Source: https://www.sec.gov/litigation/complaints/complr17252.htm
Timestamp: 2019-04-22 14:36:02+00:00

Document:
Complaint: SEC v. BIJ Financial Services, et al.
1. From at least November 2000 through July 2001, defendants, BIJ Financial Services, Inc. d/b/a Molla Investments ("Molla Investments"), New Era Enterprises Company ("New Era Enterprises"), and Brian K. Miles have made material misrepresentations in their offer and sale of securities through a "Venture Capital Program" to investors in Colorado. The investors are members of a Denver church and individuals who refinanced their home mortgages through BIJ Financial Services, which also brokers mortgages. Molla Investments, New Era Enterprises and Miles have raised at least $200,000 from approximately 18 investors.
2. Molla Investments, New Era Enterprises, and Miles offered and sold "units" in a "Venture Capital Program." They represented that investors would receive returns of 20% per month or, in later agreements, 40% per quarter. Miles represented that his trading in S&P 500 futures would generate these payments.
3. They also promised to return investors' principal minus returns already paid at any time, making the investment risk free.
4. Molla Investments, New Era Enterprises, and Miles offered the units and made the promised payments until August 2001, when they claimed that they were required to discontinue making all payments because of a purported Securities and Exchange Commission ("SEC") action freezing Molla Investments' bank account. In fact, the SEC has never previously filed an action against the defendants.
5. From August 2001 through the present the defendants have continued to make lulling statements to investors concerning the purported SEC asset freeze, including a recent promise made to an investor that they would resume trading following the imminent settlement of the SEC's purported action.
6. Molla Investments, New Era Enterprises, and Miles, directly or indirectly, have engaged, are engaged and are about to engage in transactions, acts, practices and courses of business which constitute violations of Section 17(a) of the Securities Act of 1933 (Securities Act) [15 U.S.C. § 77q(a)], and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5].
7. Molla Investments, New Era Enterprises, and Miles will, unless restrained and enjoined, continue to engage in the acts, practices, and courses of business alleged herein, and in acts, practices and courses of business of similar object and purpose.
8. The Commission brings this action pursuant to the authority conferred upon it by Section 20(a) of the Securities Act [15 U.S.C. § 77t] and Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)] to restrain and enjoin the defendants, and each of them, from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5], and granting other equitable relief.
9. The defendants, and each of them, committed the violations described above by means of conduct which involved fraud and deceit and which created a significant risk of substantial losses to other persons.
10. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v] and Sections 21(e) and 27 of the Exchange Act [15 U.S.C. §§ 78u(e) and 78aa].
11. Venue properly lies in this Court pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)], and Section 27 of the Exchange Act [15 U.S.C. § 78aa].
12. The defendants, and each of them, directly and indirectly, have made use of the means and instrumentalities of interstate commerce, or of the mails in connection with the acts, practices and courses of business alleged in this complaint.
13. Defendant BIJ Financial Services, a Colorado corporation, is a mortgage broker and has also solicited investors using the name "Molla Investments."
14. Defendant New Era Enterprises Company, a Colorado corporation, jointly offered the "Venture Capital Program" with Molla Investments.
15. Defendant Brian K. Miles, a resident of Aurora, Colorado, is the president of BIJ Financial Services, Inc., and the "program manager" of the New Era Enterprises/Molla Investments' Venture Capital Program.
16. Between at least November 2000 and July 2001, defendants Molla Investments, New Era Enterprises, and Miles offered and sold investments in what they represented was a "Venture Capital Program." They offered the investment units in $5,000 increments.
17. Beginning in November 2000, the Venture Capital Agreement used by defendants stated that New Era Enterprises Company/Molla Investments would pay investors a monthly "venture capital bonus fee" of 20% of each unit they purchased. Thus, investors who bought a single unit for $5,000 would be entitled to receive monthly payments of $1,000. In a later version of the Venture Capital Agreement defendants promised a 40% return paid quarterly.
18. Defendants told investors that they would receive these payments in perpetuity.
19. Defendants told investors that they would generate the funds to make the payments from trading in S&P 500 futures. Miles represented that he had created a computer program to implement a sophisticated trading strategy for such futures.
20. The Venture Capital Agreement also represented that investors could cancel the agreement at any time and receive their initial purchase price back, inferring that this investment was risk free.
21. These statements were false because trading in S&P 500 futures involves considerable risk.
22. From November 2000 until at least July 2001, investors purchased units in the Venture Capital Program from defendants.
23. Investors made their purchases of units by wiring funds to a bank account in Nevada in the name of Molla Investments. Defendant Miles gave investors the wire transfer instructions.
24. Investors received some payments back from New Era Enterprises/ Molla Investments and received statements confirming their accounts. This led investors to believe in the legitimacy of the Venture Capital Program.
25. Investors received the interest payments from the Venture Capital Program in checks signed by Brian Miles.
26. In August 2001 the defendants stopped making payments to investors in the Venture Capital Program.
27. On August 22, 2001 defendants sent investors a letter that represented that the investors had violated an SEC order and that, as a result, the SEC could fine Molla Investments and terminate the Venture Capital Program.
28. In or about August 2001, defendants represented that the SEC had frozen Molla Investments' bank account and that no payments of principal or interest could be made to investors.
29. In September 2001, defendants represented that they were about to resolve the action purportedly brought by the SEC.
30. In November 2001, Miles told investors that he was about to resume the Venture Capital Program.
31. These statements were false because the SEC has not brought any action in any forum against Molla Investments, New Era Enterprises Company or Miles prior to the filing of this complaint.
32. Molla Investments, New Era Enterprises, and Miles' promises to generate extraordinary rates of return with no risk to investors' principal are materially false and misleading.
33. Paragraphs 1 through 32 are hereby realleged and incorporated by reference.
(c) have engaged in acts, practices or courses of business which have operated, are operating and will operate as a fraud or deceit upon other persons, including purchasers and sellers of such securities.
35. By reason of the foregoing, Molla Investments, New Era Enterprises, and Miles, and each of them, have violated and are violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5].
36. Paragraphs 1 through 32 are hereby realleged and incorporated by reference.
37. Molla Investments, New Era Enterprises, and Miles, directly or indirectly, with scienter, in the offer or sale of securities, by the use of the means or instruments of transportation or communication in interstate commerce or by the use of the mails have employed, are employing, or are about to employ devices, schemes or artifices to defraud.
38. By reason of the foregoing, Molla Investments, New Era Enterprises, and Miles, and each of them, have violated and are violating Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)].
39. Paragraphs 1 through 32 are hereby realleged and incorporated by reference.
(b) have engaged, are engaged, or are about to engage in transactions, acts, practices and courses of business that operated or would operate as a fraud upon purchasers of securities.
41. By reason of the foregoing, Molla Investments, New Era Enterprises, and Miles, and each of them, have violated and are violating Sections 17(a)(2) and (3) of the Securities Act [15 U.S.C. § 77q(a)(2) and (3)].
Enter a Temporary Restraining Order, Preliminary Injunction, and a Permanent Injunction as to Molla Investments, New Era Enterprises, and Brian K. Miles restraining and enjoining them, and each of them, and their officers, agents, servants, employees, attorneys, and those persons in active concert or participation with them who receive actual notice by personal service or otherwise, from violating Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5].
Enter a Temporary Restraining Order, Preliminary Injunction, and a Permanent Injunction as to Molla Investments, New Era Enterprises, and Brian K. Miles restraining and enjoining them, and each of them, and their officers, agents, servants, employees, attorneys, and those persons in active concert or participation with them who receive actual notice by personal service or otherwise, from violating Section 17(a) of the Securities Act of 1933 [15 U.S.C. § 77q(a)].
Order Molla Investments, New Era Enterprises, and Brian K. Miles, and each of them, and their officers, agents, servants, employees and attorneys, to account for and disgorge all illegal gains, together with prejudgment interest.
Order Molla Investments, New Era Enterprises, and Brian K. Miles, and each of them, to pay civil money penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)], and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)].
Dated this 3rd day of December 2001.

References: v. 
 § 77
 § 78
 § 240
 § 77
 § 78
 § 77
 § 78
 § 240
 § 77
 § 77
 § 78
 § 78
 § 240
 § 77
 § 77
 § 78
 § 240
 § 77
 § 77
 § 78