SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

Litigation Release No. 17403 / March 7, 2002

SECURITIES AND EXCHANGE COMMISSION v. JOSEPH LLOYD NORRIS, MARK GRAY COLEMAN, MAGELLAN COMMUNICATIONS GROUP, LLC, and NORTHERN LIGHTS FINANCIAL, LLC, No. CV-N-02-0112-DWH-VPC (D. Nev.)

SEC FILES FRAUD CASE AGAINST NEVADA INVESTMENT ADVISERS

On March 7, 2002, the Commission filed an action in the United States District Court for the District of Nevada charging four Nevada defendants with defrauding their investment advisory clients. The defendants are Joseph Lloyd Norris and Mark Coleman of Carson City, Nevada, and Magellan Communications Group, LLC, and Northern Lights Financial, LLC, two Nevada companies through which Norris and Coleman operated.

The Commission's complaint alleges that the defendants raised approximately $8.5 million from more than thirty clients by promising to invest the money in offshore "trading programs" that would generate returns of four to seven percent per month, or the equivalent of 48 to 84 percent per year. According to the complaint, these "trading programs" had the characteristics typical of fraudulent "prime bank" schemes, which have been the subject of dozens of Commission enforcement actions over the past decade. The Commission charges that Norris and Coleman lost approximately $6 million of their clients' funds in their attempts to invest in such "trading programs," then sent their clients fictitious account statements concealing the losses. The Commission also charges that Norris and Coleman continued to encourage clients and prospective clients to deposit money with them without disclosing the losses.

The Commission's complaint charges each of the defendants with securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also charges Norris, Magellan and Northern Lights with investment advisory fraud in violation of Section 206 of the Investment Advisers Act of 1940, and charges Coleman with aiding and abetting those violations. The Commission is seeking an accounting, injunctions, disgorgement of ill-gotten gains (with interest), and civil penalties against all defendants.

For more information about prime bank fraud, visit the SEC's "Prime Bank Information Center" at www.sec.gov/divisions/enforce/primebank.shtml.