Prime Bank Fraud Recovery
The United States Securities and Exchange Commission (Commission) announced that on April 26, 2007 and May 9, 2007, the United States District Court for the District of Maryland entered final judgments against defendants Larry Michael Parrish ("Parrish"), Michael Edward Zimmerman ("Zimmerman"), Z-Par Holdings, Inc. ("Z-Par Holdings") and Z-Par Investment Fund II, LLC ("Z-Par Investment Fund II") arising from charges that they conducted a fraudulent high-yield investment scheme that raised approximately $8.2 million from eleven investors in Florida and others elsewhere throughout the United States from at least April 2004 to April 2005.
Without admitting or denying the allegations of the Commission's complaint, the defendants consented to the entry of final judgments permanently enjoining them from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. Pursuant to Section 15(b)(6) of the Exchange Act, Parrish and Zimmerman have also consented to the entry of administrative orders barring them from associating with any broker or dealer for at least five years.
On April 14, 2005, the Commission obtained a temporary restraining order and asset freeze against defendants Parrish, Zimmerman, and their wholly-owned entities Z-Par Holdings and Z-Par Investment Fund II. The Commission's complaint alleged that Parrish and Zimmerman marketed the fraudulent prime bank investment scheme by falsely representing to investors that their funds would be pooled with those of other investors in $1 million lots for the purchase of "debt obligations of the top 50 banks in the world," which would be safe and secure investments yielding high rates of return. The complaint alleged that Parrish and Zimmerman fraudulently sold interests in fictitious prime bank debt instruments and payment obligations, claiming that they carried a financial insurance guarantee to further enhance the value and lower the risk of default. The complaint further alleged that in furtherance of the fraudulent scheme, Parrish and Zimmerman sent investor funds to relief defendants, Eduard Akopian, and his wholly-owned entity Capital Bancorp, who unbeknownst to Parrish and Zimmerman, used the funds to purchase precious metals on margin.
On May 4, 2005, the defendants and relief defendants consented to a preliminary injunction and an order maintaining the asset freeze. In December 2005, $7.5 million was returned to investors."
The one undeniable fact in all frauds is the investors have an unshakeable belief in finding a safe and high return investment. But without any special skill, and absent winning a lottery, there is no such investment.
