Physicians Guardian Unit Investment Trust, et al.
SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16167 / May 27, 1999
SECURITIES AND EXCHANGE COMMISSION V. PHYSICIANS GUARDIAN UNIT INVESTMENT TRUST, ET. AL., CASE NO. 99-1117-CIV-T-17A (M.D. Fla.)
The Securities and Exchange Commission ("SEC") announced that on May 13, 1999, the Honorable Elizabeth A. Kovachevich, United States District Judge for the Middle District of Florida, entered a Temporary Restraining Order and Other Relief ("Order") against defendants Physicians Guardian Unit Investment (the "PG Trust"), Physicians Guardian, Inc. ("PGI"), Physicians Guardian Insurance Corp. ("Physicians Guardian"), ABFAC, Inc. ("ABFAC"), Charles Polley ("Polley"), and Robert W. Singerman ("Singerman") halting their sale of fraudulent, unregistered securities through a network of "boiler rooms" in Florida and California. The Order temporarily restrains the defendants from continuing to violate the registration and anti-fraud provisions of the federal securities laws, namely Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, thereunder.
On May 13, 1999, the SEC filed a complaint against the PG Trust, PGI, Physicians Guardian, ABFAC, Polley, and Singerman seeking an ex parte temporary restraining order and other ancillary relief against them. The Court's May 14, 1999 Order froze the assets of these defendants. The Court also appointed a receiver, who immediately secured PGI's premises and is now in possession of PGI's offices and its books and records. The complaint also seeks permanent injunctions and other relief against Tel Com Plus East, L.L.C. and Tel Com Plus West, L.L.C, a prior, allegedly fraudulent, unregistered securities offering. The SEC's action seeks disgorgement of ill-gotten profits and penalties against all the defendants.
According to the SEC's complaint, the defendants made material misrepresentations and omissions in connection with their sale to the investing public of approximately $18.6 million in "units" in the PG Trust and Tel Com Plus. In the complaint, the SEC alleges that the defendants were representing to investors that the funds raised through the Physicians Guardian offering would be used to start up and operate a medical malpractice insurance company based in the Cayman Islands. According to the complaint, the defendants were representing to investors that Physicians Guardian had engaged a team of "Professional Advisors," including KPMG Peat Marwick and Milliman & Robertson. The SEC's complaint alleges that, in fact, neither KPMG Peat Marwick nor Milliman & Robertson has ever had any dealings with PGI or Physicians Guardian. In addition, the complaint alleges that investors were falsely told that Physicians Guardian had entered into a business partnership with one of three established insurance companies: Fireman's Fund, Allstate, or Farmers. The SEC complaint alleges that, in fact, none of these insurance companies has ever entered into any partnerships with Physicians Guardian.
The SEC complaint further alleges that defendants Tel Com Plus and Polley represented to investors that the funds raised through the Tel Com Plus offering would be used to operate and expand a prepaid telephone service for the "credit impaired." The SEC alleges that, unbeknownst to investors, more than 40% of the funds raised from investors were used to pay sales commissions to the network of boiler rooms that participated in the offering. The SEC further alleges, among other things, that Tel Com Plus and Polley lied about the background and experience of those associated with the offering.
On or about May 19, 1999, the defendants consented to the entry of a preliminary injunction and other relief.
Last Reviewed or Updated: June 27, 2023