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William M. McKnight Investment Fraud Schemes ( Old & New )
Anonymous
Posted: Saturday, August 13, 2011

Posted: 3/21/2008 8:28:12 PM

By: ShoreLines

Agreed.

Good background reading . . .

"The Fountain Pen Conspiracy" by, Jonathan Kwitny [Pub. Alfred A. Knopt Inc. 1973 (1979 4th Ed.)] on scam artists Clifford Dixon Noe, his brother Paul Howe Noe, et al.; or,

"The Myth Of Prime Bank Investment Scams" by, Prof. James E. Byrne

One may also look beyond those books to the story surrounding the infamous Farhat Tabbah ("Farih") of SITEA INTERNATIONAL S.A. and the associated scams involving Emma Corbin, et al.

SL


Anonymous
Posted: Saturday, August 13, 2011

Posted: 3/21/2008 6:17:53 PM

By: David S. Lesperance

That is quite a story this guy was telling investors. Tony Rials had nothing on this guy. Again makes me reach for my copy of "Why People Believe Weird Things?"

David S. Lesperance
Barrister and Solicitor


Anonymous
Posted: Saturday, August 13, 2011

Posted: 3/21/2008 12:23:15 AM

By: Unwanted Publicity

Additional info . . .

====

William M. McKnight, D.D. ( Doctor of Divinity )

Aliases:

- Dr. William M. McKnight ( Doctor of Divinity )
- Reverend William M. McKnight
- Pastor William M. McKnight

DOB: 1940

RESIDENCE(S):

01APR05 -

William M. McKnight [ DOB: 1940 / 68-yrs. ] & Karen Dowling McKnight [ DOB: MAR51 / 56-yrs. ]
4416 Alamance St.
Baytown, TX 77521
USA

21MAY03 -

William M. McKnight
7210 Breda Dr.
Baytown, TX 77521
USA

2001 -

William M. McKnight & Karen Dowling McKnight
1701 Amy Dr.
Baytown, TX 77520
USA
TEL: (281) 422-9495

11SEP97 -

William M. McKnight
3411 Garth Rd. PMB 187 ( mail drop )
Baytown, TX 77521-3851
USA
TEL: (281) 838-3021
FAX: (832) 594-8257

BUSINESS(ES):

2007 -

[NOTE: On site work location (immediately below)]

CENTRAL BAPTIST CHURCH OF VIDOR (aka)
CENTRAL BAPTIST CHURCH
1100 E. Railroad
Vidor, TX 77662
USA
CONTACT: Joseph McKnight

[NOTE: On site work location (immediately above)]

04NOV03 -

GLOBAL HUMANITARIAN GROUP+ ( Utah registered company )
7210 Breda Dr. PMB 203 ( mail drop )
Baytown, TX 77521-3851
USA

1998:

GLOBAL MINISTRIES INC.
7210 Breda Dr.
Baytown, TX 77521
USA
TEL: (281) 839-3009
TEL: (281) 839-1234 (office)
FAX: (281) 839-1199

CALVARY TEMPLE OF BAYTOWN INC.
7210 Breda Dr.
Baytown, TX 77521
USA
TEL: (281) 839-3009
TEL: (281) 839-1234 (office)
FAX: (281) 839-1199

11SEP97 -

PROTEX PROPERTIES LTD.
3411 Garth Rd. PMB 187 ( mail drop )
Baytown, TX 77521-3851
USA
TEL: (281) 838-3021
FAX: (832) 594-8257

FEB64 -

GLOBAL HUMANITARIAN GROUP ( Texas registered company )
ETERNAL STORY
3411 Garth Rd. PMB 203 ( mail drop )
Baytown, TX 77521-3851
USA

====

William M. McKnight legal counsel ( 27AUG98 ):

GREENBERG, PEDEN, SIEGMYER & OSHMAN P.C.
Texas
USA
CONTACT: Michael B. Lee Esq.

====

[NOTE: SEC complaint background ( 25JUL95 ) and U.S. District Court federal ruling ( 27AUG97 ), below.]

- - - -

Named in case CV-95-164-B ( D. Ma. 1997 ) complaint background (below):

- CENTRAL INTELLIGENCE AGENCY ( CIA )
- HONG KONG PROGRAM
- Grand Master ( Trader & Collateral Holder Training )
- GULLETT & ASSOCIATES
- Bradley T. Gullett ( Grand Master Trader & Master Collateral Holder )
- U.S. SECRET SERVICE
- Bill Clinton ( president of USA )
- BANCOMER S.A. ( bank in Mexico )
- Ellis L. Deyon ( claimed CIA agent )
- William M. McKnight ( minister with 9 doctoral degrees )
- CRAIG MINISTRIES INC.
- Sherwood H. Craig
- DOVE INVESTMENT GROUP INC.
- William Hanke
- Bradley T. Gullett
- Atlas Langford
- U.S. SECURITIES AND EXCHANGE COMMISSION ( SEC )

- - - -

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE

SECURITIES AND EXCHANGE COMMISSION,
Plaintiff

v.

ELLIS DEYON, ET AL.,
Defendants

Civ. No. 95-164-B ( D. Ma. 1997 )

FINDINGS OF FACT AND CONCLUSIONS OF LAW

August 27, 1997

BRODY, District Judge.

Plaintiff, the Securities and Exchange Commission ("SEC"), alleged in a Complaint dated July 25, 1995, that Defendants, Ellis L. Deyon, Bradley T. Gullett, GULLETT & ASSOCIATES, Sherwood H. Craig, William Hanke, and DOVE INVESTMENT GROUP INC., violated Section 17(a) of the Securities Act of 1933, 15 U.S.C. §77q(a), Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. §240.10b-5, and Section 15(a) of the Securities Exchange Act of 1934, 15 U.S.C. §78o(a).

After Deyon settled with the SEC, the Court issued a judgment by consent against him on January 14, 1997. The Court enjoined Deyon from committing further violations of the securities laws and ordered him to disgorge $512,000.00 of his ill-gotten gains. After $407,071.89 had been deposited into the Registry of the Court, the remainder was waived due to Deyon's inability to pay.

The Court issued judgments against Hanke and his corporation, DOVE INVESTMENT GROUP INC., on October 9, 1996, and November 2, 1995, respectively, after they defaulted.

The Court left the assessment of penalties against Hanke and DOVE INVESTMENT GROUP INC. for determination at a hearing scheduled for July 31, 1997. Hanke did not appear for the hearing. The Court assesses penalties against Hanke and DOVE INVESTMENT GROUP INC. based on Plaintiff's request for judgment and supporting documents.

A trial was held before the Court from July 28, 1997 through August 1, 1997 to determine the liability of the remaining Defendants, Craig and Gullett, and to assess penalties to be levied against them, if any.

I.

Findings of Fact

A. Background

In the early 1990s, Bradley Gullett was introduced to a minister named William M. McKnight, who claimed expertise in finance including a background of having earned nine (9) doctorate degrees.

McKnight later introduced Gullett to Ellis Deyon, who was working at the time for the CHARTER TRADING CORPORATION, which, according to McKnight and Deyon, had as employees agents of the CENTRAL INTELLIGENCE AGENCY.

In 1993, Gullett, McKnight, and Deyon executed a joint venture agreement with Atlas Langford, an elderly and affluent long-time friend of Gullett's from Tennessee.

Pursuant to the agreement, Langford would pay the other parties' expenses while they marketed "Prime Bank" programs. These programs in reality were fraudulent schemes that purported to generate substantial profits through the trading of fictional instruments in a fictional market said to be regulated by a "Grand Master."

The parties agreed to split the profits generated by the programs. Gullett persuaded Langford to execute the agreement by falsely depicting Langford's potential profits as being in the hundreds of millions of dollars.

Gullett, knowing Langford to be a devoutly religious Christian, also purported to share his religious beliefs and told him that a prophet named Bernard Leuschner told Gullett that Gullett was the "right man on the East Coast to fulfill the finances before the last harvest of Christ before the end time." Gullett also performed faith healing services in the presence of Langford.

In June 1993, pursuant to the joint venture agreement, Gullett and Deyon sought investors for a "bill of exchange" program. In advertising this program to potential investors, Gullett promised that he was to receive a pre-approved loan of $5,000,000,000.00 (USD) billion dollars that was "self- liquidating," indicating, he claimed, that he did not have to pay it back.

Gullett told potential participants that he would use the money to buy and sell Prime Bank Debentures, which, unknown to the investors, did not exist.

An additional program, executed pursuant to the joint venture agreement was known as the "Hong Kong Program."

Langford was told that he could expect to receive $730,000,000.00 million in profits from the Hong Kong Program.

In furtherance of this scheme, Langford paid for Gullett's expenses while he supposedly trained in Hong Kong with the Grand Master.

McKnight purportedly told Gullett that U.S. President Clinton was an investor in the Hong Kong Program, and later told Gullett that the program failed because U.S. President Clinton was refused his billion dollar share and subsequently sent the U.S. Secret Service to execute the Grand Master.

Another investment scheme Deyon and Gullett executed, before they began working on the bank program that is the subject of this suit, was an arrangement with an individual named Ivan Pearson.

Pursuant to this scheme, Pearson would use investors' money to trade bank debentures for a profit of 25% per month.

Gullett, Deyon, and Pearson agreed to split the profits. Deyon assured Gullett that Pearson was trustworthy, and continued to do so even after Pearson had been named as a defendant in a twelve (12) count court proceeding ultimately resulting in Pearson's incarceration.

B. The Mexican Bank Account

In April 1995, Deyon was living and working in Mexico in an effort to initiate additional Prime Bank schemes pursuant to the joint venture agreement with McKnight, Gullett, and Langford.

On April 25, 1995, Deyon opened a bank account at a branch of BANCOMER S.A. in Saltillo, Mexico with money sent to him by Gullett.

Deyon sent a copy of the contract opening the account to Gullett, who, despite the fact that he did not speak Spanish, never had the contract, which was written in Spanish, translated.

According to Deyon, the account paid an interest rate of approximately 85% per month and would guarantee a return of 25% per month to any investor who deposited a minimum of $25,000 and agreed to leave the money in the account for at least 1-year.

Gullett began seeking investors for this account, telling them in addition to the alleged terms of the account, that the account was not available to the general public and that Deyon had procured it only because he had certain high level connections in BANCOMER S.A.

Gullett also told potential investors that the investment was as safe as any savings account in the United States and that the only risk they faced was if the bank collapsed, which he said was highly unlikely because the bank was supported by the government of Mexico.

Additionally, Gullett told potential investors that he had spoken with other investors who were prepared to invest $500,000,000.00 (USD) million in the account and that Gullett himself had invested in the account.

In an effort to prove that the BANCOMER S.A. bank account truly offered the terms that he had been reporting, Gullett planned to travel to Mexico with two (2) potential investors so they could determine the account legitimacy for themselves. At about this time Gullett enlisted William Hanke, whom Gullett had met in early 1995 and knew had been involved in fraudulent "roll programs" in the past. Hanke thereafter called Sherwood Craig.

Hanke had first talked to Craig earlier in the year after learning that Craig was interested in making money to help build television stations. Craig, president and pastor of CRAIG MINISTRIES INC., was also a televangelist who already owned and operated eight ( television stations under the business name DOOR OF FAITH, a Pentecostal charismatic church comprised of fundamentalist Christians.

He discussed the BANCOMER S.A. bank account with Craig, describing it as being risk-free.

Craig, who was a licensed broker for the firm of WADDELL & REED from approximately 1964 to 1968, thought that the rates Hanke said the bank offered were "too good to be true."

Hanke assured Craig that the rates were correct, and explained that the BANCOMER S.A. bank could afford to offer such high rates because it made 200% per month on its money.

Craig admitted being pessimistic about the account. Nevertheless, he continued to discuss the account with Hanke, despite knowing that the Mexico banking industry was in the middle of the worst financial crisis in its history and that the peso had devalued approximately 50% in the previous 5-months.

Hanke finally told Craig that if Craig brought investors into the program and the investors agreed to accept a return of 15% per month, Craig would be entitled to recover the difference between the 25% return the account allegedly promised investors and the 15% the investors agreed to accept.

Gullett expected to recover for himself the difference between the 85% per month return the account offered and the 25% per month interest the investor and Craig received.

Gullett later confirmed this arrangement during a meeting in Florida between Craig, Hanke, and Gullett on May 9, 1995.

Additionally, Gullett explained to Craig that the BANCOMER S.A. bank could afford to offer an account that had a return of 85% per month because it was a "World Bank." Craig did not know what a "World Bank" was nor did he make any inquiry to learn about it or to determine if BANCOMER S.A. was a "World Bank."

Gullett also told Craig that Deyon was once employed by the CENTRAL INTELLIGENCE AGENCY and that Gullett had discussions with a potential investor, whose name he did not disclose, who was prepared to invest $500,000,000.00 (USD) million into the account. Craig did not ask for the name of the investor or make any further inquiries.

The next day, May 10, 1995, Gullett traveled to Florida with two (2) potential investors from Pennsylvania, and on May 11, 1995 they went to the BANCOMER S.A. bank with Deyon and his lawyer. Gullett and the investors could not read, speak, or understand Spanish. The BANCOMER S.A. bank employees, with whom they met, could not read, speak, or understand English. Deyon's lawyer, Yolanda Cortes, translated their conversations.

Although the bank employees stated that the current interest rate paid by BANCOMER S.A. bank was 85% per year, the two (2) potential investors thought that the employees had confirmed Deyon's statement that the account paid 85% per month.

Gullett, however, indicated that based on representations made to him by BANCOMER S.A. bank employees the account rate could fluctuate to as low as 55% per month.

Based on Gullett's representations, and upon visiting the bank in Mexico, the two (2) individuals from Pennsylvania decided to wire money to BANCOMER S.A. bank and invest in the account. Gullett and Craig continued to present the program to potential investors.

Soon after returning from Mexico, Gullett talked to Terry Nelson, a Christian missionary, describing the BANCOMER S.A. bank account as he had done to the Pennsylvania investors although Gullett did not tell Nelson that the account could produce a rate as low as 55% per month.

Nelson eventually invested in the BANCOMER S.A. bank account. For his part, Craig prepared an advertising circular that he distributed to potential investors. They described the BANCOMER S.A. bank as being "one of the top 200 World Banks," and that the program had been started by Christian men for church related programs. Craig faxed the circular to Hanke, who reviewed it with Gullett and faxed back a revised version to Craig.

The revised version of the circular described BANCOMER S.A. bank as being "supported by 25 Top Prime Banks world wide…"

Craig showed this revised circular to potential investors, despite the fact that he did not understand what it meant to be a "Prime Bank." Craig continued to recommend BANCOMER S.A. bank account to many potential investors, either by telephone or in person, and often provided them with documents relating to the program, including the informational circular. He told them that the BANCOMER S.A. bank could afford to offer such a high rate of return because it was making 200% per month on its own money. He told one potential investor, John Przybycien, that investors had placed $1,000,000,000.00 (USD) billion dollars into the BANCOMER S.A. account on the first day it was offered.

Gullett never checked with any regulatory agencies about the program and, other than his meeting with the two (2) bank employees in Mexico, relied on information about the bank provided by Deyon.

He never investigated Deyon's background and relied on William M. McKnight who vouched for Deyon's credibility.

Whenever Gullett asked Deyon for a statement for an investor, Deyon offered an excuse as to why he could not produce one. Deyon eventually sent a statement but it was illegible. Gullett never received a legal bank statement from Deyon.

Craig relied on Hanke's and Gullett's representations about the bank account. He never investigated their backgrounds, never contacted the bank himself, and never made any effort to determine if the documents he had been given were genuine.

After Gullett learned that the SEC was investigating the BANCOMER S.A. bank account and its promoters, he told Craig that his lawyer advised him that the program could be considered a security.

Craig continued to accept funds for the program. In fact Craig, continued to promote the BANCOMER S.A. account even after he had been subpoenaed by the SEC regarding the bank account and, had invoked his 5th Amendment right against self- incrimination.

Despite what Gullett and Craig had told potential investors, the BANCOMER S.A. bank account was not available only to a handful of people; rather, the account was available to the general public.

Moreover, the BANCOMER S.A. account did not pay an interest rate of 85% per month; it evidently paid 40%-57% per year.

There were no investors who had deposited $500,000,000.00 (USD) million or $1,000,000,000.00 (USD) billion into the BANCOMER S.A. account.

The BANCOMER S.A. bank did not earn 200% per month on its money, nor would it be possible for it to do so.

BANCOMER S.A. is not a member of the World Bank.

The BANCOMER S.A. account was not essentially risk-free.

The factual scenario of the entire scheme was bizarre and incredulous.

II. Conclusions of Law

A. Securities Violations

It is unlawful under Section 17(a) of the Securities Act of 1933 for any person in the sale or offering of securities and through the use of communication in interstate commerce:

(1) to employ any device, scheme, or artifice to defraud, or (2) to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (3) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.

15 U.S.C. § 77q(a). Section 10(b) of the Securities Exchange Act of 1934 makes it unlawful for any person, through the use of interstate commerce or the mails: (b) [t]o use or employ, in connection with the purchase or sale of any security . . ., any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate . . . .

15 U.S.C. § 78j(b). Rule 10b-5, codified by the SEC pursuant to the authority given it in Section 10(b) of the Securities Exchange Act of 1934, proscribes the making of any untrue statements of material fact in connection with the sale of securities. See 17 C.F.R. 240.10b-5.

A statement is material if there is a substantial likelihood that a reasonable investor would consider it important in deciding whether or not to invest his or money in a particular security. See Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (198. A showing of scienter is required to prove a violation of Section 17(a)(1) of the Sceurities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. See Aaron v. SEC , 446 U.S. 680, 691 (1980). Scienter, however, is not an element of a violation under Sections 17(a)(2) or 17(a)(3). See id. at 695-96.

A showing that an individual acted with recklessness satisfies the scienter requirement. See Xaphes v. Merrill, Lynch, Pierce, Fenner and Smith, Inc., 600 F. Supp. 692, 694 (D. Me. 1985). An individual acts recklessly if he disregards a risk so obvious that he must be said to have been aware of it and a risk so great that harm would most likely follow. Id. A security is defined as an "investment contract." See 15 U.S.C. § 77b(1), § 78c(a)(10). In SEC v. W.J. Howey Co., 328 U.S. 293, 298-99 (1946), the Supreme Court defined an investment contract as "any contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third person." Courts should look at the economic reality of the investment when deciding whether it can be considered an investment contract. See United Housing Foundation, Inc. v. Forman, 421 U.S. 837, 848 (1975).

The first issue the Court addresses is whether the Bancomer bank account program that Defendants promoted was a security. There is no question that certain individuals invested their money in the account and that they expected to recover profits solely from the efforts of Defendants. Nevertheless, the program cannot be considered an investment contract, and thus a security, unless there was a common enterprise. See W.J. Howey Co., 328 U.S. at 298-99.

A common enterprise is proven by demonstrating that there was horizontal or vertical commonality. Horizontal commonality is defined as "the pooling of assets from two or more investors into a single investment fund, usually combined with a pro rata sharing of profits." Lavery v. Kearns, 792 F. Supp. 847, 851 (D. Me. 1992). Vertical commonality is established when "the investment manager's fortunes rise and fall with those of the investor." Id.

The First Circuit has not yet determined which type of commonality need be present to prove the existence of a common enterprise. For present purposes, however, it is not necessary to decide which type of commonality need be present because the SEC has established the existence of both horizontal and vertical commonality.

Horizontal commonality was present because the investors' money was deposited into a single account (under Deyon's name), with each investor to receive 15% or 25% of the principal that he deposited.

Thus, a pro rata sharing of the profits was present because each investor would recover an amount in proportion to the principal that he deposited; likewise, each investor would suffer a pro rata loss if the account failed to produce the interest rate that was promised to him at the time he invested.

Vertical commonality was present because the fortunes of both the investors and the Defendant promoters were linked. Gullett would recover as profit the difference in interest between what BANCOMER S.A. produced per month and what each investor received per month. Thus, the more an investor deposited in the account, the more Gullett would recover. Similarly, Craig would recover as profit the difference in interest between the 25% per month the account supposedly offered investors and the 15% that certain investors agreed to recover. Craig, therefore, also stood to gain more in profit if an investor would deposit more money into the account. Thus, vertical commonality exists.

Defendants argue that because the interest investors could receive was capped at 25%, the investors were promised a set rate of return and thus could not share any risk of loss with the Defendants. Indeed, in Lavery v. Kearns, 792 F. Supp. 847 (D. Me. 1992), the court held that there was not vertical commonality because the plaintiffs received exactly $416.18 per month.

This rate did not vary or depend on any other factors and thus the plaintiffs did not face any risk of loss. On the contrary, the investors here faced the possibility that the interest the bank offered could fall significantly and imperil the investors' ability to recover an interest rate of 15% or 25% per month.

Gullett and Craig, consequently, also could be left without any profits. Accordingly, although the investors could receive a maximum of 25% in interest per month, it was possible that they could recover less than that depending on the financial stability of the market.

The Court is not persuaded by Defendants' arguments to the contrary and holds that vertical commonality was present.

Consequently, the BANCOMER S.A. bank program offered by Defendants was a security as that term is defined in the Securities Act of 1933 and the Securities Exchange Act of 1934.

The Court is also persuaded that Gullett, and Craig to a somewhat lesser extent, made material misrepresentations, either recklessly or with scienter, with regard to the sale of these securities.

For instance, Gullett knew as early as May 10, 1995, that the BANCOMER S.A. account could earn as little as 55% per month, yet he continued to distribute circulars and other materials containing the 85% rate to potential investors. This information was material, see Basic Inc. v. Levinson, 485 U.S. 224, 231 (198, because a reasonable investor would want to know that the account's rate could drop by as much as thirty percent from what it was supposed to produce.

Such a decline could foretell even further declines, which would threaten the investor's ability to recover the 15% or 25% interest he expected to receive. Gullett also knew that there were no other investors who had placed or were considering placing $500,000,000.00 (USD) million into the account; nevertheless, he told potential investors that this money was or would soon be deposited into the account. This, too, was material because it undermines the legitimacy of the account that Gullett had tried to establish. Moreover, even assuming that Gullett believed that the bank produced a return of 85% per month, he was at least reckless in reaching such a conclusion. A return of 85% per month is inconceivable on its face.

Gullett also was reckless in relying so much on the advice of William M. McKnight and Ellis L. Deyon. For instance, he never investigated Deyon's background other than to rely on McKnight's assurance of his credibility.

Gullett should have at least questioned McKnight's background based on claims of having earned nine (9) doctorate degrees and the absurd statement that U.S. President Clinton sent the U.S. Secret Service to assassinate the "Grand Master."

Clearly, William M. McKnight was not an individual upon whom Gullett should have relied for advice. Indeed, it was reckless for Gullett to have done so.

Finally, Gullett should have known that the BANCOMER S.A. account was a fraud because he never received a legal bank statement of an investor's account after requesting several from Deyon.

Gullett also never had the contract opening the account translated and he did not speak, read, or understand Spanish.

Each of these incidents, either taken individually or cumulatively, establish by a clear preponderance of the evidence, that Gullett either knew or was reckless in not knowing that the account was a fraud and knowingly or recklessly made material misrepresentations about the account to potential investors.

Thus, Gullett is liable for violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the 12 _ Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Craig also is liable for violating Sections 17(a) of the Securities Act of 1933 and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Craig should have known that investors had not deposited $1,000,000,000.00 (USD) billion into the account on the day it was opened, despite telling one potential investor to the contrary. This constitutes a material misrepresentation.

A reasonable investor would consider it important to know whether $1,000,000,000.00 (USD) billion had already been deposited in an account because such a deposit gives the account an aura of credibility and legitimacy. Therefore, falsely representing that $1,000,000,000.00 (USD) billion had been deposited in the BANCOMER S.A. account puts the account and its credibility in a false light.

Like Gullett, Craig was reckless in believing, assuming that he honestly did believe, that the account could produce a return of 85% per month.

It is beyond belief that a bank could produce such a high rate of return for its investors.

Craig relied exclusively on Gullett's and Hanke's representations to determine the program's legitimacy. He took no independent steps to investigate the program or to investigate Gullett's or Hanke's backgrounds.

Craig also never made any effort to determine if the BANCOMER S.A. bank documents he had been given were genuine.

Additionally, after Gullett learned that the SEC was investigating BANCOMER S.A. bank account, its promoters, and told Craig that his lawyer advised him that the program could be considered a security, Craig continued to accept funds for the program. Craig continued to promote the account even after he had been subpoenaed by the SEC regarding the bank account. He must have been aware at that moment that there was a possibility that the BANCOMER S.A. account was seriously suspect.

Consequently, he was reckless to continue to promote the account after the SEC subpoena and to actually accept another $25,000 deposit from an investor.

The Court finds that Craig was reckless in not knowing or determining that the BANCOMER S.A. account was a fraud and recklessly made material misrepresentations about the account to potential investors, including his sons, in his zeal to fund his CRAIG MINISTRIES INC.

The Court is persuaded that Craig was less sophisticated than Gullett and Deyon and did not knowingly attempt to defraud potential investors, including Craig’s sons. He was, however, clearly reckless in relying on the information supplied to him by the others connected with the scheme. Thus, he is liable for violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Finally, Craig and Gullett are liable for violating Section 15(a) of the Securities Exchange Act of 1934. See 15 U.S.C. 780(a)(1). Section 15 makes it unlawful for any broker who is not registered with the SEC to induce the purchase or sale of any security.

The parties stipulated that Gullett and Craig were not registered with the SEC and the Court has held that the BANCOMER S.A. bank program was a security.

Further, both Gullett and Craig acted as brokers, as that term is defined in 15 U.S.C. §78c(a)(4). "The term `broker' means any person engaged in the business of effecting transactions in securities for the account of others..." Id.

Both Gullett and Craig solicited investors by phone and in person. Gullett distributed documents and Craig prepared and distributed sales circulars in the hope that potential investors would deposit their money in the BANCOMER S.A. account.

Indeed, they both actively sought to effect securities transactions. For these reasons, Craig and Gullett were brokers, and thus are liable for violating Section 15(a).

B. Penalties

1. Permanent Injunction

The Court hereby issues a permanent injunction against Gullett and Craig, prohibiting them from committing future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 15(a) of the Securities Exchange Act of 1934 because their conduct indicates “'that there is a reasonable likelihood of further violation[s] in the future.'" SEC v. Savoy Ind., Inc., 587 F.2d 1149, 1168 (D.C. Cir. 197 (quoting SEC v. Commonwealth Chemical Sec., Inc., 574 F.2d 90, 99-100 (2nd Cir. 197).

Gullett knowingly or recklessly, and Craig recklessly made material misrepresentations to potential investors.

Their conduct was patently offensive because they exploited the sincere religious beliefs of others in an effort to promote the investment that they knew or should have known was fraudulent.

There is no indication that either Craig or Gullett has admitted or will admit wrongful conduct.

Craig exploited his position as president and minister of the DOOR OF FAITH church to convince unsuspecting people to give their money to a program that he recklessly endorsed.

For his part, Gullett has knowingly and recklessly been involved in fraudulent "Prime Bank" schemes for years. He has given no assurances that he will not continue to do so in the future.

Thus, a permanent injunction should issue against both Craig and Gullett.

2. Disgorgement

The Court also orders Gullett to disgorge his ill-gotten gains that he received from the BANCOMER S.A. bank program that is the subject of this suit. See SEC v. Huffman, 996 F.2d 800, 802 (5th Cir. 1993). Gullett received ill-gotten gains in the amount of $41,646. This figure represents the amount Gullett was wired from the account, plus the amount wired from the account to Atlas Langford and subsequently given to Gullett, plus the amount sent to Bernard Leuschner, which was meant to satisfy a liability that Gullett and his partners owed to Leuschner. He is hereby ordered to pay to the Registry of the Court the full amount, $41,646, within 30-days of the entry of final judgment.

3. Civil Penalties

The SEC requests civil penalties against Craig, Gullett, Hanke, and DOVE INVESTMENT GROUP INC. pursuant to Section 20(d) of the Securities Act of 1933, see 15 U.S.C. § 77t(d), and Section 21(d)(3) of the Securities Exchange Act of 1934, see 15 U.S.C. § 78u(d)(3).

The Court finds that Gullett, Hanke, and DOVE INVESTMENT GROUP INC. each deserve to be penalized in the amount of $75,000, because their conduct "involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement" and it "directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons." 15 U.S.C. 77t(d)(2)(C); 15 U.S.C. 78u(d)(3)(B)(iii).

Because the Court finds that Craig's conduct was more reckless than fraudulent, a penalty of $25,000 is assessed against Defendant Craig. Such penalties shall be paid to the U.S. Treasury within 30-days of the entry of final judgment.

III. Conclusion

Gullett and Craig are liable for violating Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a), Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5, and Section 15(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78o(a).

They are permanently enjoined from committing future violations of these sections. Gullett is ordered to disgorge all of his ill-gotten gains from the BANCOMER S.A. program, in the amount of $41,646. Such payment shall be made to the Registry of the Court within thirty days of the entry of final judgment.

Gullett, Hanke, and DOVE INVESTMENT GROUP INC. are each penalized $75,000 and Craig is penalized $25,000 for their conduct in the Bancomer program, pursuant to 16 _ Section 20(d) of the Securities Act of 1933, see 15 U.S.C. § 77t(d), and Section 21(d)(3) of the Securities Exchange Act of 1934, see 15 U.S.C. § 78u(d)(3).

They shall make their payments to the U.S. Treasury within 30-days of the entry of final judgment.


SO ORDERED.


/s/
________________________
MORTON A. BRODY
United States District Judge

Dated this 27th day of August 1997.

Reference(s)

http://www.med.uscourts.gov/Opinions/Brody/1997/mab_1-95cv164_sec_v_deyon_doc169_aug.pdf

http://209.85.129.104/search?q=cache:4qaHdOzkDzAJ:www.med.uscourts.gov/Opinions/Brody/1997/mab_1-95cv164_sec_v_deyon_doc169_aug.pdf+SEC+v+Bradley+Gullett&hl=en&ct=clnk&cd=5&gl=nl

http://www.crimes-of-persuasion.com/Crimes/InPerson/MajorPerson/Prime/primebankSECstark.pdf

====

[NOTE: Texas state trial court case ( 28SEP98 ), Texas state appellate court case ( 28MAR01 ), and Texas state supreme court case ruling ( 07JUN99 ) below:]

A. Background

SAN ANTONIO COURT OF APPEALS
73rd Judicial District Court
Bexar County, Texas
USA

BELL vs. LEE trial court Case No.: 98-CI-13762
Date Filed: September 28, 1998

LEE vs. BELL apellate court Case No.: No. 04-00-00011-CV
Date Filed: March 28, 2001

RULING: Lower Court Ruling Upheld

IN RE: MICHAEL B. LEE; GREENBERG, PEDEN, SIEGMYER & OSHMAN, P.C.; WILLIAM M. MCKNIGHT; GLOBAL MINISTRIES INC.; and, CALVARY TEMPLE OF BAYTOWN INC., Appellees

Scott Bell, a San Antonio police officer, investigated an alleged financial "scheme" involving CALVARY TEMPLE OF BAYTOWN INC. In doing so, he contacted CALVARY TEMPLE's bank, which in turn contacted CALVARY TEMPLE OF BAYTOWN INC. and informed its pastor, Dr. William McKnight, of Officer Bell's investigation.

On August 27, 1998, on behalf of CALVARY TEMPLE OF BAYTOWN INC. and Dr. McKnight, Michael B. Lee - an attorney with the law firm GREENBERG, PEDEN, SIEGMYER & OSHMAN P.C. - sent a letter to Officer Bell claiming that Bell's inquiries at the bank damaged CALVARY TEMPLE's relationship with the bank, as well as its reputation in the community. In his letter, Lee goes on to threaten suit for Bell's slanderous comments to the bank. Lee demanded an apology, compensation, and a response. The letter states Lee’s firm "has the privilege to represent Dr. William M. McKnight and the Church he serves as Pastor, CALVARY TEMPLE CHURCH in Baytown, Texas, " requests a response by a date certain, and warns "slander has a 1-year statute of limitations in Texas, and we do not intend to let the anniversary of your telephone call go by."

Lee sent copies of his letter to the Professional Standards Section of the San Antonio Police Department and to the San Antonio City Attorney.

On September 21, 1998, Officer Bell sued Lee, Lee's law firm, Dr. McKnight, CALVARY TEMPLE OF BAYTOWN INC., and GLOBAL MINISTRIES INC. for slander, libel, civil conspiracy to commit slander, intentional infliction of emotional distress, and tortious interference with a police investigation all based upon the publication of Lee's letter.

On October 1, 1998 and November 5, 1998, the defendants / relators filed motions for summary judgment asserting that the statements in Lee's letter are absolutely privileged by the fact that they were made by an attorney in contemplation of litigation. Both of the motions were denied. The defendants/relators now seek mandamus relief in this court, contending they have no adequate remedy by appeal.

Reference

99-0510 IN RE MICHAEL B. LEE, GREENBERG, PEDEN, SIEGMYER & OSHMAN P.C., WILLIAM M. MCKKNIGHT, CALVARY TEMPLE OF BAYTOWN INC., and GLOBAL MINISTRIES INC. motion for temporary relief overruled ( Order delivered June 7, 1999 ).

http://www.supreme.courts.state.tx.us/historical/1999/jun/061099.htm

====

Submitted,

Unwanted Publicity
[E-MAIL: UnwantedPublicity@gmail.com]

/

/


Internal Administrator
Posted: Saturday, August 13, 2011
Joined: 10/12/2010
Posts: 5779


Posted: 3/20/2008 4:24:28 AM

By: Unwanted Publicity

He's back at it again . . .

Dr. William M. McKnight (aka)
William M. McKnight, D.D (aka)
Reverend William M. McKnight (aka)
Pastor William M. McKnight

ADDRESS (old):

3411 Garth Road - PMB 187 ( mail drop )
Baytown, Texas 77521
USA
TEL: (281) 838-3021
FAX: (832) 594-8257

BUSINESS (old):

PROTEX PROPERTIES LTD.
Mexico City
MEXICO
TEL: 011 (525) 546-6263
FAX: 011 (525) 546-6269
CONTACT: William M. McKnight, D.D (aka) Reverend Dr. William M. McKnight

BACKGROUND:

On 11SEP97, INTERNATIONAL DEPOSIT INSURANCE CORP. (below) carried on its books an asset managed by FIDELITY INTERNATIONAL BANK INC. (below) described as "Baja 1250" that was a Baja-California Mexico post Ejido Law real estate land gold mine claim traded for $3,000,000,000.00 (USD) billion in Series A & B Guarantee Notes held by UNION DE CREDITO METROPOLITANA S.A. DE C.V. (below) for PROTEX PROPERTIES LTD. (below) controlled by Dr. William M. McKnight who on 25SEP00 was made the agent and representative of Leonard J. Suchanek Esq. directing McKnight to redirect $100,000,000.00 (USD) million -- from said $3,000,000,000.00 (USD) billion -- into a Suchanek Trust account for private placement funding of a trading program involving a Belize airport development project Suchanek was to receive $2,160,000.00 (USD) million in returns on by 18APR01 after Suchanek bank wired $160,000.00 on 06APR01 to McKnight who promised to get an insurance wrap and loan, however as of 06NOV03 Suchanek never received any money from McKnight -- in-accordance with their joint venture contract agreement -- or proof that the Belize airport development project occured. [NOTE: signed notarized documents, bank wire transaction, and other support documents on file are available. ]

Those involved, included:

- PROTEX PROPERTIES LTD. ( Mexico City, Mexico )
- William M. McKnight, D.D ( Houston, Texas, USA & Baytown, Texas, USA )
- CHARTER TRADING CORPORATION
- Ellis L. Deyon ( see, e.g. U.S. District Court CASE NO.: CV-00095-164-B in Maine )
- UNION DE CREDITO METROPOLITANA S.A. DE C.V. ( 40 Letters of Guarantee, Series A & B UCM Notes valued at $3,000,000,000.00 USD / numbers available )
- Peter H. Block Esq. ( Santa Monica, California, USA )
- Leonard J. Suchanek Esq. ( Washington, D.C., USA )
- Joleen A. Schweitzer ( Consul General - U.S. Embassy - Mexico City, Mexico, D.F. )
- Scott G. Smith Esq. ( West River, Maryland, USA )
- Charles Hester ( client of Scott G. Smith Esq. - West River, Maryland, USA )
- Gregory McClelland ( client of Scott G. Smith Esq. - West River, Maryland, USA )
- DEEP BLUE MANAGEMENT SERVICES LTD. ( Memphis, Tennessee, USA )
- BANCO INTERNATIONAL ( Felix Guadalupe - New York, New York, USA & La Paz, Mexico )
- THE ORION GROUP INC. ( Pawleys Island, South Carolina, USA )
- James B. Thornton ( TOG Director - Pawleys Island, South Carolina, USA )
- GUARDIAN GROUP INTERNATIONAL LLC
- Robert John Skirving ( GGI Managing Director )
- Wes Harbison
- Paul James Peiffer ( GGI Managing Director )
- FIDELITY INTERNATIONAL BANK INC. ( Nauru, Belize, Barbados, Grenada )
- Cynthia Joy Hastey (aka) Tai Hastey ( FIB CEO )
- Robert John Skirving ( FIB Executive Director )
- Gilbert Allen Ziegler (lka) Van Arthur Brink ( FIB Executive Director )
- INTERNATIONAL DEPOSIT INSURANCE CORP. ( Charlestown, Nevis )
- Gerald D. Burton ( IDIC General Counsel - Roseau, Dominica )
- Samuel D. Rubenstein ( IDIC Executive Director )
- Douglas Christie-Ferguson ( IDIC Executive Director )
- C. Dennis Christie ( Lake Oswego, Oregon, USA )
- MCLEAN MANAGEMENT ASSOCIATES ( Lake Oswego, Oregon, USA )
- PACIFIC COAST ASSET PROTECTION ( Ogden, Utah, USA )
- GEP INTERNATIONAL ( Malaysia )
- GRUPO ECO PRINCIPE DE PAZ S.A. ( GEP - San Jose, Costa Rica )
- SSGI MANAGEMENT LTD. ( British Columbia, Canada )
- FIDELITY MANAGEMENT & TRUST LTD. ( Kingstown, St. Vincent and the Grenadines )
- Gerard Beeman Esq. ( PCAP, GEP, SSGI, & FMT Director - Santa Ana, California )

In 1997, FIDELITY INTERNATIONAL BANK INC. executive director Gilbert Allen Ziegler (aka) Van Arthur Brink sat next to William M. McKnight on an airplane with McKnight who described details of how he was linked to "powerful people," including the Knights of Malta organization, and that he had billions in Baja-California post Ejido Law land gold reserves valued at $62,000,000,000.00 (USD) billion he had worked on for 8-years with Mexico tribal chiefs whom convinced their people landowners to sell their acreages for $100 (USD) each, which was one of many tall stories Van Brink bought.

A little over 6,000 people worldwide lost millions in the now-defunct independent offshore bank FIRST INTERNATIONAL BANK OF GRENADA LTD., founded by Van Bribk, but few knew during May 1998 it absorbed all the assets - including McKnight's $62-billion Mexico land of gold story - held under management by FIDELITY INTERNATIONAL BANK INC.

CURRENT ACTIVITY:

It now appears McKnight and associates have just run another similar fraudulent investment scheme cloaked in grandiose claims of "secrecy" and so-called "powerful people" involved in a 90-day high yield investment trading program ( HYIP ) investors were told they would see returns by November 2007, but McKnight made up a fraudulent excuse to investors as to 'why' they hadn't been paid, claiming a U.S. Securities and Exchange Commission investigation began on certain limited liability companies, one of which McKnight holds interest in with four (4) other managing partners, was holding up investors pay outs.

When December 15, 2007 rolled around, McKnight told current investors yet another fraudulent excuse on December 23, 2007 that he was working on a $4,000,000,000.00 (USD) billion support deal that would allow investors look forward to receiving their returns, at which point, investors began doubting McKnight.

Investors had two (2) acquaintances contact the Unwanted Publicity website [ http://groups.msn.com/UnwantedPublicity ] host about information they gleaned over the internet surrounding previous McKnight associated frauds, which is believed what will finally lead investors to hopefully contact the U.S. Department of Justice Federal Bureau of Investigation California field office before McKnight and his current associates disappear by March 21, 2008.

When asked why they hadn't come forward to complain sooner, investors claimed being afraid of losing all the big money returns McKnight indicated and they didn't want to "rock the boat" that supposedly held these so-called "powerful people" McKnight indicated pooled private placement funds supported the same trading program.

Those now in this current case, under investigation, are:

- Reverend Pastor William M. McKnight, D.D ( Baytown, Texas, USA );
- Alexander Gilbert Baraona ( Lake Tahoe, Nevada, USA );
- Robert Rudder;
- Herman Lance;
- William Sample ( Tomball, Texas, USA );plus,
- several others.


Submitted,

Unwanted Publicity
[E-MAIL: UnwantedPublicity@gmail.com]

/

/


Anonymous
Posted: Saturday, August 13, 2011

Posted: 12/28/2009 2:24:16 PM

By: Luis O. Aguilar

I was associated with Alexander Gilbert Baraona on some real estate deals. I allowed him to work as a real estate agent under my real estate broker's license and after learning of his many fraudulent activities I did not renew my broker's license for fear of losing it.

Have you received any further information on the pending investigation?


Anonymous
Posted: Saturday, August 13, 2011

Posted: 9/27/2008 12:08:13 PM

By: Dr. William M Mcknight

Dear Sirs the only truth in all of the statement against me is that you did spell my name right.I have hired an attorney firm out of Houston Texas demanding that you take these out right lies off of your web-site and they are prepared to do what ever it takes to make sure that my good name is not harmed in any way.

Dr. William M McKnight


Anonymous
Posted: Saturday, August 13, 2011

Posted: 9/16/2008 8:24:29 AM

By: vinod

can some one plese provide more Information on

union de credito metropolitana. S.A De. C.V


 

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