William P. Sauer, James M. Jordon and Phil D. Kerley
SEC v. William P. Sauer, James M. Jordan and Phil D. Kerley, Civil Action File No. 1:02-CV-2191 (N. D. Ga., August 7, 2002)
The Securities and Exchange Commission announced that on August 7, 2002 it filed a complaint in the United States District Court for the Northern District of Georgia against William P. Sauer ("Sauer"), James M. Jordan ("Jordan") and Phil D. Kerley ("Kerley"), alleging that each of them fraudulently sold large amounts of the securities issued in connection with two Ponzi Schemes, ETS Payphones, Inc. ("ETS"), and Global Telelink Services, Inc. ("GTS"). Sauer and Kerley also fraudulently sold the securities of Global Contact Corporation ("GCC"), a corporation controlled by GTS.
The Commission's complaint alleges that ETS, GTS and GCC depended on the sale of new investments in order to meet their current financial obligations, such as investor lease payments and refunds. Jordan, Sauer and Kerley knew, or were severely reckless in failing to disclose, among other things, that ETS, GTS and GCC could not make the payments they promised to investors without continually selling their products to new investors. From 1998 until September 2000, Jordan and his agents, including Sauer and Kerley, sold more than $84 million of the ETS payphone investments. Sauer and Kerley sold at least $1 million of the ETS payphone investments at prices between $5,000 and $7,000 per unit. Beginning in November 1999 until at least June 2000, Jordan and his agents, including Sauer and Kerley, sold more than $10 million of the GTS investments. Beginning in August 2000 and continuing until GTS and GCC were enjoined on March 9, 2001, Sauer and his agents, including Kerley, sold about $2 million of GCC investments.
The Commission's complaint charges the defendants with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 thereunder. The Commission's complaint seeks permanent injunctions, accountings, disgorgement, prejudgment interest and civil penalties against each defendant.
