Securities Misrepresentation Federal and State Litigation and FINRA Arbitration Lawyer, Russell L. Forkey, Esq.

June 28, 2011:

SEC v. Michael E. Kelly, et al., Case No. 1:07-CV-4979 in the United States District Court for the Northern District of Illinois

Court Enters Final Judgment Against Georgia Resident William K. Boston, Jr., Texas Resident Warren T. Chambers And Their Business, Century Estate Planning, Inc.

The Securities and Exchange Commission recently announced that on June 22, 2011, Judge Elaine Bucklo of the United States District Court for the Northern District of Illinois entered a final judgment against William K. Boston, Jr., of Canton, Georgia, Warren T. Chambers, of Leander, Texas, and Century Estate Planning, Inc. (Century Estate), their business. The final judgment: (1) enjoined Boston, Chambers and Century Estate from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rules 10b-5 and 10b-10 promulgated thereunder, and enjoined Boston and Chambers from aiding and abetting violations of Rule 10b-10 of the Exchange Act; (2) ordered Boston, Chambers and Century Estate to pay disgorgement in the amount of $1,347,601.44 plus prejudgment interest of $617,269.01, for a total of $1,964,870.45; and (3) ordered Boston and Chambers to each pay a civil penalty of $120,000,and Century Estate to pay a civil penalty in the amount of $600,000.

The SEC’s complaint in this matter charged that Michael E. Kelly and 25 other defendants, including Boston, Chambers and Century Estate, participated in a massive fraud on U.S. investors that involved the offer and sale of securities in the form of Universal Leases. Universal Lease investments were structured as timeshares in several hotels in Cancun, Mexico, coupled with a pre-arranged rental agreement that promised investors a high, fixed rate of return. The SEC’s complaint alleges that from 1999 until 2005, Kelly and others, including Boston, Chambers and Century Estate, raised at least $428 million through the Universal Lease scheme from investors throughout the United States, with more than $136 million of the funds invested coming from IRA accounts. The SEC further alleges that a nationwide network of unregistered salespeople who sold the Universal Leases, including Boston, Chambers and Century Estate, collected undisclosed commissions totaling more than $72 million. The SEC also alleged that Kelly and others ran the scheme from Cancun, Mexico, through a number of foreign entities in Mexico and Panama. According to the SEC’s complaint, Kelly and others told investors that Universal Leases would generate guaranteed income through the leasing of investor timeshares by a large, independent leasing agent. In fact, the complaint alleged, the leasing agent was a small Panamanian travel agency controlled by Kelly, and for most of the scheme, its payments to investors came from accounts funded by money raised from new investors. Further, the complaint alleged that Kelly and the other defendants, including Boston, Chambers and Century Estate, failed to disclose key facts about the Universal Lease investment, including the risks of the investment and that Kelly was paying commissions as high as 27% to the selling brokers. The SEC’s action against the remaining defendants is pending.

If you would like to review a copy of the original complaint filed by the SEC, please follow the highlighted link.

Russell L. Forkey, P.A.

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