Article

Prime Bank Instrument Scams.

Type of Lawsuit:

Action by SEC against alleged scamsters for violation of antifraud provisions of US securities laws, for disgorgement of illicit profits, and permanent injunction against future violations.

Parties:

Plaintiff- SEC

Defendant/Alleged Scamsters- Jerome C. Pinckney; Richard L. Arnold; Donald E. Elder; Fernando Cruz; Shaun K. R. Maxwell; Anthony Bukovitch; Six Capital Corporation.

False Instruments:

Bank guarantees issued by the top banks in Western Europe; standby letters of credit.

Activities:

1) From April 1994, some of the defendants solicited an investment of US$ 850,000 in a bank guarantee trading program which were to be purchased at 75% of face value which was $1 million and sold to Merrill Lynch immediately at 92.5%. .

2) From August 1994, some of the defendants solicited an investment of $750,000 for a standby letter of credit trading program.

Decision:

The U.S. District Court for the Eastern District of North Carolina, Britt, J, prior to trial entered a permanent injunction against Arnold, Cruz, Elder, and Maxwell and the claim against Pinckney was voluntarily dismissed with prejudice. At trial, a permanent injunction was entered against Bukovitch and Six Capital Corporation.

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The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.