Securities and Exchange Commission v. M. Mark McAdams and R. Dane Freeman, Civil Action No. Civil Action No. 4:10-CV-00701-TLW (D.S.C.)
The Securities and Exchange Commission recently announced that the Honorable Terry L. Wooten, United States District Judge for the District of South Carolina, entered final judgments permanently enjoining M. Mark McAdams (“McAdams”) and R. Dane Freeman (“Freeman”). The final judgments restrained and enjoined McAdams and Freeman from future violations of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The final judgments also held McAdams and Freeman jointly and severally liable for disgorgement of $3,500,000 and prejudgment interest of $787,794.28. The final judgments also impose a civil penalty of $120,000 each on both McAdams and Freeman.
The Complaint, filed on March 18, 2010, alleged fraud against McAdams and Freeman in connection with sales of securities interests in Global Holdings, a limited liability company organized by McAdams. Approximately $3.5 million was raised from investors during the first nine months of 2008. The Complaint alleged that McAdams and Freeman told investors orally and in writing that Global Holdings was “in the business of locating and securing high return investment opportunities for investors on international trading platforms.” Most of the Global Holdings’ investors executed a joint venture agreement that was prepared by McAdams and signed by either McAdams or Freeman. These joint venture agreements represented that Global Holdings would utilize those funds “for the purpose of buying and selling Standard and Poor’s AAA or AA rated bonds and/or Medium Term Notes” on an “overseas trading platform.” Some of the joint venture agreements stated that investors who invested $20,000 would receive $1,000,000 after 60 days, a return of 4,900%. At least one joint venture agreement stated that an investor’s $500,000 would grow to $1,500,000 after 60 days, for a 200% rate of return. Most investors, if not all of them, never received either profits or a return of their principal. Instead, over $500,000 in investor funds were transferred to accounts controlled by Freeman and his family.
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