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, thereunder; and (d) Sections 17(a)(2) and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77(q)(a)(2) and 77(q)(a)(3); and Defendants Infinity, Leclercq, Marsique and Shapiro, their officers, agents, servants, employees, attorneys, and all persons in active concert or participation with it, and each of them from violating Section 15(a)(1) of the Exchange Act, 15 U.S.C. § 78o(a)(1). III. Disgorgement Issue an Order requiring Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro and Relief Defendants Starcash Consulting, Starcash Industries and Starcash Media to disgorge all ill-gotten profits or proceeds that they have received as a result of the acts and/or courses of conduct complained of herein, with prejudgment interest. IV. Penalties Issue an Order directing Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro to pay civil money penalties pursuant to Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d) of the Exchange Act, 15 U.S.C. § 78(d)(3). V. Asset Freeze and Accounting Issue an Order temporarily freezing the assets of Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro, and Relief Defendants Starcash Consulting, Starcash Industries and Starcash Media until further Order of the Court, and requiring accountings by Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro and Relief Defendants Starcash Consulting, Starcash Industries and Starcash Media. VI. Appointment of Receiver Issue an Order appointing a Receiver of the assets of Starcash and Infinity to marshal and safeguard all of said assets, and any other duties the Court deems appropriate, and to prepare a report to the Court and the Commission detailing the activities of Starcash, Infinity, Leclercq, Marsique and Shapiro and the whereabouts of investor funds. VII. Records Preservation and Expedited Discovery Issue an Order requiring Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro and Relief Defendants Starcash Consulting, Starcash Industries and Starcash Media to preserve any records related to the subject matter of this lawsuit that are in their custody, possession or subject to their control, and to respond to discovery on an expedited basis. VIII. Repatriation of Investor Proceeds Issue an Order requiring Defendants Starcash, Infinity, Leclercq, Marsique and Shapiro and Relief Defendants Starcash Consulting, Starcash Industries and Starcash Media to take such steps as are necessary to repatriate to the territory of the United States all funds and assets of investors described in the Commission's Complaint in this action which are held by them or are under their direct or indirect control, jointly or singly, and deposit such funds into the registry of the United States District Court for the Southern District of Florida, and provide the Commission and the Court a written description of the funds and assets so repatriated. IX. Further Relief Grant such other and further relief as may be necessary and appropriate. X. Retention of Jurisdiction Further, the Commission respectfully requests that the Court retain jurisdiction over this action in order to implement and carry out the terms of all orders and decrees that may hereby be entered, or to entertain any suitable application or motion by the Commission for additional relief within the jurisdiction of this Court. Respectfully submitted, May ____, 2002 By:______________________
Chedly C. Dumornay
Linda S. Schmidt
Attorneys for Plaintiff
http://www.sec.gov/litigation/complaints/complr17526a.htm
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