UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

SECURITIES AND EXCHANGE 

COMMISSION,

Plaintiff

v.

STEPHEN G. DONAHUE, and

DONAHUE SECURITIES, INC.,

Defendants

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Civil Action No. C-1-01-116

(Judge Beckwith)

JOINT STATUS REPORT

Come now plaintiff United States Securities and Exchange Commission (the “SEC”), Michael R. 

Barrett as the Receiver (the “Receiver”) for defendant Stephen G. Donahue (the “Donahue”) and Douglas 

L. Lutz as substituted trustee of Donahue Securities, Inc. (“DSI”), S.G. Donahue & Company, Inc. 

pursuant to the Federal Securities Investor Protection Act (the “SIPC Trustee”) and pursuant to the Order 

dated October 3, 2003 for a joint status report (document 95) submit this joint status report.

Report by the SEC:

In its February 26, 2001 Order of Permanent Injunction Against Stephen G. Donahue, the Court 

ordered Donahue to disgorge all ill-gotten gains received by him as a result of the conduct alleged in the 

Commission’s Complaint. The Court also ordered that the imposition of civil penalties against Donahue 

may be appropriate. The Order of Permanent Injunction stated that the Court would set the specific 

amounts of disgorgement and penalties in a separate hearing upon due notice and motion by the 

Commission. The Commission has waited for the Receiver over Donahue and the SIPC Trustee over 

Donahue Securities Inc. to wrap up their marshalling and managing of Donahue’s assets prior to moving 

the Court to set these amounts. The Commission expects to move the Court for such a hearing within 

approximately ninety days.

In its February 26, 2001 Order of Preliminary Injunction Against Donahue Securities Inc., the 

Court entered a preliminary injunction against DSI enjoining it from violating the federal securities laws. 

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Simultaneously with its motion for a hearing to set disgorgement and civil penalties, the Commission 

expects to move the Court to either enter an Order of Permanent Injunction against DSI or dismiss the 

proceedings against DSI.

Report by the Receiver

The former residence of Mr. Donahue at 6006 Gaines Road, Cincinnati, Ohio is in the process of 

being sold pursuant to the order entered March 31, 2003 (document 88) approving an omnibus settlement 

between the Receiver, the SIPC Trustee, Linda A. Donahue and Provident Bank (the “Provident Bank 

Settlement”).

The Receiver still has not received an accounting from Provident Bank pursuant to the Provident 

Bank Settlement despite repeated demand for the same.

The Receiver is continuing to litigate two mechanics lien claims pending in the Court of Common 

Pleas for Clermont County, Ohio in case number 2003 CVH 00192 styled Gulley Log Homes, Inc., et al., 

plaintiffs versus Linda A. Donahue, et al., defendants. Trial to a jury is set for January 21, 2004. The 

total demand by plaintiffs is $28,252 plus 10% interest from at least March 1, 2001. The liens have been 

bonded off. The Receiver hopes that the claims can be settled before trial.

Report by the SIPC Trustee

The SIPC Trustee has now resolved all claims filed by former customers. There has been 

no resolution of general unsecured claims because there is presently no ability to repay any such 

claims. The SIPC Trustee has received over $8 million in advances from SIPC to pay customer 

claims and expenses of administration and SIPC is entitled to reimbursement of such advances 

prior to any distribution to general creditors. Therefore, processing claims of general creditors 

would be premature and perhaps futile. 

Currently, the SIPC Trustee is prosecuting claims against (1) the former auditors of DSI, 

(2) former employees, (3) an insurer, (4) a former contract or who performed services for the 

Case 1:01-cv-00116-SSB-TSH Document 96 Filed 10/16/2003 Page 2 of 3
SIPC Trustee and (5) a former employee of SIPC. It is believed that these actions will continue

for an indeterminate period since they have not yet been set for trial.

It is the position of the SIPC Trustee that all, or practically all, of the funds held by the 

Receiver should be distributed to the SIPC Trustee because they can be directly traced to funds 

stolen by Mr. Donahue.

The SEC, the Receiver and the SIPC Trustee respectfully request this action be set for further 

joint status report on February 2, 2004.

Respectfully submitted,

/s/ Anne C. McKinley

Anne C. McKinley 

Attorney for Plaintiff U.S. Securities 

and Exchange Commission

Midwest Regional Office

175 West Jackson Boulevard

Suite 900

Chicago, IL 60604

/s/ Richard Boydston

Richard Boydston (22360)

Attorney for Michael R. Barrett, 

 Receiver

Ulmer & Berne LLP

600 Vine Street, Suite 2800

Cincinnati, Ohio 45202-2409

(513) 762-6202

(513) 762-6245 (fax)

rboydston@ulmer.com

/s/ Gerald L. Baldwin

Gerald L. Baldwin (15635)

Attorney for the SIPC Trustee

Frost Brown Todd, LLC

2500 PNC Center

201 E. Fifth Street

Cincinnati, Ohio 45202-4182

(513) 651-6948

(513) 651-6981 (fax)

gbaldwin@fbtlaw.com

26950\00001 - 241885.1

10/16/2003 9:31 AM

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