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                SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 15111 / October 7, 1996

SECURITIES AND EXCHANGE COMMISSION v. KENNETH E. EDWARDS, ROGER
S. CHEDESTER, DONALD E. LUNA, A.R. GRANT MOREHOUSE, AND THE FIRST
AMERICAN COMPANIES, INC., United States District Court for the
Eastern District of California, CIV-s-96 1716 GEB GGH.

     The Securities and Exchange Commission announced the filing
of a complaint with the United States District Court for  the
Eastern District of California against Kenneth E. Edwards and 
Roger S. Chedester of the Sacramento, California area, and Donald
E. Luna, A.R. Grant Morehouse and the First American Companies,
Inc. of Hilton Head, South Carolina.  The Commission's complaint
alleges that each of the defendants engaged in securities fraud
by making misrepresentations in issuing or selling securities.  

     The complaint alleges that from July 1994 through January
1995, Edwards sold over  $3 million of "prime bank" securities in
three separate, but related, schemes.  In the schemes at issue,
investors' money was purportedly to be used to trade actively in
the off-balance sheet debt obligations of unnamed "prime banks"
to generate profits of between 100 percent a year to 570 percent
over a 19 week period.  In each case, investors were  also told
that their funds were completely safe, as the underlying
investment was secured by gold, treasury bills or letters of
credit.  In reality, the off-balance sheet debt obligations
purportedly being traded do not exist, and the securities sold to
investors a sham.

     The complaint further alleges that the first of the three
investments sold by Edwards, with assistance from Chedester,
involved $1.2 million of debentures issued by First American, led
by Luna and assisted by Morehouse.  The debentures offered
returns of 100 percent per year, with no risk to principal as the
debentures were secured by gold or gold certificates.  In the
second scheme, Edwards induced investors to place $700,000 with
an entity operating out of Switzerland for trading in "prime
bank" debt.  In the third, Edwards devised his own "Private
Investment Program" for which he and Chedester raised
approximately $1.1 million.  Of the $3 million raised,
approximately $2.5 million has not been returned.

     The complaint alleges that each of the defendants knew, or
was reckless in not knowing, that the representations each made
in issuing and selling the respective securities were false.
The Commission seeks an order permanently enjoining (i) Edwards
from violating Sections 5(a), 5(c) and 17(a) of the Securities
Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange
Act of 1934, and Rule 10b-5 thereunder; (ii) Chedester from
violating Section 17(a) of the Securities Act of 1933, Sections
10(b) and 15(a) of the Securities Exchange Act of 1934, and Rule
10b-5 thereunder; and Luna, Morehouse and First American from




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violating Sections 5(a), 5(c) and 17(a) of the Securities Act of
1933, Section 10(b) of the Securities Exchange Act of 1934, and
Rule 10b-5 thereunder.  In addition, the Commissions complaint
seeks disgorgement from each defendant of all ill-gotten gains.