SEC v. Shae Yatta Harper, No. 5:18-cv-00436, District of Columbia (Mar. 30, 2018) — Complaint

UNITED STATES DISTRICT COURT
DISTRICT OF WESTERN LOUISIANA
SHREVEPORT DIVISION
SECURITIES AND EXCHANGE COMMISSION,
CASE NO.
Plaintiff,
VERSUS JUDGE
SHAE YA
TT A HARPER,
MAGISTRATE JUDGE
Defendant.
COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF
Plaintiff Securities and Exchange Commission (the "Commission") alleges as follows:
INTRODUCTION
1. The Commission brings this action to enjoin Shae Yatta Harper ("Harper") from
further violations
of the registration provisions of the federal securities laws and from aiding and
abetting violations
of the antifraud provisions of the federal securities laws.
2. Between approximately April 2013 and August 2014, Kirbyjon Caldwell and
Gregory Alan Smith raised at least $3,488,500 through a  scheme to defraud approximately 29
investors through the fraudulent offer and sale
of participation rights in certain historical Chinese
bonds ("the bonds"). Among other material misstatements and omissions, Caldwell and Smith
represented to these investors that the bonds were safe, risk-free, worth tens,
if not hundreds, of
millions of dollars, and could be sold to third parties. In reality, the bonds were mere collectible
memorabilia with
no investment value. At Caldwell's direction, Harper drafted participation
agreements in the bonds that were sent to investors. Harper also controlled the bank account to
which most investors sent their funds
to invest in this investment opportunity, and distributed
investor funds to Caldwell and Smith at  their direction.

3. Through her conduct as alleged in this Complaint, Harper violated Sections 5(a)
and 5(c)
of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. §§ 77e(a) and 77e(c), and
aided and abetted violations
of Section l 7(a) of the Securities Act, 15 U.S.C. § 77q(a), and
Section
l0(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78j(b), and
Rule 1 0b-5 thereunder,
17 C.F.R. § 240.1 0b-5. Unless the Court enjoins Harper, she is
reasonably likely to continue to violate these provisions
of the federal securities laws.
DEFENDANT
4. Harper, age 44, is a  resident of Monmouth Junction, New Jersey. Harper is an
attorney licensed to practice
in California, New Jersey, and the District of Columbia. Harper is
currently employed as a transactional attorney within the power and gas industry.
OTHER RELEVANT PARTIES
5. Caldwell, age 64, is a  resident of Houston, Texas. During the relevant period,
Caldwell was the Senior Pastor at Windsor Village United Methodist Church (the "church"), one
of the largest Protestant churches in the U.S. He and his wife are the co-owners of LDT, LLC,
("LDT"), a Wyoming limited liability company formed by Harper in April 2013.
6. Smith, age 55, is a  resident of Shreveport, Louisiana. Between December 1999
through July 2010, Smith was associated with New England Securities Corp, a registered broker­
dealer. In July 2010, Smith was permanently barred from association with any FINRA
member
in any capacity, in part for commingling investor funds in his business account and for
misappropriating investor funds.
2

JURISDICTION AND VENUE
7. The Court has jurisdiction over this action pursuant to Sections 20(b ),  20( d)( I),
and 22(a)
of the Securities Act, I 5  U .S.C. §§ 77t(b ),  77t( d)(I ), and 77v(a); and Sections 21 ( d)
and 27 of the Exchange Act, 15 U.S.C. §§ 78u(d) and 78aa.
8. The Court has personal jurisdiction over the Defendant, and venue is  proper in the
Western District of Louisiana, because many of the Defendant's acts and transactions
constituting violations
of the federal securities laws occurred in the district.
9. In connection with the conduct alleged in the Complaint, the Defendant, by
drafting the participation agreements
in the bonds that were sent to investors and by distributing
the funds as directed by Caldwell and Smith, directly or indirectly, singly or in concert with
others, made use
of the means or instrumentalities of interstate commerce, the means or
instruments
of transportation or communication in interstate commerce, or the mails.
FACTUAL ALLEGATIONS
A. Background and Mechanics of the Offering
10. From at least April 2013 until August 2014, Caldwell and Smith offered and sold
to at least 29 investors participation rights
in various historical or Pre-revolutionary Chinese
bonds which Caldwell claimed to own, control, or possess. In some cases, Caldwell and Smith
told investors that their funds would be used to purchase the bonds. Smith, who worked as a
financial planner, was responsible for finding investors for this offering. He raised the money
for this offering by promising investors exorbitant returns on their investment. Smith also
represented to many investors that he was an "investment  adviser" with many years
of prior
experience assisting others with their investments. He gave these investors investment advice
concerning whether to invest in this scheme.
3

11 . Smith was instrumental in securing investors for this scheme because he had
longstanding ties
to prospective investors and operated under the guise of an investment adviser
with many years
of experience advising clients on similar deals. In one case, Smith promised an
investor that she would receive
15 times her original investment within 30 days and any funds
she invested would be returned within 5  days
of any demand for the funds. Once an investor
agreed
to invest, the investor was instructed to wire transfer payment to one of two bank
accounts: a  bank account solely controlled by Harper and titled in the name
of her deceased
mother (the "Estate
of Alta Harvey Account") or an account held by LDT. Immediately after the
investors sent the money, the investment funds were transferred to the personal accounts
of
Caldwell, Smith, or a Mexican business associate.
B. The Material Misrepresentations and Omissions about the Bonds
1. Background on Pre-Revolutionary Chinese Bonds
12. Prior to the 1949 communist takeover in  China, the former republic issued
billions
of dollars' worth of government bonds. These bonds have been in default since 1939
and the current Chinese government refuses to recognize the debt. In 1970, the Foreign Claims
Settlement Commission (FCSC) considered a claim
to recuperate this debt under the
International Claims Settlement Act
of 1949. On March 18, 1970, the FCSC concluded in
Decision No. CN-147 that because the bonds had been in default since 1939 (ten years prior
to
Chinese Communist assumption of power), the claims did not come under the purview of the
Act.
In May 2012, the U.S. Treasury issued a fact sheet confirming that it does not hold any pre-
1949 Chinese bonds in its foreign exchanges.
2. Misrepresentations and Omissions
4

13. Smith was successful in raising money for this offering by promoting the deal as
something that he was offering to only a
few select individuals. Smith falsely told some of the
investors that the money raised would be used
to acquire more Chinese bonds. He repeatedly
told investors that the bonds were '"risk free," "guaranteed," and "safe" and that there were
buyers lined up to purchase the bonds. Smith also told investors that the bonds would either be
sold to a  third party or redeemed by the Chinese government. Caldwell also made similar
material misrepresentations to several investors, including that the return on investment was
guaranteed. In fact, he even told one investor who invested approximately $800,000 that the
bonds were backed by gold or silver. Both Smith and Caldwell falsely told investors that the
bonds were valuable and worth tens,
if not hundreds, of millions of dollars. Harper never
directly communicated with any investors and therefore did not make any misstatements or
omissions to them.
14. Although many investors did not understand the investment, they ultimately
trusted Smith and had faith in the fact that a  high-profile pastor was offering the investment.
Among other things, Smith falsely represented to investors that he too had invested in the bonds
and that investors were guaranteed a return on investment which would be repaid in less than one
year.
In one case he promised a  return on investment in as little as 30 days. However, Smith
failed to tell these investors that these bonds had already matured and had been in default for
decades, or that they were not redeemable at all. Smith also failed to disclose that he was
receiving compensation for recommending the investment to prospective investors.
3. The Participation Agreements
15. Once Smith found investors for the offering, Caldwell directed Harper to draft a
participation agreement containing the terms
of the investment. The participation agreements
5

usually included the investment amount, a vague description of the bond, an exorbitant return on
investment, a  profit-sharing provision, depository bank information, and a  "failure to close"
option pursuant to which the investor could request his or her money back in the event Caldwell
was unable
to sell the bonds. Most of the participation agreements given to investors generally
described the bonds
as "historical Chinese Bonds." Harper earned $5, 100 in legal fees for
drafting the participation agreements.
16. Under the terms of the participation agreements, the investors' expectation of a
return on their investment was based solely upon Caldwell's ability to sell the bonds to a  third
party purchaser. In fact, many
of the participation agreements expressly stated that Caldwell was
in control and possession
of the bonds and that he planned to sell the bonds to third party
purchasers. This offering was not registered with the Commission. Furthermore, most
of the
investors who invested in this scheme were not accredited.
In fact, many were unsophisticated
retirees who liquidated their annuities
to invest in this scheme pursuant to Smith's advice.
C. Harper's Involvement in the Fraudulent Offering
17. Caldwell was Harper's pastor and a close family friend. Between approximately
April 2013 and August 2014, Harper drafted the participation agreements provided to investors
for which she was paid attorney's fees totaling approximately $5,100. Harper also controlled a
bank account which received and distributed investor funds
to Caldwell and Smith. By
controlling this account, and distributing investor funds to Caldwell and Smith, Harper
substantially assisted their fraudulent scheme. In doing so, Harper did not sufficiently
investigate red flags indicating that the transactions might be fraudulent. For example, during a
trip to Europe with Caldwell, an individual discussed the bonds with Harper and questioned
whether the potential buyers were real and the bonds valuable. Several
of Harper's attorney
6

friends also expressed doubt as to the value of the bonds. Harper also read an article that
questioned the value
of the bonds.
18. Harper invested $5,000 of her own money in this investment scheme in or around
March 2013. Despite the presence
of the red flags described above, Harper did not ask Caldwell
for the return
of her investment.
CLAIMS FOR RELIEF
COUNTI
Violations of Sections S(a) and (c) of the Securities Act
19. The Commission repeats and realleges Paragraphs 1 through 18 of its Complaint.
20. No registration statement was filed or in effect with the Commission pursuant
to
the Securities Act with respect to the securities and transactions described in this Complaint and
no exemption from registration existed with respect to these securities and transactions.
21. Between approximately April 2013 and August 2014, Harper, a  substantial and
necessary participant in the unregistered sale
of the securities, directly and indirectly:
(a) Made use
of means or instruments of transportation or communication in
interstate commerce or
of the mails to sell securities as described herein,
through the use or medium
of a prospectus or otherwise;
(b) Carried securities or caused such securities,
as described herein, to be
carried through the mails or in interstate commerce, by any means or
instruments
of transportation, for the purpose of sale or delivery after sale; or
( c) Made use
of means or instruments of transportation or communication in
interstate commerce or
of the mails to offer to sell or off er to buy through the
use or medium
of a  prospectus or otherwise, as described herein, without a
registration statement having been filed or being in effect with the Commission
as to such securities.
7

22.
By
reason
of
the
foregoing,
Harper
violated
and,
unless
enjoined,
is
reasonably
likely
to
continue
to
violate,
Sections
5(a)
and
5(c)
of
the
Securities
Act,
15
U.S.C
§  77e(a)
and
77e(c).
COUNT
II
Aiding
and
Abetting
Violations
of
Section
1 0(b)
of
the
Exchange
Act
and
Rule
lOb-5
thereunder
23.
The
Commission
repeats
and
realleges
Paragraphs
1 through
18
of
its
Complaint.
24.
Between
approximately
April
2013
and
August
2014,
Harper,
directly
or
indirectly,
knowingly
or
recklessly
provided
substan~ial
assistance to
persons
who,
directly
or
indirectly,
singly
or
in
concert
with
others,
in
connection
with
the
purchase
or
sale
of
a
security,
with
scienter,
used
the
means
or
instrumentalities
of
interstate
commerce,
or
of
the
mails,
or
of
the
facilities
of
a  national
securities
exchange:
(
1)
to
employ
devices,
schemes,
or
artifices
to
defraud;
(2)
to
make
untrue
statements
of
material
facts
or
omit
to
state
material
facts
necessary
in
order
to
make
the
statements
made,
in
the
light
of
the
circumstances
under
which
they
were
made,
not
misleading;
or
(3)
to
engage
in
acts,
practices,
or
courses
of
business
which
operated
or
would
operate
as
a  fraud
or
deceit
upon
any
person
in
connection
with
the
purchase
or
sale
of
any
security.
25.
By
reason
of
the
foregoing,
Harper
aided
and
abetted
and,
unless
enjoined,
is
reasonably
likely
to
continue
to
aid
and
abet,
violations
of
Section
1 0(b)
of
the
Exchange
Act,
15
U.S.C.
§ 78j(b),
and
Rule
l0b-5
thereunder,
17
C.F.R.
§ 240.l0b-5.
COUNTIII
Aiding
and
Abetting
Violations
of
Sections
l
7(a)
of
the
Securities
Act
26.
The
Commission
repeats
and
realleges
Paragraphs
1 through
18
of
this
Complaint.
8

27. Between approximately April 2013 and August 2014, Harper, directly or
indirectly, knowingly or recklessly provided substantial assistance to persons who, directly
or indirectly, singly or in concert with others, in the offer or sale of a  security, used the
means
or instrumentalities of interstate commerce, or of the mails, or of a facility of a
national securities exchange: ( 1) to knowingly
or recklessly employ devices, schemes, or
artifices to defraud; (2) to negligently obtain money or property by means of untrue
statements of material fact or omissions to state material facts necessary in order to
make the statements made, in the light of the circumstances under which they were
made, not misleading; or (3) to negligently engage in transactions, practices, or courses of
business which operated or would operate as a  fraud or deceit upon purchasers of the
securities.
28. By reason of the foregoing, Harper aided and abetted and, unless enjoined, is
reasonably likely to continue to aid and abet, violations
of Section 17(a) of the Securities Act, 15
U.S.C. § 77q(a).
RELIEF REQUESTED
WHEREFORE,
the Commission respectfully requests that the Court:
I.
Permanent Injunctive Relief
Issue a  permanent injunction restraining and enjoining Harper, and her officers, agents,·
servants, employees, attorneys, representatives, and all persons in active concert or participation
with them, and each
of them, from violating the federal securities laws alleged in this complaint.
II.
Civil Penalties
9

Issue an  Order directing  Ha rper  t   o  pay a civil money p ena lty purs uant to  Section 20(d) of
the  Securities Act,  15 U.S.C. § 77t(d), and Section 2l(d) of the  Exchange Act,  15 U .S.C. §
78u(d).
III.
Further Relief
Grant such other further  relief as may be necessary and appropriate.
JV.
Retention of Jurisdiction
Further, the Commissio n  respectfully  requests that  the Court reta in jurisdi ct ion over  this
action in o r
der to implem ent and ca1Ty o ut  the  terms  of  all orders and  decrees that  may be
entered,  o r  to entertain any  suitable  application or  motio n by the Commission fo r  additional
reli
ef within the jurisdicti on of th is Court.
March _, 20 I 8
l  espectfully submitted,
2:C!::::::::trC.142859
TRIA L ATTORNEY
ANDRE ZAMORANO, FL BA R #967361
J
ACQUE LINE M. O'REILLY, F L  BA R #29326
SECURITIES AND EXCHANGE
COMMISSION
801 Brickell Avenue, Suite  1800
Miami, Florida 3313 1
T elephone: (
305) 982-6300
Facsimile: (305) 536-4146
[email protected]
zamoran
[email protected]
orei
lly [email protected]
Atto rneys for Pla i
ntiff
ALEXANDER C. VAN HOOK
UNI
TED STATES  ATTORNEY
WESTERN DISTRICT OF LOUIS IANA
IO

Isl Katherine W Vincent
KATHERINE W. VINCENT#l8717
Assistant United States Attorney
800 Lafayette Street, Suite 2200
Lafayette, Louisiana 70501-6832
Telephone: (337) 262-6618
Facsimile: (337) 262-6693
Katherine. [email protected]
Local Counsel
11

UNITED STATES DISTRICT COURT 
DISTRICT OF WESTERN LOUISIANA 

SHREVEPORT DIVISION 

SECURITIES AND EXCHANGE COMMISSION, CASE NO. 

Plaintiff, 
VERSUS JUDGE 

SHAE YA TT A HARPER, MAGISTRATE JUDGE 

Defendant. 

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF 

Plaintiff Securities and Exchange Commission (the "Commission") alleges as follows: 

INTRODUCTION 

1. The Commission brings this action to enjoin Shae Yatta Harper ("Harper") from 

further violations of the registration provisions of the federal securities laws and from aiding and 

abetting violations of the antifraud provisions of the federal securities laws. 

2. Between approximately April 2013 and August 2014, Kirbyjon Caldwell and 

Gregory Alan Smith raised at least $3,488,500 through a scheme to defraud approximately 29 

investors through the fraudulent offer and sale of participation rights in certain historical Chinese 

bonds ("the bonds"). Among other material misstatements and omissions, Caldwell and Smith 

represented to these investors that the bonds were safe, risk-free, worth tens, if not hundreds, of 

millions of dollars, and could be sold to third parties. In reality, the bonds were mere collectible 

memorabilia with no investment value. At Caldwell's direction, Harper drafted participation 

agreements in the bonds that were sent to investors. Harper also controlled the bank account to 

which most investors sent their funds to invest in this investment opportunity, and distributed 

investor funds to Caldwell and Smith at their direction. 

Case 5:18-cv-00436 Document 1 Filed 03/29/18 Page 1 of 11 PageID #: 1 



3. Through her conduct as alleged in this Complaint, Harper violated Sections 5(a) 

and 5(c) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. §§ 77e(a) and 77e(c), and 

aided and abetted violations of Section l 7(a) of the Securities Act, 15 U.S.C. § 77q(a), and 

Section l0(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78j(b), and 

Rule 1 0b-5 thereunder, 17 C.F.R. § 240.1 0b-5. Unless the Court enjoins Harper, she is 

reasonably likely to continue to violate these provisions of the federal securities laws. 

DEFENDANT 

4. Harper, age 44, is a resident of Monmouth Junction, New Jersey. Harper is an 

attorney licensed to practice in California, New Jersey, and the District of Columbia. Harper is 

currently employed as a transactional attorney within the power and gas industry. 

OTHER RELEVANT PARTIES 

5. Caldwell, age 64, is a resident of Houston, Texas. During the relevant period, 

Caldwell was the Senior Pastor at Windsor Village United Methodist Church (the "church"), one 

of the largest Protestant churches in the U.S. He and his wife are the co-owners of LDT, LLC, 

("LDT"), a Wyoming limited liability company formed by Harper in April 2013. 

6. Smith, age 55, is a resident of Shreveport, Louisiana. Between December 1999 

through July 2010, Smith was associated with New England Securities Corp, a registered broker­

dealer. In July 2010, Smith was permanently barred from association with any FINRA member 

in any capacity, in part for commingling investor funds in his business account and for 

misappropriating investor funds. 

2 

Case 5:18-cv-00436 Document 1 Filed 03/29/18 Page 2 of 11 PageID #: 2 



JURISDICTION AND VENUE 

7. The Court has jurisdiction over this action pursuant to Sections 20(b ), 20( d)( I), 

and 22(a) of the Securities Act, I 5 U .S.C. §§ 77t(b ), 77t( d)(I ), and 77v(a); and Sections 21 ( d) 

and 27 of the Exchange Act, 15 U.S.C. §§ 78u(d) and 78aa. 

8. The Court has personal jurisdiction over the Defendant, and venue is proper in the 

Western District of Louisiana, because many of the Defendant's acts and transactions 

constituting violations of the federal securities laws occurred in the district. 

9. In connection with the conduct alleged in the Complaint, the Defendant, by 

drafting the participation agreements in the bonds that were sent to investors and by distributing 

the funds as directed by Caldwell and Smith, directly or indirectly, singly or in concert with 

others, made use of the means or instrumentalities of interstate commerce, the means or 

instruments of transportation or communication in interstate commerce, or the mails. 

FACTUAL ALLEGATIONS 

A. Background and Mechanics of the Offering 

10. From at least April 2013 until August 2014, Caldwell and Smith offered and sold 

to at least 29 investors participation rights in various historical or Pre-revolutionary Chinese 

bonds which Caldwell claimed to own, control, or possess. In some cases, Caldwell and Smith 

told investors that their funds would be used to purchase the bonds. Smith, who worked as a 

financial planner, was responsible for finding investors for this offering. He raised the money 

for this offering by promising investors exorbitant returns on their investment. Smith also 

represented to many investors that he was an "investment adviser" with many years of prior 

experience assisting others with their investments. He gave these investors investment advice 

concerning whether to invest in this scheme. 

3 

Case 5:18-cv-00436 Document 1 Filed 03/29/18 Page 3 of 11 PageID #: 3 



11 . Smith was instrumental in securing investors for this scheme because he had 

longstanding ties to prospective investors and operated under the guise of an investment adviser 

with many years of experience advising clients on similar deals. In one case, Smith promised an 

investor that she would receive 15 times her original investment within 30 days and any funds 

she invested would be returned within 5 days of any demand for the funds. Once an investor 

agreed to invest, the investor was instructed to wire transfer payment to one of two bank 

accounts: a bank account solely controlled by Harper and titled in the name of her deceased 

mother (the "Estate of Alta Harvey Account") or an account held by LDT. Immediately after the 

investors sent the money, the investment funds were transferred to the personal accounts of 

Caldwell, Smith, or a Mexican business associate. 

B. The Material Misrepresentations and Omissions about the Bonds 

1. Background on Pre-Revolutionary Chinese Bonds 

12. Prior to the 1949 communist takeover in China, the former republic issued 

billions of dollars' worth of government bonds. These bonds have been in default since 1939 

and the current Chinese government refuses to recognize the debt. In 1970, the Foreign Claims 

Settlement Commission (FCSC) considered a claim to recuperate this debt under the 

International Claims Settlement Act of 1949. On March 18, 1970, the FCSC concluded in 

Decision No. CN-147 that because the bonds had been in default since 1939 (ten years prior to 

Chinese Communist assumption of power), the claims did not come under the purview of the 

Act. In May 2012, the U.S. Treasury issued a fact sheet confirming that it does not hold any pre-

1949 Chinese bonds in its foreign exchanges. 

2. Misrepresentations and Omissions 

4 

Case 5:18-cv-00436 Document 1 Filed 03/29/18 Page 4 of 11 PageID #: 4 



13. Smith was successful in raising money for this offering by promoting the deal as 

something that he was offering to only a few select individuals. Smith falsely told some of the 

investors that the money raised would be used to acquire more Chinese bonds. He repeatedly 

told investors that the bonds were '"risk free," "guaranteed," and "safe" and that there were 

buyers lined up to purchase the bonds. Smith also told investors that the bonds would either be 

sold to a third party or redeemed by the Chinese government. Caldwell also made similar 

material misrepresentations to several investors, including that the return on investment was 

guaranteed. In fact, he even told one investor who invested approximately $800,000 that the 

bonds were backed by gold or silver. Both Smith and Caldwell falsely told investors that the 

bonds were valuable and worth tens, if not hundreds, of millions of dollars. Harper never 

directly communicated with any investors and therefore did not make any misstatements or 

omissions to them. 

14. Although many investors did not understand the investment, they ultimately 

trusted Smith and had faith in the fact that a high-profile pastor was offering the investment. 

Among other things, Smith falsely represented to investors that he too had invested in the bonds 

and that investors were guaranteed a return on investment which would be repaid in less than one 

year. In one case he promised a return on investment in as little as 30 days. However, Smith 

failed to tell these investors that these bonds had already matured and had been in default for 

decades, or that they were not redeemable at all. Smith also failed to disclose that he was 

receiving compensation for recommending the investment to prospective investors. 

3. The Participation Agreements 

15. Once Smith found investors for the offering, Caldwell directed Harper to draft a 

participation agreement containing the terms of the investment. The participation agreements 

5 

Case 5:18-cv-00436 Document 1 Filed 03/29/18 Page 5 of 11 PageID #: 5 



usually included the investment amount, a vague description of the bond, an exorbitant return on 

investment, a profit-sharing provision, depository bank information, and a "failure to close" 

option pursuant to which the investor could request his or her money back in the event Caldwell 

was unable to sell the bonds. Most of the participation agreements given to investors generally 

described the bonds as "historical Chinese Bonds." Harper earned $5, 100 in legal fees for 

drafting the participation agreements. 

16. Under the terms of the participation agreements, the investors' expectation of a 

return on their investment was based solely upon Caldwell's ability to sell the bonds to a third 

party purchaser. In fact, many of the participation agreements expressly stated that Caldwell was 

in control and possession of the bonds and that he planned to sell the bonds to third party 

purchasers. This offering was not registered with the Commission. Furthermore, most of the 

investors who invested in this scheme were not accredited. In fact, many were unsophisticated 

retirees who liquidated their annuities to invest in this scheme pursuant to Smith's advice. 

C. Harper's Involvement in the Fraudulent Offering 

17. Caldwell was Harper's pastor and a close family friend. Between approximately 

April 2013 and August 2014, Harper drafted the participation agreements provided to investors 

for which she was paid attorney's fees totaling approximately $5,100. Harper also controlled a 

bank account which received and distributed investor funds to Caldwell and Smith. By 

controlling this account, and distributing investor funds to Caldwell and Smith, Harper 

substantially assisted their fraudulent scheme. In doing so, Harper did not sufficiently 

investigate red flags indicating that the transactions might be fraudulent. For example, during a 

trip to Europe with Caldwell, an individual discussed the bonds with Harper and questioned 

whether the potential buyers were real and the bonds valuable. Several of Harper's attorney 

6 

Case 5:18-cv-00436 Document 1 Filed 03/29/18 Page 6 of 11 PageID #: 6 



friends also expressed doubt as to the value of the bonds. Harper also read an article that 

questioned the value of the bonds. 

18. Harper invested $5,000 of her own money in this investment scheme in or around 

March 2013. Despite the presence of the red flags described above, Harper did not ask Caldwell 

for the return of her investment. 

CLAIMS FOR RELIEF 

COUNTI 

Violations of Sections S(a) and (c) of the Securities Act 

19. The Commission repeats and realleges Paragraphs 1 through 18 of its Complaint. 

20. No registration statement was filed or in effect with the Commission pursuant to 

the Securities Act with respect to the securities and transactions described in this Complaint and 

no exemption from registration existed with respect to these securities and transactions. 

21. Between approximately April 2013 and August 2014, Harper, a substantial and 

necessary participant in the unregistered sale of the securities, directly and indirectly: 

(a) Made use of means or instruments of transportation or communication in 
interstate commerce or of the mails to sell securities as described herein, 
through the use or medium of a prospectus or otherwise; 

(b) Carried securities or caused such securities, as described herein, to be 
carried through the mails or in interstate commerce, by any means or 
instruments of transportation, for the purpose of sale or delivery after sale; or 

( c) Made use of means or instruments of transportation or communication in 
interstate commerce or of the mails to offer to sell or off er to buy through the 
use or medium of a prospectus or otherwise, as described herein, without a 
registration statement having been filed or being in effect with the Commission 
as to such securities. 

7 

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22. By reason of the foregoing, Harper violated and, unless enjoined, is reasonably 

likely to continue to violate, Sections 5(a) and 5(c) of the Securities Act, 15 U.S.C § 77e(a) and 

77e(c). 

COUNT II 

Aiding and Abetting Violations of Section 1 0(b) 
of the Exchange Act and Rule lOb-5 thereunder 

23. The Commission repeats and realleges Paragraphs 1 through 18 of its Complaint. 

24. Between approximately April 2013 and August 2014, Harper, directly or 

indirectly, knowingly or recklessly provided substan~ial assistance to persons who, directly 

or indirectly, singly or in concert with others, in connection with the purchase or sale of a 

security, with scienter, used the means or instrumentalities of interstate commerce, or of the 

mails, or of the facilities of a national securities exchange: ( 1) to employ devices, schemes, 

or artifices to defraud; (2) to make untrue statements of material facts or omit to state 

material facts necessary in order to make the statements made, in the light of the 

circumstances under which they were made, not misleading; or (3) to engage in acts, 

practices, or courses of business which operated or would operate as a fraud or deceit upon 

any person in connection with the purchase or sale of any security. 

25. By reason of the foregoing, Harper aided and abetted and, unless enjoined, is 

reasonably likely to continue to aid and abet, violations of Section 1 0(b) of the Exchange Act, 

15 U.S.C. § 78j(b), and Rule l0b-5 thereunder, 17 C.F.R. § 240.l0b-5. 

COUNTIII 

Aiding and Abetting Violations of Sections l 7(a) of the Securities Act 

26. The Commission repeats and realleges Paragraphs 1 through 18 of this Complaint. 

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27. Between approximately April 2013 and August 2014, Harper, directly or 

indirectly, knowingly or recklessly provided substantial assistance to persons who, directly 

or indirectly, singly or in concert with others, in the offer or sale of a security, used the 

means or instrumentalities of interstate commerce, or of the mails, or of a facility of a 

national securities exchange: ( 1) to knowingly or recklessly employ devices, schemes, or 

artifices to defraud; (2) to negligently obtain money or property by means of untrue 

statements of material fact or omissions to state material facts necessary in order to 

make the statements made, in the light of the circumstances under which they were 

made, not misleading; or (3) to negligently engage in transactions, practices, or courses of 

business which operated or would operate as a fraud or deceit upon purchasers of the 

securities. 

28. By reason of the foregoing, Harper aided and abetted and, unless enjoined, is 

reasonably likely to continue to aid and abet, violations of Section 17(a) of the Securities Act, 15 

U.S.C. § 77q(a). 

RELIEF REQUESTED 

WHEREFORE, the Commission respectfully requests that the Court: 

I. 

Permanent Injunctive Relief 

Issue a permanent injunction restraining and enjoining Harper, and her officers, agents,· 

servants, employees, attorneys, representatives, and all persons in active concert or participation 

with them, and each of them, from violating the federal securities laws alleged in this complaint. 

II. 

Civil Penalties 

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Issue an Order directing Harper to pay a civil money penalty pursuant to Section 20(d) of 

the Securities Act, 15 U.S.C. § 77t(d), and Section 2l(d) of the Exchange Act, 15 U.S.C. § 

78u(d). 

III. 

Further Relief 

Grant such other further reli ef as may be necessary and appropri ate. 

JV. 

Retention of Jurisdiction 

Further, the Commission respectfully requests that the Court retain jurisdi ction over this 

action in order to implement and ca1Ty out the terms of all orders and decrees that may be 

entered, or to entertain any suitable application or motion by the Commission fo r additional 

relief within the j urisdiction of this Court. 

March _ , 20 I 8 

l espectfully submitted, 

2:C!::::::::trC.142859 
TRIAL ATTORNEY 
ANDRE ZAMORANO, FL BAR #967361 
JACQUELINE M. O'REILLY, FL BAR #29326 
SECURITIES AND EXCHANGE 
COMMISSION 
801 Brickell Avenue, Suite 1800 
Miami, Florida 33 13 1 
Telephone: (305) 982-6300 
Facsimile: (305) 536-4 146 
[email protected] 
[email protected] 
orei ll [email protected] 
Attorneys for Plaintiff 

ALEXANDER C. VAN HOOK 
UNITED STATES ATTORNEY 
WESTERN DISTRICT OF LOUISIANA 

IO 

Case 5:18-cv-00436 Document 1 Filed 03/29/18 Page 10 of 11 PageID #: 10 



Isl Katherine W Vincent 
KATHERINE W. VINCENT#l8717 
Assistant United States Attorney 
800 Lafayette Street, Suite 2200 
Lafayette, Louisiana 70501-6832 
Telephone: (337) 262-6618 
Facsimile: (337) 262-6693 
Katherine. [email protected] 
Local Counsel 

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