UNITED STATES SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 15911 / September 29, 1998 SEC SUES OPERATORS AND SALES AGENTS OF $3.3 MILLION PONZI SCHEME Securities and Exchange Commission v. Shane T. Vaessen, Veronika M. Vaessen, Otis Herring, Marvin Moses, Taft Womack, William McNamara, Dale Van Wyk, and Frank Gaines, Civil Action No. 98- 1964-CV-10-26F (M. D. Florida) The Securities and Exchange Commission ("SEC") announced that today it filed a complaint in a seven state Ponzi scheme which included three Florida insurance agents. The SEC filed its complaint in the U.S. District Court for the Middle District of Florida against Shane T. Vaessen ("Vaessen"), Veronika M. Vaessen ("V. Vaessen"), Otis Herring ("Herring"), Marvin Moses ("Moses"), Taft Womack ("Womack"), William McNamara ("McNamara"), Dale Van Wyk ("Van Wyk") and Frank Gaines ("Gaines"), and is seeking orders of permanent injunction, disgorgement, and civil money penalties. Vaessen, age 54, and V. Vaessen, age 52, are residents of Las Vegas, Nevada. Vaessen was the President and Chief Executive Officer of ICC 2000, a now defunct Nevada corporation, and V. Vaessen was its Secretary and Treasurer. The SEC's complaint alleges, among other things, that the Vaessens sold ICC 2000 securities and raised over $3.3 million from over 100 investors in Florida, Georgia, Indiana, Nebraska, Michigan, Tennessee, and California between 1994 and 1997. The SEC's complaint alleges that all defendants violated the antifraud provisions of the federal securities laws. The SEC's complaint also alleges, among other things, that the defendants illegally sold unregistered securities, and that Herring, Moses, Womack, McNamara, Van Wyk, and Gaines illegally acted as broker- dealers without being registered with the SEC. The SEC's complaint alleges that the Vaessens and their sales agents 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"). In return for their investments, which ranged from $2,200 to over $150,000, investors were provided with a written ICC 2000 investment contract, a specified number of post-dated checks purportedly representing interest payments for the investment, and one post-dated check representing a return of the investor's principal. The SEC's complaint alleges, however that investors monies were never invested in GICs. Instead, the SEC's complaint alleges that investment funds were used primarily for interest and principal payments to earlier ICC 2000 investors, to pay sales commissions, and for the Vaessens' personal expenditures. Instead of using ICC 2000 program funds for investment purposes, funds were withdrawn from the accounts in amounts ranging from about $1000 to over $10,000, as cash. Vaessen and V. Vaessen also used investor funds to make mortgage payments of approximately $3500 per month for the Vaessen residence in Las Vegas, Nevada, to pay over $50,000 for construction and remodeling work performed on that residence, to pay over $20,000 for jewelry for V. Vaessen, and to pay over $10,000 for a high-end department store credit card account. The SEC's complaint alleges that Herring, Moses, Womack, McNamara, Van Wyk, and Gaines received commissions as high as 56% for their sale of investment contracts to many unsophisticated and elderly residents of Florida, Georgia, Indiana, Nebraska, Michigan, Tennessee, and California. This enforcement action is part of a joint action by the Regional SEC, the Florida Office of the Comptroller, the Florida Department of Insurance, and the Hillsborough County State Attorney's Office. The SEC thanks the Florida State Comptroller's Department of Banking and Finance, the Indiana Secretary of State's Securities Division and the Indiana State Police, and the Colorado Department of Regulatory Agencies' Division of Securities for the assistance they provided in connection with the investigation leading to this action.