UNITED STATES SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 16219 \ July 23, 1999

Securities and Exchange Commission v. Funding Resources Group, et al
#3-98CV2689-X, USDC, NDTX (DALLAS DIVISION)

On June 22, 1999, Judge Joe Kendall of the United States District Court for the Northern District of Texas in Dallas ordered B. David Gilliland of Bluewater Bay, Florida, and Memphis, Tennessee, jailed for contempt. Judge Kendall ordered Gilliland confined until the remaining $1.695 million (of $2.745 million which Gilliland and others had agreed to pay) was paid to a Court-appointed receiver.

&On November 13, 1998, the Securities and Exchange Commission filed a proceeding against seventeen (17) individuals and entities alleging that they had swindled hundreds of investors throughout Texas and much of the rest of the United States in raising $14 million in non-existent "prime bank" note programs. In connection with the Commission's action, the Court appointed a receiver to gather all assets obtained by fraud. In the course of his engagement, the receiver learned that Hammersmith Trust, L.L.C., an entity controlled by Gilliland, had received investor funds.

On March 26, 1999, Hammersmith, Gilliland and others agreed to a Court order requiring the payment of $2.745 million to the receiver. After Hammersmith, Gilliland and the others failed to make timely payment of the final $1.695 million, Judge Kendall held Hammersmith and Gilliland in contempt and gave them an additional forty-five (45) days to make payment. When Hammersmith and Gilliland again failed to make payment despite Gilliland's testimony that Hammersmith had $42 million in assets, Judge Kendall found Gilliland in contempt and ordered him incarcerated until payment is made.

News Digest

On June 22, 1999, Judge Joe Kendall of the United States District Court for the Northern District of Texas in Dallas ordered B. David Gilliland of Bluewater Bay, Florida, and Memphis, Tennessee, jailed for contempt. Judge Kendall ordered Gilliland confined until he caused the remaining $1.695 million (of $2.745 million) which Gilliland and others had agreed to be ordered to be paid to a court-appointed receiver.

On November 13, 1998, the Securities and Exchange Commission filed a proceeding against seventeen (17) individuals and entities alleging that they had swindled hundreds of investors throughout Texas and much of the rest of the United States in raising $14 million in non-existent "prime bank" note programs. In connection with the Commission's action, the Court appointed a receiver to gather all assets obtained by fraud. In the course of his engagement, the receiver learned that Hammersmith Trust, L.L.C., an entity controlled by Gilliland, had received in excess $2.745 million.

On March 26, 1999, Hammersmith, Gilliland and others agreed to a court order requiring the payment of $2.745 million to the receiver. After Hammersmith, Gilliland and the others failed to make timely payment of the final $1.695 million, Judge Kendall held Hammersmith and Gilliland in contempt and gave them an additional forty-five (45) days to make payment. Hammersmith and Gilliland again failed to make payment. Gilliland attempted to avoid imprisonment by placing Hammersmith into bankruptcy.

Yesterday, after Gilliland testified that Hammersmith has $42 million in assets, Judge Kendall found that Gilliland in contempt and ordered him held in the custody of the United States marshal until payment is made.

Robert A. Brunig
District Trial Counsel
Fort Worth District Office
(817) 978-6448