[ by Larry Goldfarb ]

The Securities and Exchange Commission uncovered another prime bank scheme in which the operators promise unusually high returns at a foreign financial institution. The SEC noted that the scheme has been long running and raised $15 million from at least 220 investors in more than 20 state over a period of years.

The facts

• Billy W. McClintock, who lives in Florida, and Dianne Alexander, a former Georgia resident who now lives in California and also is known as Linda Dianne Alexander are the perpetrators.
• The scheme began at least in 2004 and misrepresented or omitted facts about investment risks, expected returns, and how investor funds would be used. 
• The complaint charges McClintock and Alexander with violating the securities registration, broker-dealer registration, and antifraud provisions of the U.S. securities laws and a related SEC anti-fraud rule.
• McClintock portrayed himself as the “U.S. Director” of a secret European trust that had the power to create money and claimed to have appointed Alexander as a “U.S. Regional Director” for the trust.
• The SEC is seeking an emergency court order to freeze the operators’ assets for the benefit of investors.
• The SEC alleges that McClintock and Alexander led investors to believe that they could receive 38 percent annual interest on loans to the trust, provided they abide by the trust’s strict rules requiring secrecy.
• Investor money was instead used to merely pay other investors, the hallmark of a Ponzi scheme.

“McClintock and Alexander pitched an investment opportunity that simply did not exist. They merely reshuffled funds between investors in a modern take on a classic prime bank scheme,” said William P. Hicks, Associate Director of Enforcement in the SEC’s Atlanta Regional Office.

For further information, please contact [SEC, 11/19/12]