UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT
Release No. 44925 / October 12, 2001

ADMINISTRATIVE PROCEEDING
File No. 3-10619

In the Matter of JOSEPH F. DENSON, JR., Respondent.

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ORDER INSTITUTING PUBLIC ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(b) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS AND IMPOSING REMEDIAL SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be and hereby are instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act"), against Joseph F. Denson, Jr. ("Denson").

In anticipation of the institution of these proceedings, Denson has submitted an Offer of Settlement to the Commission which the Commission has determined to accept. Solely for the purposes of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party and without admitting or denying the findings contained herein, except as to those facts set forth in paragraphs II.B. through D. and the Commission's jurisdiction over him and over the subject matter of this proceeding, which are admitted, Denson consents to the institution of public administrative proceedings, and the findings and remedial sanctions set forth below.

II.

On the basis of this Order and the Offer of Settlement submitted by Denson, the Commission finds that:

A. During the period from February 1998 to October 1999, Denson engaged in the business of effecting transactions in securities for the accounts of others by selling promissory notes issued by Rolls Royce, Ltd. and Morningstar, Ltd.

B. On October 15, 1999, the Commission filed a Complaint in the United States District Court for the Southern District of New York against Denson's affiliates captioned SEC v. Charles Richard Homa, et al. On October 18, 1999, the action was transferred to the Northern District of Illinois and assigned case number 99 C 6895. On June 1, 2000, the Commission filed its Amended Complaint naming Denson.

C. The Commission's Amended Complaint alleges that from February 1998 through October 1999, Denson and other defendants violated the federal securities laws by fraudulently engaging in a $314 million Ponzi scheme involving at least 1000 investors. The Amended Complaint alleges that Denson, as part of an extensive sales network developed by Charles Richard Homa ("Homa") and Michael Gause ("Gause"), offered and sold securities, in the form of promissory notes issued by Rolls Royce, Ltd. and Morningstar, Ltd., which purported to provide returns through investments in the car title and payday loan business. The Amended Complaint alleges Denson raised at least $61.2 million. Further, the Amended Complaint alleges that the investment funds were not used in the car title or payday loan business, but rather were used to make interest payments to existing investors, to pay marketer commissions, and for personal expenditures of Homa and Gause. The Amended Complaint alleges that Denson and other defendants made misrepresentations and omissions of material fact concerning the use of investor funds and failed to disclose the source of the interest payments and that the notes and receivables purportedly securing certain offerings were insufficient security. The Amended Complaint also alleges that Denson, in the course of marketing the securities, violated the broker-dealer registration provisions of the federal securities laws.

D. On November 20, 2000, in SEC v. Homa, the Honorable Ronald A. Guzman entered an order enjoining Denson from violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b), 15(a), and 15(c) of the Exchange Act and Rules 10b-5 and 15c1-2 promulgated thereunder. Denson, without admitting or denying the allegations in the Complaint, consented to Judge Guzman's Order.

III.

In view of the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer of Settlement of Joseph F. Denson, Jr.

Accordingly, IT IS ORDERED that Respondent Joseph F. Denson, Jr. is barred from association with any broker or dealer.

By the Commission.

Jonathan G. Katz
Secretary

http://www.sec.gov/litigation/admin/34-44925.htm