U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17973 / February 6, 2003

SEC v. Capital Consultants, LLC, et al., Civil Action No. CV 1290 KI (D. Ore.)

COMMISSION CONCLUDES CASE AGAINST JEFFREY L. GRAYSON

The Securities and Exchange Commission ("Commission") announced that on December 5, 2002, a federal judge in Portland, Oregon, entered an amended judgment of permanent injunction against Jeffrey L. Grayson, a former principal of Capital Consultants, LLC, an investment adviser located in Portland. The remaining issue in the case was the assessment of a civil penalty against Grayson. The amended judgment does not assess a civil penalty against Grayson based upon sworn statements of financial condition that he submitted to the Commission staff.

The Commission charged Capital Consultants, Jeffrey Grayson and his son, Barclay L. Grayson with fraud and obtained emergency relief against them in September 2000. The complaint alleged that the defendants were operating an undisclosed Ponzi-like scheme in which they used client funds to make interest payments to other clients who were invested in a $160 million loan that Capital Consultants made to Wilshire Credit Corp. On April 30, 2001, the Court entered permanent injunctions against Capital Consultants and the Graysons. Capital Consultants is currently in receivership.

On April 23, 2002, Grayson pleaded guilty to one count of mail fraud and one count of assisting in the preparation of a false tax return in connection with his role as the former principal of Capital Consultants. Jeffrey Grayson admitted that between 1994 and 2000, he engaged in a scheme to defraud Capital Consultants' clients, mostly union pension and benefit plans. The criminal charges against Jeffrey Grayson carry a maximum penalty of 8 years in prison and maximum fine of $500,000. Grayson's criminal sentencing is scheduled for January 2003.