Dealing with Disbarred Laywers
According to the SEC,
Global Online Direct, Inc., Bryant E. Behrmann and Larry "Buck" E. Hunter: Lit. Rel. No. 20359 on November 6, 2007, the Honorable William S. Duffey, Jr., United States District Judge for the Northern District of Georgia, entered judgments as to defendants Bryant E. Behrmann (Behrmann) and Larry "Buck" E. Hunter (Hunter), restraining and enjoining them from future violations of Sections 5 and 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 Court ordered each defendant to pay disgorgement, prejudgment interest and civil penalties, the amounts of which will be decided by the Court upon subsequent motion by the Commission.
The defendants consented to the entries of the judgments without admitting or denying any of the allegations of the Commission's Amended Complaint. The Amended Complaint, which was filed on July 3, 2007, charged that, since at least October 2005, Global, Behrmann and Hunter have orchestrated a massive Ponzi scheme and conducted an unregistered offering of securities through Global's SPIP. Global, Behrmann and Hunter solicited investors to "loan" Global funds for a term of one year in exchange for promised daily interest payments. Depending on the amount invested, Global promised effective annual returns of more than 1,800%. Global purported to generate revenue sufficient to pay investors their promised returns by pooling investor proceeds to purchase distressed inventory, which Global then claimed to resell through various online auction websites, including Ebay and Yahoo! Auctions, as well as through flea markets, street sales and retail storefronts. From October 2005 through March 2007, Global raised approximately $45 million from more than 9,000 investors.
The Amended Complaint further alleged that Global, Behrmann and Hunter failed to disclose to investors that Global's purported business model was wholly incapable of generating the returns promised to investors, and that the vast majority of the returns paid to existing investors were in fact the proceeds invested by later investors - the key hallmark of a Ponzi scheme. The Amended Complaint also charged that Global, Behrmann, and Hunter failed to disclose other material information to investors, including that: (a) as of March 2007, Global was more than $30 million in arrears in honoring investor withdrawal requests and owed investors approximately $265 million - an amount more than $250 million in excess of all assets of Global; (b) even though they had promised investors that their investments were "secured and backed by actual product inventories," they had taken no steps to secure or tie any individual investment to any actual product inventory, and the total value of the inventory was only a tiny fraction of the investments purportedly secured; (c) Global maintained no effective bookkeeping or accounting systems, and thus were completely incapable of tracking or identifying the amounts invested by investors, the returns paid to investors, the cost of inventory purchased, and the proceeds generated through inventory sales; and (d) state cease-and-desist and injunctive orders for prior violations of securities laws had been entered against Global by the states of Pennsylvania and South Dakota, against Behrmann by the states of North Dakota, Pennsylvania and South Dakota, and against Hunter by the states of Idaho, Illinois, Minnesota, North Dakota, Oregon, Pennsylvania, South Dakota and Washington. The Amended Complaint further alleged that, while representing to investors that Behrmann was an attorney and a former judge, Defendants failed to disclose that his law license had been suspended since 1999 for professional misconduct and that the Idaho Supreme Court had found Behrmann to have engaged in "conduct involving dishonesty, fraud, deceit or misrepresentation in course of his practice of law."
Behrmann is the secretary and treasurer of Global and a resident of Las Vegas, Nevada. Hunter is the president of Global and a resident of La Grande, Oregon.
Fascinating, 9000 investors who did not check to see whether Behrmann was a lawyer in good standing.
