SECURITIES AND EXCHANGE COMMISSION

LITIGATION RELEASE NO. 17845 / November 18, 2002

SECURITIES AND EXCHANGE COMMISSION v. EARL A. ABBOTT, RICHARD L. STALVEY, GLENN PERDUE, ROBERT E. GERWIN, KENNETH C. NUNN AND THOMAS J. O'KEEFFE (United States District Court for the Middle District of Florida, C.A. No. 6:01-CV-364-ORL-31-KRS)

The Commission announced today the entry of separate judgments against two defendants in a prime bank securities fraud case. First, on October 30, 2002, the United States District Court for the Middle District of Florida granted the Commission's motion for summary judgment against Kenneth C. Nunn ("Nunn") of Kent, England, the scheme's central figure. According to the Commission's complaint, Nunn solicited U.S. promoters and falsely told them that his prime bank trading program would pay 15% a month for twelve months and that investor funds were fully collateralized by U.S. Treasury Bills. Nunn also allegedly told U.S. promoters that for years he had successfully operated high-yield prime bank programs, buying and selling newly-issued bonds in 45-minute intervals and earning 20% per week with no risk. U.S. citizens invested $3.55 million in the scheme. The investors' funds were sent to an off-shore bank account controlled by Nunn. None of the funds were used to buy securities and investors did not receive their promised return or return of all principal. Nunn allegedly used over $400,000 of the funds for his personal benefit.

The Court's judgment enjoins Nunn from future violations of the securities and broker-dealer registration provisions as well as the general antifraud provisions of the federal securities laws. The judgment orders Nunn to pay disgorgement of $401,000 plus prejudgment interest of $126,421. Further, the Court ordered Nunn to pay a civil penalty of $200,000.

The Commission also announced that on November 8, 2002, a judgment by consent was entered against Earl A. Abbott of Titusville, Florida in the same matter. The Commission's complaint alleged that Abbott recruited others to sell the $3.55 million of non-existent prime bank securities to investors in five different states. Abbott, without admitting or denying the Commission's allegations, agreed to settle the matter by agreeing to the entry of an injunction against future violations of the securities and broker-dealer registration provisions and the antifraud provisions of the federal securities laws and the payment of a $25,000 civil penalty.

The Commission's complaint alleged that, in connection with this scheme, Nunn and Abbott engaged in transactions, acts, practices and courses of business which constituted violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 thereunder, Section 5(a) and 5(c) of the Securities Act and Section 15(a) of the Exchange Act.

For further information on the action, see Litigation Release Nos. 16940, 17198 and 17289.

http://www.sec.gov/litigation/litreleases/lr17844.htm