SEC v. Alanar, Inc.; Vaughn A. Reeves, Sr.; Vaughn A. Reeves, Jr.; J. Christopher Reeves; Joshua C. Reeves; Guardian Services, LLC, et al., No. LR-19314, Southern District of Indiana (July 27, 2005) — Press Release
raw: Alanar, Inc., et al.
Alanar, Inc., et al., No. LR-19314 (July 27, 2005)
The Reeves family and affiliated entities defrauded over $170 million from Christian investors through church bonds and bond funds by misappropriating trust funds for speculative trading and personal loans, leading to a permanent SEC injunction, asset freeze, and ongoing disgorgement proceedings without admission of guilt.
The U.S. Securities and Exchange Commission charged Alanar, Inc., the Reeves family (Vaughn A. Reeves, Sr., Jr., J. Christopher, and Joshua C.), 37 bond funds, and three paying agents with orchestrating a $170 million affinity fraud targeting Christian investors. The defendants allegedly diverted $8 million in church funds held in trust and $5 million from bond fund proceeds to trade stocks, make unsecured loans to themselves and their companies, and falsely represent investment returns, violating Sections 17(a) of the Securities Act and 10(b) and Rule 10b-5 of the Exchange Act. The court issued a permanent injunction freezing assets, appointing an independent monitor, and prohibiting document destruction, while the defendants consented without admitting or denying the allegations, and the SEC continues to seek disgorgement and civil penalties.
The U.S. Securities and Exchange Commission obtained a permanent injunction against Alanar, Inc., the Reeves family (Vaughn A. Reeves, Sr., Jr., J. Christopher, and Joshua C.), six companies they controlled, 37 bond funds, and three paying agents for orchestrating a $170 million affinity fraud targeting Christian investors through church bonds and bond funds. The Reeves exploited religious trust to solicit funds, falsely representing returns and misappropriating over $8 million in church funds held in trust for bondholders and nearly $5 million from bond fund investors. These misappropriated funds were used for speculative stock and equity option trading, unsecured loans to themselves and their companies, and even to loan money to churches—breaching fiduciary duties and violating Sections 17(a) of the Securities Act and 10(b) and Rule 10b-5 of the Exchange Act, with paying agents also found liable under the same anti-fraud provisions. The court froze the assets of Alanar, the Reeves, and six controlled entities, appointed Bradley W. Skolnik as an independent monitor with day-to-day operational authority, and prohibited any destruction of documents. The defendants consented to the injunction without admitting or denying the allegations, preserving their legal position while accepting immediate restrictions. The SEC is still pursuing disgorgement of all ill-gotten gains and civil penalties, with expedited discovery and mandatory accounting required to determine the full scope of financial misconduct.
Exhibits & Attached Documents (1)
Extracted insights
- $120.00M $120 million $100M–$1B
- $50.00M $50 million $10M–$100M
- $8.00M $8 million $1M–$10M
- $5.00M $5 million $1M–$10M
- organization Alanar, Inc.
- agency Securities and Exchange Commission
- organization Securities and Exchange Commission
- Securities and Exchange Commission obtained an Order of Permanent Injunction against Alanar, Inc., Vaughn A. Reeves, Sr., Vaughn A. Reeves, Jr., J. Christopher Reeves, Joshua C. Reeves, a group of 37 bond funds, and Guardian Services, LLC, First Financial Services of Sullivan County, and Th
- Securities and Exchange Commission filed a civil action against Alanar, Inc., et al. in U.S.D.C. S.D. Ind., Civil Action Number 05-cv-1102-JDT-TAB
- Alanar, Inc. was charged with securities violations leading to a permanent injunction
- Vaughn A. Reeves, Sr. was named as a defendant in SEC civil action for securities violations
- Vaughn A. Reeves, Jr. was named as a defendant in SEC civil action for securities violations
- J. Christopher Reeves was named as a defendant in SEC civil action for securities violations
- Joshua C. Reeves was named as a defendant in SEC civil action for securities violations
- Guardian Services, LLC was named as a defendant in SEC civil action for securities violations
- First Financial Services of Sullivan County was named as a defendant in SEC civil action for securities violations
U.S. Securities & Exchange Commission Litigation Release No. 19314 / July 27, 2005 Securities and Exchange Commission v. Alanar, Inc., et al. (U.S.D.C. S.D. Ind., Civil Action Number 05-cv-1102-JDT-TAB, filed July 26, 2005) On July 26, 2005, the Commission obtained an Order of Permanent Injunction and Other Relief (Order of Permanent Injunction) against: Alanar, Inc. (Alanar), Vaughn A. Reeves, Sr., Vaughn A. Reeves, Jr., J. Christopher Reeves, Joshua C. Reeves (the Reeves), a group of 37 bond funds (the Bond Funds), and Guardian Services, LLC, First Financial Services of Sullivan County, and The Liberty Group, Inc. (the Paying Agents), enjoining them from violating the anti-fraud provisions of the federal securities laws. The Order of Permanent Injunction also freezes the assets of Alanar, the Reeves and six companies controlled by the Reeves, pending the resolution of the appropriate amount of disgorgement and civil penalties, requires the defendants to give an accounting, prohibits document destruction, permits expedited discovery, requires the defendants to comply with certain undertakings and appoints Bradley W. Skolnik of the Indianapolis law firm Stewart & Irwin, P.C., an independent monitor who will have day-to-day approval authority over all facets of the defendants' operations. The defendants consented to the Order of Permanent Injunction and Other Relief without admitting or denying the allegations of the Commission's complaint. In its complaint, the Commission charged that the Reeves' investment scheme was an "affinity fraud." The Commission alleged that by employing solicitations appealing to the Christian faith of many investors, the Reeves succeeded in raising over $120 million from investors in church bonds (bondholders) and over $50 million from investors in the Bond Funds (Bond Fund investors). Through their control of Alanar, the Bond Funds and the Paying Agents, the Reeves allegedly misused funds that churches paid to the Paying Agents to be held in trust for the benefit of bondholders, misused Bond Fund investor proceeds, and misrepresented the rates of return of the Bond Funds. For instance, from September 2003 to May 2005, the Reeves and the Paying Agents allegedly diverted $8 million worth of church funds held in trust for the repayment of bondholders into an online brokerage account. The Reeves allegedly used those funds to trade stock and equity options, loan money to at least one church and to make unsecured loans to themselves and companies they controlled. Similarly, the Reeves allegedly caused the Bond Funds to loan investor proceeds to other Bond Funds, and transferred almost $5 million worth of Bond Fund investor proceeds to their companies. The complaint alleged that, by the above conduct: Alanar, the Reeves, and the Bond Funds violated Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Securities Exchange Act ("Exchange Act") and Rule 10b-5 thereunder; the Paying Agents violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and Alanar violated Section 15(c)(1) of the Exchange Act. In addition to the permanent injunctive relief already obtained, the Commission also seeks the entry of an order requiring Defendants to disgorge ill-gotten gain and pay civil penalties. SEC Complaint in this matterU.S. Securities & Exchange Commission Litigation Release No. 19314 / July 27, 2005 Securities and Exchange Commission v. Alanar, Inc., et al. (U.S.D.C. S.D. Ind., Civil Action Number 05-cv-1102-JDT-TAB, filed July 26, 2005) On July 26, 2005, the Commission obtained an Order of Permanent Injunction and Other Relief (Order of Permanent Injunction) against: Alanar, Inc. (Alanar), Vaughn A. Reeves, Sr., Vaughn A. Reeves, Jr., J. Christopher Reeves, Joshua C. Reeves (the Reeves), a group of 37 bond funds (the Bond Funds), and Guardian Services, LLC, First Financial Services of Sullivan County, and The Liberty Group, Inc. (the Paying Agents), enjoining them from violating the anti-fraud provisions of the federal securities laws. The Order of Permanent Injunction also freezes the assets of Alanar, the Reeves and six companies controlled by the Reeves, pending the resolution of the appropriate amount of disgorgement and civil penalties, requires the defendants to give an accounting, prohibits document destruction, permits expedited discovery, requires the defendants to comply with certain undertakings and appoints Bradley W. Skolnik of the Indianapolis law firm Stewart & Irwin, P.C., an independent monitor who will have day-to-day approval authority over all facets of the defendants' operations. The defendants consented to the Order of Permanent Injunction and Other Relief without admitting or denying the allegations of the Commission's complaint. In its complaint, the Commission charged that the Reeves' investment scheme was an "affinity fraud." The Commission alleged that by employing solicitations appealing to the Christian faith of many investors, the Reeves succeeded in raising over $120 million from investors in church bonds (bondholders) and over $50 million from investors in the Bond Funds (Bond Fund investors). Through their control of Alanar, the Bond Funds and the Paying Agents, the Reeves allegedly misused funds that churches paid to the Paying Agents to be held in trust for the benefit of bondholders, misused Bond Fund investor proceeds, and misrepresented the rates of return of the Bond Funds. For instance, from September 2003 to May 2005, the Reeves and the Paying Agents allegedly diverted $8 million worth of church funds held in trust for the repayment of bondholders into an online brokerage account. The Reeves allegedly used those funds to trade stock and equity options, loan money to at least one church and to make unsecured loans to themselves and companies they controlled. Similarly, the Reeves allegedly caused the Bond Funds to loan investor proceeds to other Bond Funds, and transferred almost $5 million worth of Bond Fund investor proceeds to their companies. The complaint alleged that, by the above conduct: Alanar, the Reeves, and the Bond Funds violated Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Section 10(b) of the Securities Exchange Act ("Exchange Act") and Rule 10b-5 thereunder; the Paying Agents violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and Alanar violated Section 15(c)(1) of the Exchange Act. In addition to the permanent injunctive relief already obtained, the Commission also seeks the entry of an order requiring Defendants to disgorge ill-gotten gain and pay civil penalties. SEC Complaint in this matter