U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19690 / May 8, 2006
SEC v. Scott B. Hollenbeck, Timothy L. Bradshaw and Steven K. Gilley, Civil Action No. 1:05-cv-1272 (NDGA)
The Securities and Exchange Commission announced that on May 1, 2006, the Honorable Willis B. Hunt, Jr., United States District Judge for the Northern District of Georgia, entered a Judgment of Permanent Injunction As To Steven K. Gilley (Gilley), enjoining him from future violations of Sections 5 and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Gilley consented to the entry of the judgment without admitting or denying the allegations of the Commission's Complaint. The court ordered disgorgement and prejudgment interest against Gilley in the amounts of $1,749,392 and $187,506, and did not impose a civil penalty.
The Complaint alleged that Gilley, Scott B. Hollenbeck and Timothy L. Bradshaw (others), who worked as commissioned sales agents for Mobile Billboards of America, Inc. (Mobile Billboards) engaged in the unregistered sale of Mobile Billboards' securities in the form of investment contracts. The investment contracts included the purchase of two billboard frames which sold for $20,000 per unit. Investors simultaneously leased the billboards back to Outdoor Media Industries, Inc. (Outdoor Media). Investors were told that Outdoor Media would purportedly pay the lease payments to investors. Mobile Billboards agreed to buy back the billboards after seven years at the full purchase price. The investment program functioned as a Ponzi scheme and relied on new investor money to make lease payments. The sales materials used by Gilley and others made false claims about the number of operational billboards and misrepresented the value of other assets. Gilley and others made additional misrepresentations, including claims that the investment was secured or guaranteed, and knew or recklessly ignored information indicating that the Mobile Billboards program was a Ponzi scheme.
See also: L.R. No. 19226 (May 17, 2005)