SEC v. Benjamin Sydney Staples; and Benjamin Oneal Staples, No. 3:13-cv-02575, District of South Carolina (Jan. 1, 2013) — Complaint

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
 COLUMBIA DIVISION

UNITED STATES SECURITIES AND EXCHANGE
COMMISSION,

                                           Plaintiff,

                                 v.

BENJAMIN SYDNEY STAPLES, an individual and
BENJAMIN ONEAL STAPLES, an individual

                                        Defendants,

                                and

BRIAN STAPLES,
                                                     Relief Defendant.

  Civil Action No.:

COMPLAINT FOR INJUNCTIVE RELIEF
Plaintiff,  Securities  and  Exchange  Commission  (the  “Commission”),  for  its  Complaint
against   Defendants   Benjamin   Sydney   Staples   and   Benjamin   Oneal   Staples   (collectively,
“Defendants” or the “Staples”) alleges as follows:
INTRODUCTION
1. This  matter  involves  fraudulent  conduct  by  Benjamin  Sydney  Staples  (“Ben
Staples”)  and  his  son,  Benjamin  Oneal  Staples  (“Oneal  Staples”)  designed  to  profit  from  the
deaths of terminally ill individuals.
2. From  early  2008  through  approximately  June  2012,  the  Staples  operated  the
Estate Assistance Program (the “Program,”) which effectively turned the deaths of terminally ill

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individuals  into  a  profit-making  enterprise  by  purchasing  and  redeeming  corporate  bonds  that
contained a “survivor's option.”
3. The  Staples  identified  terminally  ill  individuals  and  recruited  them  into  the
Program by offering to pay for their funeral expenses.  In exchange, the terminally ill participant
agreed to open a joint brokerage account with Ben Staples, Oneal Staples or both.
4. Although the ill participants opened joint brokerage accounts with the Staples, the
Staples  required  them  to  relinquish  any  ownership  rights  to  any  assets  purchased  in  those
accounts   through   the   execution   of   side   agreements.      The   Staples   required   all   Program
participants to sign an “Estate Assistance Agreement” and a “Participant Letter,” both of which
relinquished the terminally ill participant’s ownership interest in the assets in the joint account.
5. After  a  joint  account  was  opened,  the  Staples  purchased  discounted  corporate
bonds  containing  a  “survivor's  option,”  which  allowed  the  Staples  to  redeem  the  bonds  for  the
full principal amount prior to maturity if, among other things, a joint owner of the bond died.
6. After a terminally ill participant died, the Staples wrote a letter to each brokerage
firm where the Staples and that participant had a joint account.  In that letter, the Staples asked
that the bonds in the joint account be redeemed pursuant to the “survivor's option.”
7. The Staples’ early redemption of these bonds constitutes a sale of the bonds to the
bond issuers.
8. In   their   redemption   request   letters   to   the   brokerage   firms,   the   Staples
misrepresented  that  the  deceased  participant  was  an  “owner”  of  the  bonds,  when  in  fact  the
deceased had relinquished all ownership interest in the bonds.

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9. The  Staples  further  failed  to  inform  the  brokerage  firms  or  bond  issuers  that  the
deceased  Program  participants  had  signed  the  Estate  Assistance  Agreements  and  Participant
Letters relinquishing all ownership interest in the bonds.
10. These misrepresentations and omissions were material and as a result of them, the
Staples profited at least $6.5 million from the deaths of their Program participants.
JURISDICTION AND VENUE
11. This  Court  has  subject  matter  jurisdiction  by  authority  of  Sections  20  and  22  of
the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. §§ 77t and 77v] and Sections 21 and
Section 27 of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. §§ 78u and
78aa].
12. Defendants,  directly  and  indirectly,  singly  and  in  concert,  have  made  use  of  the
means  and  instrumentalities  of  interstate  commerce  and  the  mails  in  connection  with  the
transactions, acts and courses of business alleged herein, certain of which have occurred within
the District of South Carolina.
13. Venue  for  this  action  is  proper  in  the  District  of  South  Carolina  under  Section
22(a) of the Securities Act [15 U.S.C. § 77v(a)] and under Section 27 of the Exchange Act [15
U.S.C.  §  78aa]  because  certain  of  the  transactions,  acts,  practices,  and  courses  of  business
alleged  in  this  Complaint  took  place  in  this  district  and  because  the  Defendants  reside  in  and
transact business in this district.
14. Defendants, unless restrained and enjoined by this Court, will continue to engage
in the transactions, acts, practices, and course of business alleged herein and in transactions, acts,
practices, and courses of business of similar purport and object.

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15. Defendants’ conduct took place in connection with the offer, purchase and/or sale
of corporate bonds, which are securities.
THE DEFENDANTS
16. Benjamin  Sydney  Staples,  age  62,  resides  in  Lexington,  South  Carolina.    He
created and operated the Estate Assistance Program.
17. Benjamin Oneal Staples, age 28, resides in Lexington, South Carolina.  He was
recruited by his father, Ben Staples, to work full time in operating the Estate Assistance Program.
RELIEF DEFENDANT
18. Brian  Staples,  age  25,  resides  in  Lexington,  South  Carolina.    He  received
approximately $400,000 in proceeds from the Estate Assistance Program.
RELATED ENTITY
19. Palmetto  Estate  Assistance  Trust,  LLP  (“Palmetto”)  is  a  South  Carolina
Limited  Partnership  with  its  principal  place  of  business  in  Lexington,  South  Carolina.    Its  sole
principal is Ben Staples, who used Palmetto as a signatory to the Estate Assistance Agreements.
Ben Staples managed, operated and controlled Palmetto.
STATEMENT OF FACTS
20. In early 2008, Ben Staples created the Estate Assistance Program with the intent
to profit from the deaths of terminally ill individuals by purchasing discounted corporate bonds
containing a “survivor’s option” and redeeming the bonds early, upon the death of the terminally
ill individual, for the bond's full principal amount.
21. From  2008  through  approximately  June  2012,  Ben  Staples  and  his  son,  Oneal
Staples,  operated  the  Program,  through  which  they  purchased  at  least  $26.5  million  in  bonds
from  at  least  35  issuers.    Ben  Staples  and  Oneal  Staples  recruited  at  least  44  terminally  ill

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participants into the Program and profited at least $6.5 million from the Program.  The profit was
the  difference  between  the  discounted  price  of  the  bonds  the  Staples  purchased  and  the  full
principal amount they were able to obtain through early redemption of the bonds.
22. The  Staples'  Program  was  simple.    First,  they  identified  individuals  whose  death
was imminent and who were concerned about being able to afford the costs of their funeral.
23. The Staples recruited the terminally ill individuals into the Program by offering to
pay  for  their  funeral  expenses  if  the  terminally  ill  individuals  agreed  to  open  a  joint  brokerage
account with the Staples.
24. In order to join the Program, the Staples required the terminally ill individuals to
sign  three  documents:    (a)  an  application  to  open  a  joint  brokerage  account  with  Ben  Staples,
Oneal Staples, or both; (b) an Estate Assistance Agreement; and (c) a Participant Letter.
25. Both  the  Estate  Assistance  Agreement  and  the  Participant  Letter  required  the
terminally ill participant to relinquish any ownership rights in the joint accounts or any assets in
them.
26. The Estate Assistance Agreement required the terminally ill participants to deliver
to  Palmetto,  an  entity  the  Staples  used  in  the  Program's  operation,  a  “Power  of  Attorney
providing  it  with  sole  control  of  the  Account  set  up  jointly  with  the  parties  and  specifically
waiving  and  assigning  any  interest  in  [the  participant's]  rights  in  the  account  to  Palmetto,  its
members, affiliates and associates.”
27. In  the  Participant  Letter,  the  terminally  ill  individuals  agreed  that  they,  “through
this  agreement  waive  any  rights  that  [they]  have  to  the  account.”    In  this  letter  the  participants
further  acknowledged  that  the  transfer  of  ownership  rights  to  the  Staples  was  permanent,  and

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stated that they “understand that this agreement is binding on [their] personal representatives and
heirs.”
28. After  signing  the  joint  brokerage  account  application,  the  Estate  Assistance
Agreement and the Participant Letter, the terminally ill individuals had effectively applied for a
joint brokerage account but at the same time had relinquished any ownership rights they had to
assets purchased in those accounts.
29. Once  a  brokerage  firm  opened  a  joint  account  between  the  Staples  and  the
Program  participants,  the  Staples  purchased  discounted  corporate  bonds  that  contained  a
“survivor’s option” in those accounts.
30. A  “survivor’s  option”  is  a  provision  featured  in  some  corporate  bonds  that
requires  the  bond  issuers  to  repay  the  full  principal  amount  of  the  bonds  prior  to  maturity
following the death of a beneficial owner if certain requirements are met.
31. To comply with the terms of the survivor’s option, the decedent must be an owner
of the bond at the time of their death.
32. Upon  the  death  of  a  Program  participant,  the  Staples  wrote  a  letter  to  the
brokerage  firm  asking  that  the  corporate  bonds  be  redeemed  early  pursuant  to  the  survivor’s
option.  This request for early redemption of the corporate bonds constituted a sale of the bond to
the bond issuer.
33. In letters to the brokerage firms, the Staples misrepresented the ownership interest
the  deceased  participants  had  in  the  bonds.    In  these  letters,  the  Staples  state  that  they  are
requesting  early  redemption  on  behalf  of  the  “deceased  owner,”  when  in  fact  the  deceased
participants  had  no  ownership  interest  in  the  bonds  since  the  Staples  had  required  them  to
relinquish this ownership.

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34. Throughout the account opening process and the redemption process, the Staples
failed  to  inform  the  brokerage  firms  or  the  bond  issuers  that  the  deceased  participants  had
relinquished all ownership interest in the bonds by signing the Estate Assistance Agreement and
the Participant Letter.
35. When  the  Staples  redeemed  their  bonds  under  the  survivor’s  option,  they  falsely
claimed that the decedents were owners of the bonds when in fact the deceased participants had
relinquished all ownership interest in the bonds through the Estate Assistance Agreement and the
Participant Letter.
36. The  above  misrepresentations  and  omissions  are  material  because  ownership  of
the bonds is required in order to redeem the bonds under the survivor's option.
37. The above misrepresentations and omissions occurred in connection with the sale
of  a  security  because  the  early  redemption  of  the  corporate  bonds,  which  are  securities,
constituted a sale of the bond to the bond issuer.
38. Ben  Staples  and  Oneal  Staples  acted  with  scienter.    They  operated  the  Estate
Assistance Program with the intent to deceive the brokerage firms and the bond issuers about the
ownership interest that their deceased participants had in the bonds.  The Staples were aware that
each Program participant had relinquished all ownership rights in the bonds and despite knowing
this,  they  falsely  represented  that  they  were  entitled  to  redeem  the  bonds  pursuant  to  the
survivor's option because the deceased were “owners” of the bonds.
39. From the profit obtained through his fraudulent acts set forth above, Ben Staples
deposited approximately $400,000 into the account of his son, Brian Staples.
40. Brian Staples had no active role in the Program and received these funds unjustly.

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FIRST CAUSE OF ACTION
EMPLOYMENT OF A DEVICE, SCHEME OR ARTIFICE TO DEFRAUD
Violation of Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)]

41. The Commission realleges and incorporates by reference the allegations contained
in the paragraphs above.
42. Defendants,  and  each  of  them,  by  engaging  in  conduct  described  above,  directly
or  indirectly,  in  the  offer  or  sale  of  securities,  by  the  use  of  the  means  or  instruments  of
transportation  or  communication  in  interstate  commerce  or  by  use  of  the  mails,  with  scienter,
employed devices, schemes, or artifices to defraud.
43. By reason of the foregoing, Defendants directly or indirectly, violated, and unless
restrained and enjoined by this Court, will continue to violate Section 17(a)(1) of the Securities
Act [15 U.S.C. § 77q(a)(1)].
SECOND CAUSE OF ACTION
FRAUD IN THE OFFER AND SALE OF SECURITIES
Violations of Section 17(a)(2) and (3) of the Securities Act [15 U.S.C. §77q(a)(2) and (3)]
44. The Commission realleges and incorporates by reference the allegations contained
in the paragraphs above.
45. Defendants,  and  each  of  them,  by  engaging  in  the  conduct  described  above,
directly and indirectly, in the offer and sale of securities, by the use of the means or instruments
of  transportation  or  communication  in  interstate  commerce  or  by  use  of  the  mails,  obtained
money  or  property  by  means  of  untrue  statements  of  material  fact  or  by  omitting  to  state  a
material fact necessary in order to make the statements made, in light of the circumstances under
which  they  were  made,  not  misleading,  and  engaged  in  transactions,  practices,  or  courses  of
business which operate or would operate as a fraud or deceit upon the purchaser.

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46. By reason of the foregoing, Defendants, directly or indirectly, violated, and unless
restrained and enjoined will continue to violate, Sections 17(a)(2) and 17(a)(3) of the Securities
Act [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)].
THIRD CAUSE OF ACTION
FRAUD IN CONNECTION WITH THE PURCHASE AND
SALE OF SECURITIES
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5]
47. The Commission realleges and incorporates by reference the allegations contained
in the paragraphs above.
48. Defendants,  and  each  of  them,  by  engaging  in  the  conduct  described  above,
directly or indirectly, by the use of the means and instrumentalities of interstate commerce or use
of  the  mails,  in  connection  with  the  purchase  or  sale  of  securities,  with  scienter,  (1)  employed
devices, schemes, or artifices to defraud; (2) made untrue statements of material fact or omitted
to state a material fact necessary in order to make statements made, in light of the circumstances
under  which  they  were  made  not  misleading;  or  (3)  engaged  in  acts,  practices,  or  courses  of
business that operated or would operate as a fraud and deceit upon other persons.
49. By  reason  of  the  foregoing,  Defendants  violated,  and  unless  restrained  and
enjoined will continue to violate Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule
10b-5 thereunder [17 C.R.F. § 240.10b-5].
FOURTH CAUSE OF ACTION
UNJUST ENRICHMENT

50. The Commission realleges and incorporates by reference the allegations contained
in the paragraphs above.

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51. As a result of the unlawful conduct of Defendants, Relief Defendant has thus been
unjustly  enriched,  and  it  would  be  unjust  and  inequitable  for  him  to  retain  those  funds  and/or
property.
RELIEF REQUESTED
 WHEREFORE, the Commission respectfully requests that this Court:
I
  Issue  findings  of  fact  and  conclusions  of  law  that  Defendants  committed  the  violations
charged herein.
II
Issue in a form consistent with Rule 65(d) of the Federal Rules of Civil Procedure orders
that temporarily, preliminarily and permanently enjoin Ben Staples and Oneal Staples and their
officers,  agents,  servants,  employees,  attorneys,  and  accountants,  and  those  persons  in  active
concert  or  participation  with  any  of  them,  who  receive  actual  notice  of  the  order  by  personal
service  or  otherwise,  and  each  of  them,  from  engaging  in  transactions,  acts,  practices,  and
courses of business described herein, and from engaging in conduct of similar purport and object
in  violation  of  Sections  17(a)  of  the  Securities  Act  and  Section  10(b)  of  the  Exchange  Act  and
Rule 10b-5 thereunder.
III
 Enter  an  order  directing  Defendants,  and  each  of  them,  to  pay  civil  money  penalties
pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act.
IV
 Enter  an  order  directing  Defendants  to  disgorge  all  ill-gotten  gains  received  during  the
period of violative conduct and pay prejudgment interest on such ill-gotten gains.

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V
 Declare and impose a constructive trust on all property received by Relief Defendant and
require  him  to  disgorge  the  funds  or  property  he  obtained  from  Defendants  as  a  result  of  the
illegal conduct alleged herein.
VI
 Retain  jurisdiction  of  this  action  in  accordance  with  the  principles  of  equity  and  the
Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and
decrees  that  may  be  entered,  or  to  entertain  any  suitable  application  or  motion  for  additional
relief within the jurisdiction of this Court.

Respectfully submitted,

WILLIAM N. NETTLES
UNITED STATES ATTORNEY

BY: s/Barbara M. Bowens
BARBARA M. BOWENS (#4004)
JAMES C. LEVENTIS, JR. (#9406)
Assistant United States Attorneys
1441 Main Street, Suite 500
Columbia, South Carolina  29201
Telephone (803) 929-3000
Fax: (803) 252-2759
E-mail:  [email protected]
                                    [email protected]

                                                                        Local            Counsel            for            Plaintiff            Securities            and            Exchange
      Commission

12
THOMAS M. MELTON
Trial Counsel
Utah Bar No. 4999
Telephone (801) 524-6748
E-mail: [email protected]

DANIEL J. WADLEY
Trial Counsel
Utah Bar No. 10358
Telephone (801) 524-3422
E-mail:  [email protected]

                                                                                                                                                                  TANYA                                                      G.                                                      BEARD
   Staff  Attorney
   Utah Bar No. 9106
   Telephone (801) 524-3418
                                                                                                                                                                  E-mail:                                                                                                            [email protected]

   Counsel for Plaintiff
Securities and Exchange Commission
15 West South Temple, Suite 1800
Salt Lake City, Utah 84101
Tel:  801-524-5796
Fax:  801-524-5262

September 20, 2013

IN THE UNITED STATES DISTRICT COURT 
DISTRICT OF SOUTH CAROLINA 

 COLUMBIA DIVISION 
 

 
 
UNITED STATES SECURITIES AND EXCHANGE  
COMMISSION, 

 
                                           Plaintiff, 
 
                                 v.  
 
BENJAMIN SYDNEY STAPLES, an individual and 
BENJAMIN ONEAL STAPLES, an individual 
 
                                        Defendants,  
 
                                and 
 
BRIAN STAPLES, 
                                                     Relief Defendant. 
 

  Civil Action No.:   
 
 

 
 
 

 
 
 

 
 

 

COMPLAINT FOR INJUNCTIVE RELIEF 

Plaintiff, Securities and Exchange Commission (the “Commission”), for its Complaint 

against Defendants Benjamin Sydney Staples and Benjamin Oneal Staples (collectively, 

“Defendants” or the “Staples”) alleges as follows: 

INTRODUCTION 

1. This matter involves fraudulent conduct by Benjamin Sydney Staples (“Ben 

Staples”) and his son, Benjamin Oneal Staples (“Oneal Staples”) designed to profit from the 

deaths of terminally ill individuals. 

2. From early 2008 through approximately June 2012, the Staples operated the 

Estate Assistance Program (the “Program,”) which effectively turned the deaths of terminally ill 

3:13-cv-02575-MBS     Date Filed 09/20/13    Entry Number 1     Page 1 of 12

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Typewritten Text
3:13-2575-MBS



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individuals into a profit-making enterprise by purchasing and redeeming corporate bonds that 

contained a “survivor's option.” 

3. The Staples identified terminally ill individuals and recruited them into the 

Program by offering to pay for their funeral expenses.  In exchange, the terminally ill participant 

agreed to open a joint brokerage account with Ben Staples, Oneal Staples or both. 

4. Although the ill participants opened joint brokerage accounts with the Staples, the 

Staples required them to relinquish any ownership rights to any assets purchased in those 

accounts through the execution of side agreements.  The Staples required all Program 

participants to sign an “Estate Assistance Agreement” and a “Participant Letter,” both of which 

relinquished the terminally ill participant’s ownership interest in the assets in the joint account. 

5. After a joint account was opened, the Staples purchased discounted corporate 

bonds containing a “survivor's option,” which allowed the Staples to redeem the bonds for the 

full principal amount prior to maturity if, among other things, a joint owner of the bond died. 

6. After a terminally ill participant died, the Staples wrote a letter to each brokerage 

firm where the Staples and that participant had a joint account.  In that letter, the Staples asked 

that the bonds in the joint account be redeemed pursuant to the “survivor's option.” 

7. The Staples’ early redemption of these bonds constitutes a sale of the bonds to the 

bond issuers. 

8. In their redemption request letters to the brokerage firms, the Staples 

misrepresented that the deceased participant was an “owner” of the bonds, when in fact the 

deceased had relinquished all ownership interest in the bonds. 

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9. The Staples further failed to inform the brokerage firms or bond issuers that the 

deceased Program participants had signed the Estate Assistance Agreements and Participant 

Letters relinquishing all ownership interest in the bonds. 

10. These misrepresentations and omissions were material and as a result of them, the 

Staples profited at least $6.5 million from the deaths of their Program participants. 

JURISDICTION AND VENUE 

11. This Court has subject matter jurisdiction by authority of Sections 20 and 22 of 

the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. §§ 77t and 77v] and Sections 21 and 

Section 27 of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. §§ 78u and 

78aa]. 

12. Defendants, directly and indirectly, singly and in concert, have made use of the 

means and instrumentalities of interstate commerce and the mails in connection with the 

transactions, acts and courses of business alleged herein, certain of which have occurred within 

the District of South Carolina. 

13. Venue for this action is proper in the District of South Carolina under Section 

22(a) of the Securities Act [15 U.S.C. § 77v(a)] and under Section 27 of the Exchange Act [15 

U.S.C. § 78aa] because certain of the transactions, acts, practices, and courses of business 

alleged in this Complaint took place in this district and because the Defendants reside in and 

transact business in this district. 

14. Defendants, unless restrained and enjoined by this Court, will continue to engage 

in the transactions, acts, practices, and course of business alleged herein and in transactions, acts, 

practices, and courses of business of similar purport and object. 

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15. Defendants’ conduct took place in connection with the offer, purchase and/or sale 

of corporate bonds, which are securities. 

THE DEFENDANTS 

16. Benjamin Sydney Staples, age 62, resides in Lexington, South Carolina.  He 

created and operated the Estate Assistance Program. 

17. Benjamin Oneal Staples, age 28, resides in Lexington, South Carolina.  He was 

recruited by his father, Ben Staples, to work full time in operating the Estate Assistance Program. 

RELIEF DEFENDANT 

18. Brian Staples, age 25, resides in Lexington, South Carolina.  He received 

approximately $400,000 in proceeds from the Estate Assistance Program. 

RELATED ENTITY 

19. Palmetto Estate Assistance Trust, LLP (“Palmetto”) is a South Carolina 

Limited Partnership with its principal place of business in Lexington, South Carolina.  Its sole 

principal is Ben Staples, who used Palmetto as a signatory to the Estate Assistance Agreements.  

Ben Staples managed, operated and controlled Palmetto. 

STATEMENT OF FACTS 

20. In early 2008, Ben Staples created the Estate Assistance Program with the intent 

to profit from the deaths of terminally ill individuals by purchasing discounted corporate bonds 

containing a “survivor’s option” and redeeming the bonds early, upon the death of the terminally 

ill individual, for the bond's full principal amount. 

21. From 2008 through approximately June 2012, Ben Staples and his son, Oneal 

Staples, operated the Program, through which they purchased at least $26.5 million in bonds 

from at least 35 issuers.  Ben Staples and Oneal Staples recruited at least 44 terminally ill 

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participants into the Program and profited at least $6.5 million from the Program.  The profit was 

the difference between the discounted price of the bonds the Staples purchased and the full 

principal amount they were able to obtain through early redemption of the bonds. 

22. The Staples' Program was simple.  First, they identified individuals whose death 

was imminent and who were concerned about being able to afford the costs of their funeral. 

23. The Staples recruited the terminally ill individuals into the Program by offering to 

pay for their funeral expenses if the terminally ill individuals agreed to open a joint brokerage 

account with the Staples. 

24. In order to join the Program, the Staples required the terminally ill individuals to 

sign three documents:  (a) an application to open a joint brokerage account with Ben Staples, 

Oneal Staples, or both; (b) an Estate Assistance Agreement; and (c) a Participant Letter. 

25. Both the Estate Assistance Agreement and the Participant Letter required the 

terminally ill participant to relinquish any ownership rights in the joint accounts or any assets in 

them. 

26. The Estate Assistance Agreement required the terminally ill participants to deliver 

to Palmetto, an entity the Staples used in the Program's operation, a “Power of Attorney 

providing it with sole control of the Account set up jointly with the parties and specifically 

waiving and assigning any interest in [the participant's] rights in the account to Palmetto, its 

members, affiliates and associates.” 

27. In the Participant Letter, the terminally ill individuals agreed that they, “through 

this agreement waive any rights that [they] have to the account.”  In this letter the participants 

further acknowledged that the transfer of ownership rights to the Staples was permanent, and 

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 6

stated that they “understand that this agreement is binding on [their] personal representatives and 

heirs.” 

28. After signing the joint brokerage account application, the Estate Assistance 

Agreement and the Participant Letter, the terminally ill individuals had effectively applied for a 

joint brokerage account but at the same time had relinquished any ownership rights they had to 

assets purchased in those accounts. 

29. Once a brokerage firm opened a joint account between the Staples and the 

Program participants, the Staples purchased discounted corporate bonds that contained a 

“survivor’s option” in those accounts. 

30. A “survivor’s option” is a provision featured in some corporate bonds that 

requires the bond issuers to repay the full principal amount of the bonds prior to maturity 

following the death of a beneficial owner if certain requirements are met. 

31. To comply with the terms of the survivor’s option, the decedent must be an owner 

of the bond at the time of their death. 

32. Upon the death of a Program participant, the Staples wrote a letter to the 

brokerage firm asking that the corporate bonds be redeemed early pursuant to the survivor’s 

option.  This request for early redemption of the corporate bonds constituted a sale of the bond to 

the bond issuer. 

33. In letters to the brokerage firms, the Staples misrepresented the ownership interest 

the deceased participants had in the bonds.  In these letters, the Staples state that they are 

requesting early redemption on behalf of the “deceased owner,” when in fact the deceased 

participants had no ownership interest in the bonds since the Staples had required them to 

relinquish this ownership. 

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34. Throughout the account opening process and the redemption process, the Staples 

failed to inform the brokerage firms or the bond issuers that the deceased participants had 

relinquished all ownership interest in the bonds by signing the Estate Assistance Agreement and 

the Participant Letter. 

35. When the Staples redeemed their bonds under the survivor’s option, they falsely 

claimed that the decedents were owners of the bonds when in fact the deceased participants had 

relinquished all ownership interest in the bonds through the Estate Assistance Agreement and the 

Participant Letter. 

36. The above misrepresentations and omissions are material because ownership of 

the bonds is required in order to redeem the bonds under the survivor's option. 

37. The above misrepresentations and omissions occurred in connection with the sale 

of a security because the early redemption of the corporate bonds, which are securities, 

constituted a sale of the bond to the bond issuer. 

38. Ben Staples and Oneal Staples acted with scienter.  They operated the Estate 

Assistance Program with the intent to deceive the brokerage firms and the bond issuers about the 

ownership interest that their deceased participants had in the bonds.  The Staples were aware that 

each Program participant had relinquished all ownership rights in the bonds and despite knowing 

this, they falsely represented that they were entitled to redeem the bonds pursuant to the 

survivor's option because the deceased were “owners” of the bonds. 

39. From the profit obtained through his fraudulent acts set forth above, Ben Staples 

deposited approximately $400,000 into the account of his son, Brian Staples. 

40. Brian Staples had no active role in the Program and received these funds unjustly. 

 

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FIRST CAUSE OF ACTION 
EMPLOYMENT OF A DEVICE, SCHEME OR ARTIFICE TO DEFRAUD 

Violation of Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)] 
 

41. The Commission realleges and incorporates by reference the allegations contained 

in the paragraphs above. 

42. Defendants, and each of them, by engaging in conduct described above, directly 

or indirectly, in the offer or sale of securities, by the use of the means or instruments of 

transportation or communication in interstate commerce or by use of the mails, with scienter, 

employed devices, schemes, or artifices to defraud. 

43. By reason of the foregoing, Defendants directly or indirectly, violated, and unless 

restrained and enjoined by this Court, will continue to violate Section 17(a)(1) of the Securities 

Act [15 U.S.C. § 77q(a)(1)]. 

SECOND CAUSE OF ACTION 
FRAUD IN THE OFFER AND SALE OF SECURITIES 

Violations of Section 17(a)(2) and (3) of the Securities Act [15 U.S.C. §77q(a)(2) and (3)] 

44. The Commission realleges and incorporates by reference the allegations contained 

in the paragraphs above. 

45. Defendants, and each of them, by engaging in the conduct described above, 

directly and indirectly, in the offer and sale of securities, by the use of the means or instruments 

of transportation or communication in interstate commerce or by use of the mails, obtained 

money or property by means of untrue statements of material fact or by omitting to state a 

material fact necessary in order to make the statements made, in light of the circumstances under 

which they were made, not misleading, and engaged in transactions, practices, or courses of 

business which operate or would operate as a fraud or deceit upon the purchaser. 

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46. By reason of the foregoing, Defendants, directly or indirectly, violated, and unless 

restrained and enjoined will continue to violate, Sections 17(a)(2) and 17(a)(3) of the Securities 

Act [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)]. 

THIRD CAUSE OF ACTION 
FRAUD IN CONNECTION WITH THE PURCHASE AND 

SALE OF SECURITIES 
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5] 

47. The Commission realleges and incorporates by reference the allegations contained 

in the paragraphs above. 

48. Defendants, and each of them, by engaging in the conduct described above, 

directly or indirectly, by the use of the means and instrumentalities of interstate commerce or use 

of the mails, in connection with the purchase or sale of securities, with scienter, (1) employed 

devices, schemes, or artifices to defraud; (2) made untrue statements of material fact or omitted 

to state a material fact necessary in order to make statements made, in light of the circumstances 

under which they were made not misleading; or (3) engaged in acts, practices, or courses of 

business that operated or would operate as a fraud and deceit upon other persons. 

49. By reason of the foregoing, Defendants violated, and unless restrained and 

enjoined will continue to violate Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 

10b-5 thereunder [17 C.R.F. § 240.10b-5]. 

FOURTH CAUSE OF ACTION 
UNJUST ENRICHMENT 

 
50. The Commission realleges and incorporates by reference the allegations contained 

in the paragraphs above. 

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51. As a result of the unlawful conduct of Defendants, Relief Defendant has thus been 

unjustly enriched, and it would be unjust and inequitable for him to retain those funds and/or 

property. 

RELIEF REQUESTED 

 WHEREFORE, the Commission respectfully requests that this Court: 

I 

 Issue findings of fact and conclusions of law that Defendants committed the violations 

charged herein. 

II 

Issue in a form consistent with Rule 65(d) of the Federal Rules of Civil Procedure orders 

that temporarily, preliminarily and permanently enjoin Ben Staples and Oneal Staples and their 

officers, agents, servants, employees, attorneys, and accountants, and those persons in active 

concert or participation with any of them, who receive actual notice of the order by personal 

service or otherwise, and each of them, from engaging in transactions, acts, practices, and 

courses of business described herein, and from engaging in conduct of similar purport and object 

in violation of Sections 17(a) of the Securities Act and Section 10(b) of the Exchange Act and 

Rule 10b-5 thereunder. 

III 

 Enter an order directing Defendants, and each of them, to pay civil money penalties 

pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act. 

IV 

 Enter an order directing Defendants to disgorge all ill-gotten gains received during the 

period of violative conduct and pay prejudgment interest on such ill-gotten gains. 

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V 

 Declare and impose a constructive trust on all property received by Relief Defendant and 

require him to disgorge the funds or property he obtained from Defendants as a result of the 

illegal conduct alleged herein. 

VI 

 Retain jurisdiction of this action in accordance with the principles of equity and the 

Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and 

decrees that may be entered, or to entertain any suitable application or motion for additional 

relief within the jurisdiction of this Court. 

  
 
Respectfully submitted,  
 
WILLIAM N. NETTLES 
UNITED STATES ATTORNEY 
 
 
 

BY: s/Barbara M. Bowens     
BARBARA M. BOWENS (#4004) 
JAMES C. LEVENTIS, JR. (#9406) 
Assistant United States Attorneys 
1441 Main Street, Suite 500 
Columbia, South Carolina  29201 
Telephone (803) 929-3000 
Fax: (803) 252-2759  
E-mail:  [email protected] 
   [email protected] 
 

      Local Counsel for Plaintiff Securities and Exchange 
      Commission 
 
 
 
 
 
 

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THOMAS M. MELTON  
Trial Counsel 
Utah Bar No. 4999 
Telephone (801) 524-6748 
E-mail: [email protected] 
 
DANIEL J. WADLEY 
Trial Counsel  
Utah Bar No. 10358 
Telephone (801) 524-3422 
E-mail:  [email protected] 
 

   TANYA G. BEARD 
   Staff  Attorney 
   Utah Bar No. 9106 
   Telephone (801) 524-3418 
   E-mail:  [email protected] 
 
   Counsel for Plaintiff 

Securities and Exchange Commission 
15 West South Temple, Suite 1800 
Salt Lake City, Utah 84101 
Tel:  801-524-5796 
Fax:  801-524-5262 
 
 

September 20, 2013 

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