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News Release: 03-08
GRAY DAVIS, Governor
Date: 09/04/03
DEMETRIOS A. BOUTRIS, Commissioner
Department of Corporations Obtains Judgment in Case Against Perpetrators of Investment Scheme
Defendants Will Make Refunds Totaling Over $3.5 Million to Defrauded Investors
Sacramento, September 4, 2003 — The Davis Administration today announced that the Department of Corporations has secured a judgment in a civil lawsuit in the Superior Court of Sacramento County against Ivan D. Bauer and Glenn A. Liberatore for violations of the antifraud provisions of state securities law. The defendants will refund more than $3.5 million to their investors, pay at least $3 million in penalties and are enjoined from any future violations of the securities law.
"This case drives home the point that the first call Californians need to make when considering an investment is to the Department of Corporations. Potential investors should always check up on the person with whom they plan to do business," said California Corporations Commissioner Demetrios A. Boutris. "Ivan Bauer cashed in on the trust he had developed with his tax preparation clients and fellow members of his church and turned them into victims of a multimillion dollar scheme."
From January 1998 until September 2000, Bauer and Liberatore, neither of whom was licensed to sell securities, raised approximately $3.7 million in risk capital for Florida-based 21st Century Satellite Communications, Inc. (21st Century Satellite) by selling unqualified, nonexempt securities in the form of promissory notes, profit sharing agreements or sale-leaseback investments. Approximately 75 California residents made individual investments ranging from $500 to over $400,000. The majority of these funds were transferred from investors' retirement accounts.
The U.S. Securities and Exchange Commission (SEC) brought an action against the issuing company and its principals in September 2001. The SEC maintained that 21st Century Satellite used the more than $23 million in investor funds it raised to disburse interest payments to early investors and to pay commissions to its sales agents.
The Department of Corporations is California's Investment and Financing Authority, reporting to the Business, Transportation and Housing Agency and the Governor. The Department is responsible for the regulation, enforcement and licensing of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending and residential mortgage lending. For further information or to obtain a complaint form, see the Department's Web site at www.corp.ca.gov or call 1-866-ASK-CORP (1-866-275-2677).
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