UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES ACT OF 1933 Release No. 7315 / July 26, 1996 SECURITIES EXCHANGE ACT OF 1934 Release No. 37484 / July 26, 1996 INVESTMENT ADVISERS ACT OF 1940 Release No. 1573 / July 26, 1996 INVESTMENT COMPANY ACT OF 1940 Release No. 22101 / July 26, 1996 ADMINISTRATIVE PROCEEDING File No. 3-9007 ------------------------------ : In the Matter of : : ROBERT K. WILLIAMS : : ORDER MAKING FINDINGS, and : IMPOSING REMEDIAL SANCTIONS, : AND ISSUING A CEASE-AND- COLLEGE PLANNING : DESIST ORDER SERVICES, INC., : : Respondents. : : ------------------------------ I. In these proceedings instituted pursuant to Section 8A of the Securities Act of 1933 ("Securities Act"), Sections 15(b), 19(h) and 21C of the Securities Exchange Act of 1934 ("Exchange Act"), Sections 203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940 ("Advisers Act"), and Section 9(b) of the Investment Company Act of 1940 (Investment Company Act), Respondents Robert K. Williams ("Williams") and College Planning Services, Inc. ("CPS") have each submitted an Offer of Settlement ("Offers") which the Securities and Exchange Commission ("Commission") has determined to accept.-[1]- Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except for those set forth in paragraph II.A, II.B. and ---------FOOTNOTES---------- -[1]- An Order Instituting Public Proceedings against Williams and CPS was issued by the Commission on May 21, 1996. ==========================================START OF PAGE 2====== II.I. below, which are admitted, Williams and CPS by their Offers consent to the findings and the imposition of the sanctions and other relief contained in this Order Making Findings, Imposing Remedial Sanctions, and Issuing a Cease-and-Desist Order ("Order"). II. On the basis of this Order, the Order Instituting Public Proceedings, and the Offers submitted by Williams and CPS, the Commission finds that: A. CPS, of Virginia Beach, Virginia, has been registered with the Commission pursuant to Section 203(c) of the Investment Advisers Act of 1940 ("Adviser Act") since April 24, 1992. B. Williams has been the principal, control person and sole owner of CPS since its inception. C. Williams was associated as a registered representative with a broker-dealer from May 1991 until September 1994. D. From approximately July 1992 through August 1994, Williams and CPS willfully violated Section 17(a) of the Securities Act of 1933 ("Securities Act") in the offer and sale of securities in that they, directly and indirectly, by use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails, employed devices, schemes, or artifices to defraud; obtained money and property by means of untrue statements of material fact or omitted to state material facts necessary to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in transactions, practices or courses of business that would and did operate as a fraud or deceit upon the purchasers and prospective purchasers of such securities. E. As part of the aforesaid conduct described in paragraph II.D. above, Williams, through CPS, engaged in a scheme to defraud investors by inducing approximately fourteen clients to invest approximately $293,000 with CPS under the pretense that CPS would provide them with financial planning services geared towards college financing. Williams represented that he would establish individual accounts for each client and invest their money in unspecified stocks, bonds and mutual funds. He also guaranteed that the investments would earn nine percent interest, and that the clients' principal amount would be returned upon request. Williams never used the client funds to purchase securities. Rather, he misappropriated all of the money. In furtherance of the scheme, Williams, through CPS, made false and misleading statements and omitted to state material facts concerning, among other things: ==========================================START OF PAGE 3====== a. the use of customer funds; and b. the value and existence of individual customer accounts. F. From approximately July 1992 through August 1994, Williams and CPS willfully violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, in connection with the purchase and sale of securities, by the use of the means or instrumentality of interstate commerce or of the mails, employed devices, schemes, or artifices to defraud; made untrue statements of material fact or omitted to state material facts necessary to make the statements made, in the light of the circumstances under which they were made, not misleading; or engaged in acts, practices or courses of business that would and did operate as a fraud or deceit upon the purchasers or prospective purchasers of such securities, as more fully described in paragraphs II.D. and II.E. above. G. From approximately July 1992 through August 1994, CPS, willfully aided and abetted by Williams, willfully violated Sections 206(1) and 206(2) of the Advisers Act, in that they, directly and indirectly, by use of the means or instrumentality of interstate commerce, and by use of the mails, employed devices, schemes, or artifices to defraud; or engaged in transactions, practices or courses of business that would and did operate as a fraud or deceit upon investment advisory clients and prospective clients, as more fully described in paragraph II.E. above. H. From approximately July 1992 through August 1994, CPS, willfully aided and abetted by Williams, willfully violated Section 206(4) of the Advisers Act and Rule 206(4)-2 thereunder in that they, directly and indirectly, by use of the mails or any means or instrumentality of interstate commerce, engaged in acts, practices or courses of business that were fraudulent, deceptive or manipulative. As part of the aforesaid conduct, CPS and Williams failed to do, among other things, any of the following: 1. deposit all funds in their possession into one or more bank accounts that contain only clients funds; 2. maintain client funds in the name of the investment adviser as agent or trustee for the client; 3. maintain a separate record for each client account reflecting the name and address of the bank where the account is maintained, the dates and amounts of deposits and withdrawals, and the each clients's ==========================================START OF PAGE 4====== interest therein; 4. send each client an itemized statement at least once every three months showing the funds and securities in their custody or possession, and all debits, credits and transactions in the client's account during such period; and 5. arrange for verification of all client funds and securities in their custody through actual examination by an independent public accountant. I. Based upon the conduct described in II.E. above, on August 4, 1995, Williams pled guilty to one count of mail fraud in violation of 18 U.S.C.  1341. United States v. Robert K. Williams (E.D. Va., Crim. No. 2:95cr 119). On November 1, 1995, Williams was sentenced to 24 months imprisonment and three years supervised probation, and ordered to pay restitution of $286,816. III. On the basis of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions and other relief specified in the Williams' Offer of Settlement and CPS's Offer of Settlement. Accordingly, IT IS HEREBY ORDERED that: A. Williams and CPS, pursuant to Section 8A of the Securities Act, Section 21C of the Exchange Act and Section 203(k) of the Advisers Act, cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act; Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and Sections 206(1), 206(2) and 206(4) of the Advisers Act and Rule 206(4)-2 thereunder; B. Williams be, and hereby is, barred from association with any broker, dealer, municipal securities dealer, investment company or investment adviser; and C. CPS's registration as an investment adviser is revoked. For the Commission, by its Secretary, pursuant to delegated authority. Jonathan G. Katz Secretary