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SEC Freezes Funds of 2 Firms in Fraud Case

October 09, 1998|Bloomberg News

The Securities and Exchange Commission froze $22 million belonging to two companies that sold allegedly fraudulent investments in commercial equipment leases. The companies, Alliance Leasing Corp. of San Diego and Prime Atlantic Inc. of Jacksonville, Fla., allegedly promised 28% to 32% returns over 25 months. At least 240 investors across the United States placed money with the defendants, the SEC said. Alliance allegedly paid Prime 30% of investors' funds in undisclosed commissions, the SEC alleged. Investors were also falsely told that their funds would be placed in an escrow account until equipment was purchased, the SEC said. U.S. District Court Judge Napoleon Jones in Los Angeles issued the temporary restraining order sought by the SEC, freezing the companies' assets. David Halsey, president of Prime Atlantic, said his company sells equipment, not securities, and thus isn't subject to the jurisdiction of the SEC. Alliance Leasing executives weren't immediately available for comment.

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