SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17509 / May 8, 2002

UNITED STATES SECURITIES AND EXCHANGE COMMISSION v. CHARLES R. HOMA, MICHAEL GAUSE, et al., 99 CV 6895 (N.D. Ill. October 15, 1999) (Honorable Ronald A. Guzman)

UNITED STATES v. MICHAEL GAUSE, Criminal Action No. 99 Cr. 1100 (JGK)(S.D.N.Y., October 24, 1999)

MICHAEL GAUSE SENTENCED TO 10 YEARS AND 7 MONTHS IN PRISON FOR ROLE IN CASH 4 TITLES PONZI SCHEME

On May 1, 2002, Michael Gause, the leader of an international Ponzi scheme that defrauded more than 1,800 investors out of more than $157 million, was sentenced in Manhattan federal court by United States District Judge John G. Koeltl to 10 years and 7 months in prison. Gause was arrested on October 15, 1999 by the FBI. The Securities and Exchange Commission ("Commission") and the United States Attorney's Office for the Southern District of New York ("S.D.N.Y.") coordinated the civil and criminal actions. The S.D.N.Y. prosecuted the criminal case. In addition to the term of imprisonment, Judge Koeltl also ordered Gause to pay restitution to his victims in the amount of $157,993,830.

Gause previously pled guilty to conspiracy, securities fraud, and international money laundering charges relating to his participation in the sale of high-interest debt securities, the proceeds of which were supposedly for the use of Cash 4 Titles, an Atlanta, Georgia, finance company that made high-interest consumer loans secured by car titles pledged as collateral by borrowers. Gause and others represented to investors that the proceeds from the sale of the securities would be provided to Cash 4 Titles and then lent at high-interest rates to consumers. In truth, however, virtually all of the proceeds were used for the improper and undisclosed purposes of paying principal and interest due to earlier investors in the scheme, paying business expenses necessary to promote the scheme, and paying commissions and personal expenses of Gause and others. Gause conducted much of the fraudulent investment scheme from the Cayman Islands, where he controlled a network of offshore corporations, trusts, and bank accounts.

In the Commission's related civil action filed on October 15, 1999, the Court has imposed asset freezes on Gause and the 44 other defendants and relief defendants named in the scheme. On January 14, 2000, the Court entered a permanent injunction against Gause, by consent, against future violations of the anti-fraud provisions of the securities laws, Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. On December 10, 1999, the Court appointed Phillip S. Stenger as Receiver. Mr. Gause has turned over to the Receiver assets valued at over $9 million including a bank account and houses in Cummings Georgia and Fort Lauderdale Florida. The case is still pending against all defendants.

Gause, who has been in custody since his arrest in 1999, was a former resident of Fort Lauderdale, FL, Cummings, GA, and Georgetowne, Cayman Islands.

For more information, go to the Receiver's website at www.cash4titles.com.

[See SEC v. Charles R. Homa, et al., Litigation Release Nos. 16336, 16931, 16994, 17076].