U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19860 / October 6, 2006
Securities and Exchange Commission v. First United Financial Group, LLC, et al., CIV. ACTION NO. 1:04-cv-1601-CKK (United District Court for the District of Columbia) (Judge Kollar-Kotelly)
Carletus Willis Consents to Permanent Injunction
On September 20, 2006, United States District Judge Colleen Kollar-Kotelly entered a final judgment by consent against Carletus Willis in an action that the SEC filed in the United States District Court for the District of Columbia in 2004.
The Commission's complaint alleges that, from at least June 2001 until August 2003, Carletus Willis, an employee of First United Financial Group, LLC, participated in the offer and sale of securities called "Asset Placement Agreements" in unregistered transactions to more than 150 investors in at least 18 states. Through cold calls, seminars, sales agents and newspaper advertisements, First United raised over $1.38 million. In connection with the offer and sale of securities, according to the complaint, Willis, and his co-defendant, Robert Hall, made misrepresentations and omissions of material fact to investors concerning, among other things, the use of investor funds, expected returns, and the investment risks, including representations that the funds raised would be invested in real estate in Washington, DC to assist lower and moderate income residents in a "friendly real estate development system" to assist residents who might be displaced "by the market pressures of gentrification." In fact, investors' funds were not invested in real estate projects in Washington, DC or elsewhere.
The order permanently enjoins Willis from violations of the registration provisions of the federal securities laws contained in Sections 5(a) and 5(c) of the Securities Act of 1933, and from violations of the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. In consenting to the order, Willis agreed to cooperate with the Commission in this matter.
In a parallel criminal proceeding captioned United States v. Carletus Willis, No. 1:04-cr-00414-HHK (D.D.C.), Willis pled guilty to a criminal count of mail fraud and a criminal count of conspiring to commit mail fraud, and on June 1, 2006, was sentenced to pay $106,000 in criminal restitution and to five years of supervised probation in connection with the same conduct alleged in the Commission's complaint.
In another parallel criminal proceeding, United States v. Robert L. Hall, Jr., No. 1:05-cr-00030-HHK (D.D.C), Robert Hall, who is also a defendant in the Commission's action, was on March 3, 2006, convicted on 18 criminal counts related to the conduct alleged in the Commission's complaint. An order entered July 5, 2006, in that criminal proceeding requires Hall to forfeit and to pay $747,169. Hall's sentencing is scheduled for November 17, 2006.
On September 19, 2006, the Commission also voluntarily dismissed its complaint as against First United Financial Group, LLC, which is now defunct and has had its charter revoked by the District of Columbia government.
For additional information, see Litigation Release No. 18886 (September 15, 2004).