SEC v. MILAN GROUP, No. 1:13-cv-05781-RMB, District of Columbia (Oct. 2, 2013)

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
1 
of 
15 
PagelD: 
1 
Timothy 
N. 
England 
Alan 
M. 
Lieberman 
Christopher 
M. 
McLean 
Securities and 
Exchange 
Commission 
100 
F 
Street, 
N.E. 
Washington, 
DC 20549 
Tel: 
(202) 
551-4959 
(England) 
Email: 
[email protected] 
UNITED 
STATES 
DISTRICT 
COURT 
DISTRICT 
OF NEW 
JERSEY 
SECURITIES 
AND 
EXCHANGE 
COMMISSION,: 
Plaintiff, 
Case No. 
v. 
COMPLAINT 
DAVID 
H. 
FREDERICKSON 
and 
THE LAW 
OFFICES 
OF DAVID 
H. 
FREDERICKSON 
Defendants. 
Plaintiff 
Securities 
and 
Exchange 
Commission 
("Commission"), 
for its 
complaint 
against 
defendants 
David 
H. 
Frederickson 
("Frederickson") 
and 
The 
Law 
Offices ofDavid H. 
Frederickson 
("Law 
Offices"), 
alleges 
as 
follows: 
1. 
The Commission's 
address 
is: 
United 
States 
Securities and 
Exchange 
Commission, 
100 
F 
Street, N.E., 
Washington, 
D.C. 
20549. 
Defendants' 
address is: 901 
Hermosa 
Avenue, 
Hermosa 
Beach, 
California, 
90254. 
SUMMARY 
OF 
ALLEGATIONS 
2. 
In 
2010 
and 
2011, 
Frederickson, 
a 
lawyer 
licensed 
in 
California, 
participated 
in 
and 
aided and 
abetted 
a 
high-yield 
investment 
scam 
perpetrated 
by 
Brett A. 
Cooper 
("Cooper") 
Frederickson, 
a 
sole 
practitioner 
practicing 
through 
his 
Law 
Offices, 
served 
as 
escrow 
agent 
in 
two 
bank 
instrument 
transactions 
in which 
Cooper 
defrauded 
investors 
out 
of 
a 
total 
of 
$350,
000 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
2 
of 
15 
PagelD: 
2 
by 
promising 
he 
could 
acquire 
and trade bank 
instruments 
in 
foreign 
"trading 
programs" 
that 
would 
produce 
extraordinary 
returns 
within 
as 
little 
as 
60 
days 
with 
no 
risk.' 
In 
fact, 
these 
trading 
programs 
were 
fictitious 
"prime 
bank" 
investments, 
and investors 
lost all their 
invested 
funds, 
which 
Cooper misappropriated 
for 
his 
personal 
use. 
Frederickson 
had 
no 
basis 
to 
believe 
that 
such 
investments 
existed, 
but 
allowed 
two 
investors 
to 
deposit 
funds into his 
Law 
Offices' 
client 
trust 
account 
which 
he 
then 
wired 
out 
to 
Cooper's 
company 
Global 
Funding 
Systems, 
LLC 
("Global 
Funding") 
or 
to 
other 
persons 
at 
Cooper's 
direction. 
Frederickson 
provided 
letters 
to 
these 
investors 
stating 
that 
their 
investments 
were 
secured 
by 
collateral 
owned 
by 
Global 
Funding, 
but 
Frederickson 
did 
nothing 
to 
verify 
the 
value, 
authenticity, 
or 
ownership 
of 
the 
collateral, 
which 
Cooper 
claimed 
to 
be 
seven 
sapphires 
valued 
at 
$376 
million. 
By 
the 
time 
Frederickson 
served 
as 
escrow 
agent 
for 
the second 
of
these 
investors, 
Frederickson 
had 
learned facts 
indicating 
that 
Cooper 
had affixed 
Frederickson's 
electronic 
signature 
to 
a 
forged 
escrow 
agreement 
that 
caused investor funds 
to 
be 
diverted 
to 
another 
Cooper 
company 
instead of 
sent to 
the 
Law Offices' 
escrow 
account. 
Moreover, 
Frederickson 
told this 
second investor that he 
had 
served 
as 
escrow 
agent 
for 
Cooper 
in 
numerous 
other 
successful bank 
instrument 
trading 
transactions. 
In 
fact, 
none 
of
the 
bank 
instrument 
trading 
transactions had been 
successful. 
4. 
Frederickson 
earned 
a 
total 
of 
$6, 
790 in 
escrow 
fees 
for these 
two 
investment 
transactions, 
and 
for the 
transaction 
involving 
the 
forged 
escrow 
agreement 
for 
which 
Frederickson 
provided 
no escrow 
services. 
These 
fees 
were 
paid 
from the funds ofthe 
defrauded 
investors. 
The 
Commission filed 
a 
separate 
enforcement 
action 
against 
Cooper 
in 
the 
U.S. 
District 
Court 
for 
the 
District of 
New 
Jersey 
for 
his 
fraudulent 
conduct 
concerning 
the transactions 
alleged 
herein and 
other 
high-yield 
investment 
schemes that in total raised over 
$2 
million from 
investors 
from 
November 
2008 
through 
March 
2012. 
2 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
3 
of 
15 
PagelD: 
3 
5. 
By 
virtue 
of 
the 
foregoing 
conduct 
and 
as 
alleged 
further 
herein, 
Frederickson 
and 
his 
Law 
Offices, 
directly 
or 
indirectly, 
have 
engaged 
in 
transactions, 
acts, 
practices, 
and 
courses 
of 
business 
that 
violated 
Section 
17(a)(1), 
(2), 
and 
(3) 
of 
the 
Securities 
Act 
of 
1933 
("Securities 
Act") [15 
U.S.C. 
77q(a)(1), 
(2), 
and 
(3)] 
and 
Section 
10(b) 
of the 
Securities 
Exchange 
Act 
of 
1934 
("Exchange 
Act") [15 
U.S.C. 
78j(b)] 
and 
Exchange 
Act 
Rules 
10b-5(a), 
(b), 
and 
(c) [17 
C.F.R. 
240.10b-5(a), 
(b), 
and 
(c)]. 
6. 
Unless 
defendants 
are 
restrained 
and 
enjoined, 
they 
will 
engage 
in 
the 
transactions, 
practices, 
and 
courses 
of business 
set 
forth 
in this 
Complaint 
and in 
transactions, 
practices, 
and 
courses 
of business 
of 
similar 
type 
and 
object. 
JURISDICTION 
AND 
VENUE 
7. 
This 
Court 
has 
jurisdiction 
over 
this 
action 
pursuant 
to 
Sections 
20(b) 
and 
22(a) 
of the 
Securities 
Act 
[15 
U.S.C. 
77t(b) 
and 
77v(a)], 
and 
Sections 
21(d), 21(e) 
and 
27 
ofthe 
Exchange 
Act 
[15 
U.S.C. 
78u(d), 
78u(e) 
and 
78aa]. 
The 
defendants, 
directly 
or 
indirectly, 
have 
made 
use 
of 
the 
means 
and 
instrumentalities 
of 
interstate 
commerce, 
of the 
mails, 
or 
of 
the 
facilities 
of 
a 
national 
securities 
exchange 
in 
connection 
with 
the 
acts, 
practices 
and 
courses 
of 
business 
alleged 
in 
this 
Complaint. 
8.	 
This 
district 
is 
an 
appropriate 
venue 
for this 
action 
under Section 
22 
of 
the 
The
Securities 
Act 
[15 
U.S.C. 
77v] 
and 
Section 27 
of the 
Exchange 
Act 
[15 
U.S.C. 
78aa]. 
transactions, 
acts, 
practices, 
and 
courses 
of
business 
constituting 
the 
violations 
alleged 
herein 
occurred 
in 
part 
within 
the 
District of 
New 
Jersey, 
and 
Cooper 
and 
the 
defendants 
have 
engaged 
in 
conduct 
within 
this 
district. 
3 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
4 
of 
15 
PagelD: 
4 
DEFENDANTS 
9. David H. 
Frederickson, 
age 
74, 
is an 
attorney 
licensed 
in 
California. 
He 
is a 
resident of 
Hermosa 
Beach, 
California. 
He 
has been 
a 
sole 
practitioner 
since 2000. 
10. The Law Offices 
of David H. Frederickson 
is Frederickson's law firm and is 
located 
in 
Hermosa 
Beach, 
California. Frederickson has been 
the sole 
employee 
of his 
Law 
Offices 
since 2000. 
RELATED PARTY 
AND 
ENTITIES 
11. Brett A. 
Cooper, 
age 
36, 
is believed 
to 
be 
a 
resident 
of 
Cirmaminson, 
New 
Jersey, 
and 
is the 
founder 
and 
principal 
of Global 
Funding 
Systems, 
LLC, 
Dream 
Holdings, 
LLC, 
and 
certain 
other 
entities. 
During 
the 
period 
of the misconduct 
alleged 
in 
this 
Complaint, 
Cooper 
resided in 
Moorestown, 
New 
Jersey. 
12. 
Global 
Funding Systems, 
LLC 
is 
a 
limited 
liability 
company 
formed 
under 
the 
laws of 
Wyoming 
in 
September 
2010. 
Global 
Funding 
was 
re-formed under 
the laws of North 
Carolina in 
April 
2011. 
Cooper 
is the 
Managing 
Member of 
Global 
Funding. 
13. 
The Commission named 
Cooper 
and 
Global 
Funding 
as relief defendants in SEC 
v. 
Milan 
Group, 
Inc., 
et 
al., 
1:11-cv-02132-RMB 
(D.D.C. 
Nov. 
30, 
2011), 
an enforcement 
action 
alleging 
a 
separate 
prime 
bank scheme 
that occurred 
principally 
during 
2010 and 2011. 
14. 
Dream 
Holdings, 
LLC 
is 
a 
limited 
liability 
company 
formed 
under 
the 
laws of 
New 
Jersey 
in 
June 
2010. 
Cooper 
is the 
Managing 
Member 
of
Dream 
Holdings. 
FACTS 
A. 
Background 
15. 
Starting 
in 
approximately 
2008 
and 
continuing through 
2013, 
persons 
claiming 
to 
be 
seeking 
investors 
for 
the 
trading 
overseas 
of 
bank 
guarantees 
and 
medium 
term 
notes 
4 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
5 
of 
15 
PagelD: 
5 
contacted 
Frederickson 
to 
act 
escrow 
agent 
or 
"paymaster" 
to 
receive 
investor 
funds and 
disperse 
resulting 
trading profits. 
16. 
Throughout 
this 
period, 
Frederickson 
had 
little 
knowledge 
of 
domestic 
and 
foreign 
securities 
and financial 
markets. 
B. 
Defendants' 
Involvement 
in 
Cooper's 
Scheme 
1. 
The 
Proposed 
Investment 
and 
Frederickson's 
Services 
17. In 
approximately 
2010, 
Pat 
Lewis and 
Cooper, 
persons 
unknown 
to 
Frederickson, 
contacted 
Frederickson 
to 
serve as escrow 
agent 
for 
a 
bank instrument 
trading 
program 
that 
Lewis 
and 
Cooper 
were 
arranging 
to 
solicit 
investor 
funds.2 
Cooper 
directed the 
investment 
scheme 
through 
his 
company 
Global 
Funding. Cooper 
claimed 
that 
he 
could 
acquire, 
monetize, 
leverage, 
and 
place 
into trade bank instruments 
in 
overseas 
markets 
to 
produce 
guaranteed 
profits 
for 
investors in 
a 
very 
short 
period 
of 
time with little 
or no 
risk. 
18. 
Cooper 
asked Frederickson's 
Law 
Offices 
to enter 
into 
an 
escrow 
agreement 
with 
investors 
and 
Global 
Funding, 
which would 
incorporate 
the 
terms 
ofthe 
trading 
program 
contained 
in 
a 
memorandum 
of 
understanding 
("MOU") 
or 
private placement 
agreement 
between 
the 
investors and 
Global 
Funding. 
Through 
these 
agreements, 
investor 
funds would be 
deposited 
into 
Frederickson's 
client 
trust account 
and 
thereafter 
transferred 
to 
Global 
Funding 
after 
Frederickson 
provided 
the 
investor 
with a 
"Collateral 
Guarantee" 
letter 
on 
his 
Law 
Offices' 
letterhead 
stating 
that 
their investment 
was 
guaranteed 
by 
gemstones 
which 
Frederickson would 
control 
through 
a 
power 
of 
attorney. 
19. 
By 
October 
2010, 
Cooper 
provided 
Frederickson 
with 
templates 
for the 
trading 
program 
which 
included an 
escrow 
agreement, 
the 
"Collateral 
Guarantee" 
letter, 
and 
a 
MOU, 
The 
Commission 
also named Pat 
Lewis 
and 
a 
company 
he 
controls, 
GPH 
Holdings 
LLC, 
as 
relief 
defendants 
in SEC 
v. 
Milan 
Group, 
Inc., 
et 
al., 
1:11-cv-02132-RMB 
(D.D.C. 
Nov. 
30, 
2011). 
2 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
6 
of 
15 
PagelD: 
6 
which 
Frederickson 
slightly 
edited. 
Frederickson 
prepared 
a 
power 
of 
attorney 
by 
which Global 
Funding 
purported 
to 
control 
seven 
sapphires 
valued 
in 
excess 
of hundreds 
of 
millions of dollars. 
The MOU for the 
trading 
program 
promised 
returns 
of "no less 
than 
eight 
times" the invested 
funds 
in 
60 
days, 
guaranteed 
by 
the 
collateral, 
which could be 
drawn 
upon 
ifthe investor 
did 
not 
receive the 
promised 
returns 
within 90 
days. 
20. 
Frederickson 
never 
asked 
Cooper 
or Lewis how 
such enormous short-term 
returns 
were 
possible 
through 
the 
purported 
trading 
program 
being 
offered 
to 
investors. 
He 
did 
no 
due 
diligence 
concerning 
the 
validity 
of the 
purported 
trading 
program. 
Nor 
did 
Frederickson 
do 
any 
due 
diligence 
on 
Cooper, 
Lewis, 
or 
their involved 
companies. 
21. 
In 
fact, 
the bank 
instruments 
and 
trading 
programs 
Cooper 
offered 
did 
not 
exist. 
None 
of the investors' 
funds 
Cooper 
raised was 
used 
to 
acquire 
any 
purported 
bank instruments 
or 
to 
participate 
in 
any 
trading 
programs. 
Rather, 
Cooper 
misappropriated 
the funds 
for 
his 
personal 
use. 
2. The 
Alleged 
Collateral 
22. Between 
September 
to 
December 
2010, 
the 
gemstones 
purporting 
to 
provide 
the 
collateral 
for 
the 
Collateral 
Guarantee 
letter 
varied 
from 
being 
dozens 
of different 
stones 
valued 
at 
billions 
of 
dollars held in 
the 
name 
of 
Lewis's 
company, 
GPH 
Holdings 
LLC, 
to 
being 
seven 
sapphires 
valued 
at 
$376 
million owned 
by Cooper's 
company, 
Global 
Funding. 
During 
this 
period, 
Lewis 
sent 
Frederickson 
multiple 
appraisals 
for 
gemstones 
and 
"Safekeeping 
Receipts" 
("SKRs") 
from 
Sarasota 
Vault 
Depository 
in 
Sarasota, 
Florida 
where 
the 
stones 
were 
allegedly 
deposited. 
23. 
For 
example, 
in 
September 
2010, 
in 
an 
email 
to 
Frederickson 
and 
Cooper, 
Lewis 
provided 
Frederickson 
an 
appraisal 
for 
seven 
sapphires 
and 
a 
blank SKR 
from 
Sarasota 
Vault 
6 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
7 
of 
15 
PagelD: 
7 
Depository. 
The 
appraisal, 
dated 
June 
8, 2009, 
purported 
to 
be 
from 
an 
appraiser 
in the 
United 
Kingdom 
and stated 
that 
the 
sapphires 
had 
a 
total 
of 
5,
023 
carats 
and 
a 
value 
of 
$753 
million. 
The 
appraisal 
indicated 
the 
sapphires 
were 
owned 
by 
GPH 
Holdings 
LLC. 
24. 
In 
early 
October 
2010, 
in 
an 
email 
to 
Frederickson 
and 
Cooper, 
Lewis 
provided 
Frederickson 
an 
SKR 
dated 
February 
3, 
2010, 
which 
identified 
that 
GPH 
Holdings 
LLC 
had 
on 
deposit 
156 
rubies 
and 
sapphires 
with 
a 
total 
of 
30, 
745.9 
carats. 
The 
SKR 
stated that 
Appraisal 
Certificates 
dated 
February 
2, 
2010 
valued 
the 
gemstones 
at 
$4.6 
billion. 
Also 
in 
early 
October 
2010, 
Lewis 
emailed 
Frederickson 
and 
Cooper 
yet 
another 
appraisal, 
this 
one dated 
October 
4, 
2010 
from 
a 
Florida 
appraiser, 
stating 
that 
a different 
entity 
owned 
39 
rubies 
with 
a total of 
10,
250 
carats 
and 
a 
value 
of 
$1.3 
billion. 
25. 
Finally, 
in 
November 
and 
December 
2010, 
Lewis 
emailed 
Frederickson 
and 
Cooper 
an 
Appraisal 
Certificate 
dated 
November 
19, 
2010 
from 
a 
different 
appraiser 
(in 
Chula 
Vista, 
CA) 
stating 
that 
Cooper's 
company 
Global 
Funding 
owned 
seven 
sapphires 
with 
a 
total 
of 
5,
023 
carats 
valued 
at 
$376 
million, 
and that 
"this collection 
is 
truly 
the 
largest 
in existence 
currently 
in 
a 
private 
collection." 
Lewis 
also 
emailed 
Frederickson 
and 
Cooper 
a 
different 
SKR 
stating 
that 
Global 
Funding 
has 
on 
deposit 
the 
seven 
sapphires 
and the 
Appraisal 
Certificate 
attesting 
to 
their 
value 
of 
$376 
million. 
26. 
Although 
Frederickson 
was 
going 
to 
provide 
investors 
with letters 
promising 
that 
gemstones 
owned 
by 
Global 
Funding 
guaranteed 
their 
investments, 
and 
despite 
the fact 
that 
the 
SKRs 
and 
appraisals 
Frederickson 
received 
showed 
different 
ownership 
of 
various 
gemstones 
with 
different 
valuations, 
Frederickson 
did 
nothing 
to 
verify 
the value 
or 
authenticity 
of 
any 
of 
Nor
the 
foregoing 
gemstones, 
or 
Lewis's 
or 
Cooper's 
claimed 
ownership 
and 
control 
of
them. 
did 
Frederickson 
ask 
Cooper 
or 
Lewis 
why 
they 
needed 
to 
raise 
funds 
from 
investors 
given 
that 
7 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
8 
of 
15 
PagelD: 
8 
Lewis and 
Cooper 
purportedly 
owned 
such valuable 
gemstones. 
3. The 
First Escrow 
Transaction 
27. In 
December 
2010, 
at 
Cooper's 
request, 
Frederickson 
served 
as 
the 
escrow 
agent 
for 
a 
$150,
000 
investment 
by 
an 
investor 
("Investor 
One") 
with 
Cooper's 
company 
Global 
Funding. 
The 
escrow 
agreement, 
entered into between 
Frederickson's 
Law 
Offices, 
Investor 
One, 
and Global 
Funding, 
provided 
that Frederickson would receive all documents 
reflecting 
the 
escrow.
terms 
of 
the investment 
and 
incorporated 
all 
documents 
and 
agreements 
related 
to 
the 
Cooper 
affixed Frederickson's electronic 
signature 
to 
the 
escrow 
agreement, 
which 
Frederickson 
had 
not 
authorized but learned about 
shortly 
thereafter. 
28. 
Investor 
One 
wired 
$150,
000 
to 
the 
Law 
Offices' client 
trust 
account 
and then 
Frederickson 
provided 
the investor 
with 
a 
Collateral 
Guarantee 
letter. 
After 
retaining 
$1,
290 
as 
his 
escrow 
fee, 
Frederickson 
wired the balance 
out at 
Cooper's 
direction: 
$73,
710 
to 
Cooper's 
company 
Dream 
Holdings 
and 
$75,
000 
to 
Patrick 
Lewis's 
company 
Perk 
My 
Interest Inc. 
29. 
The 
terms 
of 
the 
trading 
agreements 
between Global 
Funding 
and 
Investor 
One, 
which 
Frederickson 
read, 
stated 
that 
Global 
Funding 
would 
provide 
a 
$100 
million 
"Bank 
Guarantee" 
in the form 
of 
a 
"tradable 
Certificate 
of Debt". Profits from the 
"trade 
program" 
were 
guaranteed 
to 
be 
at 
least six times 
(600%) 
the funds 
placed 
in 
escrow 
by 
the investor for "a 
minimum 
of 
$900,
000". 
The MOU 
for 
the transaction 
guaranteed 
payment 
of
those 
profits 
within 
60 
days, 
while 
the 
private 
placement 
agreement 
promised 
payment 
within 90 
days—that 
is, 
by 
at 
least 
March 
2011. 
If
the 
profits 
were 
not 
paid 
within 90 
days, 
the 
investor 
could collect 
the 
amount 
owed under 
the Collateral 
Guarantee. 
30. 
The Collateral Guarantee 
letter stated that "the 
integrity 
of funds 
deposited 
in 
escrow 
by 
Investor 
(`Investor 
Funds') 
is 
guaranteed by 
collateral 
having 
a 
value 
of 
three 
(3) 
8 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
9 
of 
15 
PagelD: 
9 
times 
the 
dollar 
amount 
placed 
in 
escrow" 
and that the 
collateral 
"consists 
of 
certain 
described 
semi-precious 
gemstones 
which have 
an 
appraised 
value in 
excess 
of 
Ten 
Million 
Dollars" 
held 
at 
the 
Sarasota 
Vault 
Depository 
in 
favor 
of 
Global 
Funding. 
The letter 
stated 
that 
Frederickson's 
Law 
Offices "holds 
a 
Power 
of 
Attorney 
which 
grants 
the 
power 
to 
authorize 
a 
call 
against 
said 
collateral" under 
the 
terms 
of the 
trading 
agreement. 
Frederickson 
signed 
the 
letter 
on 
his 
Law 
Offices' 
letterhead. 
31. 
Investor 
One 
never 
received 
its 
$150,
000 
investment 
or 
any 
returns 
thereon 
from 
Cooper's 
sham 
transaction. 
4. 
The 
Forged 
Escrow 
Transaction 
32. 
In 
May 
2011, 
Frederickson 
was contacted 
by 
a 
representative 
of 
another investor 
who 
was 
seeking 
the 
return 
for 
the 
investor 
of 
$250,
000. 
The 
complaining 
investor 
believed 
the 
funds 
had 
been 
sent 
to 
Frederickson's 
Law 
Offices' 
client 
trust 
account 
pursuant 
to 
a 
purported 
escrow 
agreement 
between 
the 
Law 
Offices 
and 
the 
investor. 
33. 
The 
previous 
month 
on 
April 
1, 
2011, 
at 
Cooper's 
request, 
Frederickson 
had 
signed 
and 
provided 
to 
Cooper 
an 
escrow 
agreement 
involving 
this 
investor. 
That 
agreement 
was a 
three-way 
agreement 
between 
Frederickson's 
Law 
Offices, 
Cooper's 
company 
Global 
Funding, 
and 
the 
investor, 
for 
the 
investor 
to 
submit 
$250,
000 
to 
Frederickson's 
escrow 
account 
by 
April 
5, 
2011. 
This 
agreement 
contained 
no 
bank 
infoiination 
identifying 
where 
the 
investor 
should 
send 
the 
funds. 
Although 
Frederickson 
signed 
that 
agreement 
and 
provided 
it 
to 
Cooper 
on 
April 
1st, 
neither 
Cooper 
nor the 
investor 
had 
signed 
the 
agreement, 
and 
Frederickson 
never 
received 
funds 
from 
this 
investor. 
34. 
Frederickson 
obtained 
the 
purported 
escrow 
agreement 
from 
the 
complaining 
investor's 
representative. 
The 
escrow 
agreement 
purported 
to 
be 
solely 
between 
the 
investor 
and 
9 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
10 
of 
15 
PagelD: 
10 
the 
Law 
Offices. The 
escrow 
agreement 
contained 
Frederickson's 
electronic 
signature 
and 
wire 
instructions 
which 
indicated 
the investor 
was 
to 
wire 
$250,
000 
to 
a 
Bank 
of America 
account 
having 
the 
name 
"DHF 
LLC" and 
described 
as an 
"Attorney/Client 
Trust-IOLTA" 
account. 
35. 
Frederickson 
had 
never seen 
or 
signed 
this 
escrow 
agreement, 
nor 
had 
he 
received 
funds from 
this investor in his 
escrow 
account. 
36. 
When 
Frederickson 
questioned 
Cooper 
about the 
escrow 
transaction, 
Cooper 
acknowledged 
that 
the bank 
account 
information 
contained 
in the 
investor's 
escrow 
agreement 
was 
for 
one 
of 
Cooper's 
other 
companies, 
Dream 
Holdings 
LLC, 
for which 
Cooper 
maintained 
an 
account 
at 
Bank 
of 
America. 
Cooper 
also 
acknowledged 
that 
Dream 
Holdings 
received 
the 
$250,
000 
from 
the investor 
on 
or 
about 
April 
5, 
2011. 
Incredibly, 
however, 
Cooper 
denied 
knowing 
how 
the bank 
account 
information 
for 
Dream 
Holdings 
had been 
included 
in the 
investor's 
escrow 
agreement. 
He 
also 
denied 
having 
altered 
or 
caused 
to 
be altered 
the 
original 
escrow 
agreement 
Frederickson had 
signed 
and 
provided 
to 
Cooper 
for 
this investor. 
37. 
All of 
these 
circumstances, 
including 
the fact 
that 
Cooper 
had 
affixed 
Frederickson's 
electronic 
signature 
to 
another 
escrow 
agreement 
in 
the 
past 
without 
Frederickson's 
authorization, 
clearly 
indicated that 
Cooper 
had 
forged 
the 
escrow 
agreement 
in 
order 
to 
obtain 
the investor's 
funds 
directly 
while 
making 
it 
appear 
that 
the 
investor 
was 
sending 
funds 
to 
an 
attorney 
escrow 
account 
for 
safekeeping. 
38. 
Although 
Frederickson 
never 
received 
any 
funds from 
this 
investor 
and 
never 
acted 
as 
escrow 
agent 
for 
Cooper 
and 
this 
investor, 
Frederickson 
asked 
for 
and 
received 
from 
Cooper 
a 
$2,
500 
escrow 
fee. 
5. 
The 
Second 
Escrow 
Transaction 
39. 
On 
June 
22, 2011, 
Cooper 
emailed 
to 
a 
prospective 
investor 
("Investor 
Two") 
a 
10 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
11 
of 
15 
PagelD: 
11 
memorandum of 
understanding 
for 
a 
bank 
guarantee 
trading 
program, 
a 
letter 
outlining 
the 
terms 
of 
the 
investment, 
and 
an 
escrow 
agreement 
between 
the 
investor, 
Global 
Funding, 
and 
Frederickson's 
Law 
Offices. The 
investment, 
described 
as a 
"Short-Term 
Guaranteed 
High-
Yield 
Investment 
Program" 
for the 
purchase 
and trade 
of a 
"One 
Hundred 
Million 
Euro 
Bank 
Guarantee", 
promised 
a 
1,
000% 
return 
within 
60 
days 
on a 
$200,
000 
investment, 
with the 
principal 
and 
return 
guaranteed 
and 
secured 
by 
gemstones, 
and 
funds administered 
by 
an 
outside 
attorney 
through 
an escrow 
account. 
The 
escrow 
agreement 
contained Frederickson's 
electronic 
signature, 
affixed 
by Cooper, 
without Frederickson's 
authorization. 
40. To 
allay 
Investor Two's 
concern 
for the 
validity 
ofthe transaction 
and 
veracity 
of 
Cooper, Cooper 
asked Frederickson 
to 
provide 
Cooper 
a 
generic 
"comfort 
letter" for the 
prospective 
investor. 
Cooper 
provided 
the 
language 
for the 
letter, 
which Frederickson 
edited. 
Frederickson 
understood that the letter 
was 
being 
used 
by 
Cooper 
to 
solicit 
an 
investor 
for 
Cooper's 
high-yield 
bank 
guarantee 
trading 
program. 
41. 
Also 
on 
June 
22, 
2011, 
Investor Two 
emailed 
Frederickson 
telling 
him that 
Cooper 
had identified him 
as 
an 
escrow 
agent 
for 
a 
potential 
transaction and 
asking 
him 
to 
speak 
to 
him 
by 
telephone. 
In 
the 
email 
exchange, 
Investor 
Two 
asked 
Frederickson 
to 
call him the 
next 
day (June 
23) 
and asked 
whether Frederickson 
was 
going 
to 
provide 
him 
a 
letter. 
42. 
Frederickson 
emailed 
Cooper 
the 
letter, 
dated 
June 
22, 2011, 
which 
Frederickson 
signed 
on 
the 
Law 
Offices' letterhead. 
The letter 
was 
addressed 
to 
"Whom 
it 
May 
Concern" 
and 
regarding 
"Collateral Guarantee" 
and "Private 
Placement 
Memorandum 
(`PPMT 
involving 
Cooper's 
company 
"Global 
Funding Systems, 
LLC 
(`GFS')". 
The letter 
stated: 
"This 
will 
confirm 
that GFS has 
never 
had a 
collateral 
call 
on 
any 
of 
their 
PPM 
programs 
that 
my 
office 
has taken 
part 
in. 
The 
integrity 
of the funds 
deposited 
by 
Investor 
("Investor 
Funds") 
is 
guaranteed 
by 
collateral 
having 
a 
value 
of 
four 
(4) 
times the dollar 
amount 
placed 
in the 
program. 
While 
I 
hold 
the 
Power 
of 
Attorney 
and the 
ability 
to 
call 
11 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
12 
of 
15 
PagelD: 
12 
should 
a 
need 
arise 
from 
a 
failure 
to 
perform, 
this 
need 
has 
never 
arisen." 
43. 
The 
collateral 
referred 
to 
in 
this 
letter 
was 
the 
purported 
sapphires 
Global 
Funding 
claimed 
to 
own, 
but 
which 
Frederickson 
had done 
nothing 
to 
verify. 
In 
addition, 
Frederickson 
knew 
or 
should 
have 
known 
by 
this 
time 
that 
the 
600% 
return 
of 
at 
least 
$900,
000 
Cooper 
guaranteed 
to 
Investor 
One 
within 
90 
days, by 
March 
2011, 
had 
not 
paid 
out 
in 
any 
amount, 
even 
though 
it 
was 
supposed 
to 
be 
paid 
through 
Frederickson's 
escrow 
account. 
Frederickson 
also 
knew 
by 
this time 
of 
at 
least 
two 
other 
investors 
who 
were 
seeking 
return 
of 
their 
investments 
made 
with 
or 
through Cooper, 
though 
these 
investments 
did 
not 
involve 
"collateral" 
guarantees 
by 
Frederickson. 
44. 
On 
June 
23, 2011, 
Cooper 
emailed 
the 
comfort 
letter 
to 
Investor 
Two. 
45. 
Also 
on 
June 
23, 
2011, 
Frederickson 
spoke 
to 
Investor 
Two 
by 
telephone. 
During 
the 
call, 
Frederickson 
stated 
generally 
that 
he 
provided 
escrow 
services 
for 
Cooper 
in 
connection 
with 
bank 
instrument 
trading 
transactions 
and 
that 
he 
held 
power 
of 
attorney 
over 
collateral 
In 
addition, 
among 
other 
information, 
Frederickson 
told Investor
guaranteeing 
investor 
funds.
 
Two 
that 
Frederickson 
had 
participated 
in 
numerous 
bank 
instrument 
transactions 
with 
Cooper,
 
all 
of 
which 
had 
been 
successful. 
In 
fact, 
none 
of the 
bank 
instrument 
trading 
programs
 
Frederickson 
had been 
involved 
with 
as 
escrow 
agent 
for 
Cooper 
had 
been 
successful. 
46. 
On 
or 
about June 
23, 
2011, 
Investor 
Two 
then 
wired 
$200,
000 
to 
the 
Law 
Offices' 
client 
escrow 
account. 
At 
Cooper's 
direction, 
Frederickson 
retained 
a 
$3,
000 
fee 
for 
the 
transaction 
and 
wired 
$197,
000 
to 
Global 
Funding. 
47. 
On 
June 
24, 
2011, 
Cooper 
sent 
Frederickson 
the 
signed 
escrow 
agreement 
for 
the 
transaction 
with Investor 
Two, 
showing 
that 
Frederickson's 
electronic 
signature 
had 
been 
affixed 
to 
the 
agreement 
without 
his 
authorization. 
12 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
13 
of 
15 
PagelD: 
13 
48. 
Investor 
Two 
never 
received 
his 
$200,
000 investment 
or 
any 
returns 
thereon 
from 
Cooper's 
sham 
transaction. 
FIRST 
CLAIM 
FOR 
RELIEF 
Each 
Defendant 
Violated 
Exchange 
Act 
Section 
10(b) 
and 
Rule 
10b-5 
49. 
The 
Commission 
realleges 
paragraphs 
1 
through 
48 
above. 
50. 
Defendants, 
in connection 
with 
the 
purchase 
and 
sale of 
securities 
described 
herein, 
by 
the 
use 
of the 
means 
and 
instrumentalities 
of 
interstate 
commerce, 
and 
by 
use 
of the 
mails, 
directly 
and 
indirectly: (a) 
employed 
devices, 
schemes, 
and 
artifices 
to 
defraud; 
(b) 
made 
untrue statements 
of 
material facts 
and 
omitted 
to state 
material 
facts 
necessary 
in 
order 
to 
make 
the 
statements 
made, 
in 
light 
of the circumstances 
under 
which 
they 
were 
made, 
not 
misleading; 
and 
(c) 
engaged 
in 
acts, 
practices, 
and 
courses 
ofbusiness 
which 
would and did 
operate 
as a 
fraud 
and 
deceit 
upon 
the 
purchasers 
of 
such 
securities, 
all 
as more 
particularly 
described 
above. 
51. 
Defendants 
knowingly, 
intentionally, 
and/or 
recklessly 
engaged 
in the 
aforementioned 
devices, 
schemes, 
and 
artifices 
to 
defraud, 
made 
untrue 
statements 
of
material 
facts 
and 
omitted 
to state 
material 
facts, 
and 
engaged 
in 
fraudulent 
acts, 
practices, 
and 
courses 
of 
business. 
In 
engaging 
in 
such 
conduct, 
the 
defendants 
acted 
with 
scienter, 
that 
is, 
with 
an 
intent 
to 
deceive, 
manipulate 
or 
defraud, 
or 
with 
a 
severely 
reckless 
disregard 
for the 
truth. 
52. 
By 
reason 
of the 
foregoing, 
each 
defendant 
has 
violated 
and aided 
and 
abetted 
the 
violation 
of, 
and, 
unless 
restrained and 
enjoined, 
will 
continue 
to 
violate and 
aid 
and abet 
the 
violation 
of 
Exchange 
Act 
Section 
10(b) [15 
U.S.C. 
78j(b)] 
and 
Rule 
lOb-5 
[17 
C.F.R. 
240.10-5]. 
13 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
14 
of 
15 
PagelD: 
14 
SECOND 
CLAIM 
FOR 
RELIEF
 
Each 
Defendant 
Violated 
Securities 
Act 
Section 
17(a)
 
53. 
The 
Commission 
realleges 
and 
incorporates 
by 
reference 
Paragraphs 
1 
through 
52 
above. 
54. 
Each 
defendant, 
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 
the 
use 
of the 
mails: 
(a) 
has 
employed, 
is 
employing, 
or 
is 
about 
to 
employ 
devices, 
schemes 
or 
artifices 
to 
defraud; 
(b) 
has 
obtained, 
is 
obtaining 
or 
is 
about 
to 
obtain 
money 
or 
property 
by 
means 
of 
untrue 
statements 
of 
material 
fact 
and 
omissions 
to state 
material facts 
necessary 
in 
order 
to 
make the 
statements 
made, 
in 
light 
of
the 
circumstances 
under 
which 
they 
were 
made, 
not 
misleading; 
and 
(c) 
has 
engaged, 
is 
engaged, 
or 
is 
about 
to 
engage 
in 
transactions, 
acts, 
practices 
and 
courses 
of 
business 
that 
operated 
or 
would 
operate 
as a 
fraud 
upon 
purchasers 
of 
securities. 
55. 
By 
reason 
of the 
foregoing, 
each 
defendant 
has 
violated 
and 
aided 
and 
abetted 
the 
violation 
of, 
and, 
unless 
restrained 
and 
enjoined, 
will 
continue 
to 
violate 
and aid 
and abet 
the 
violation 
of 
Securities 
Act 
Section 
17(a) [15 
U.S.C. 
77q(a)]. 
PRAYER 
FOR 
RELIEF 
WHEREFORE, 
the 
Commission 
respectfully 
requests 
that 
this Court: 
I. 
Enter 
judgment 
in favor 
of the 
Commission 
finding 
that 
the 
defendants 
violated 
the 
federal securities 
laws 
and 
Commission 
rules 
as 
alleged 
in this 
Complaint; 
IL 
Permanently 
enjoin 
the 
defendants 
from 
further 
violations 
ofthe 
federal 
securities 
laws 
and 
Commission 
rules 
alleged 
against 
them 
in 
this 
Complaint; 
14 

Case 1:13-cv-05787-RMB-AMD Document 
1 
Filed 09/27/13 
Page 
15 
of 
15 
PagelD: 
15 
Order 
all 
defendants 
and 
relief 
defendants 
to 
disgorge, 
as 
the Court 
may 
direct, 
all 
ill-
gotten 
gains 
received 
or 
benefits 
in 
any 
form 
derived 
from 
the 
illegal 
conduct 
alleged 
in this 
Complaint, 
together 
with 
pre-judgment 
interest 
thereon; 
IV. 
Order 
all 
defendants 
to 
pay 
civil 
monetary 
penalties 
pursuant 
to 
Securities 
Act 
Section 
20(d) [15 
U.S.C. 
77t(d)] 
and 
Exchange 
Act 
Section 
21(d)(3) [15 
U.S.C. 
78u(d)(3)]; 
V. 
Grant 
such 
other 
equitable 
and 
legal 
relief 
as 
may 
be 
appropriate 
or 
necessary 
for 
the 
benefit 
of investors 
pursuant 
to 
Exchange 
Act 
Section 
21(d)(5) 
[15 
U.S.C. 
78u(d)(5)]. 
Date: 
September 
27, 
2013 
Respectfully 
submitted. 
Timothydrigland 
Counsel 
for 
Plaintiff 
SECURITIES 
AND 
EXCHANGE 
COMMISSION 
100 
F 
Street, 
N.E. 
Washington, 
D.C. 20549 
Tel: 
(202) 
551-4959 
(England) 
Email: 
[email protected] 
Local 
Counsel: 
Paul 
A. 
Blaine 
Chief, 
Civil 
Division 
United 
States 
Attorney's 
Office 
for 
the 
District 
of 
New 
Jersey 
Camden 
Federal 
Building 
and 
U.S. 
Courthouse 
P.O. 
Box 
2098 
401 
Market 
Street, 
4th 
Floor
 
Of 
Counsel:

Camden, 
NJ 
08101
 
Alan 
M. 
Lieberman

856-757-5412 
[email protected] 
Stephen 
T. 
Kaiser 
Designated 
Pursuant 
to 
Local 
Rule 
101.10 
Christopher 
McLean 
15 

Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 1 of 15 PagelD: 1 

Timothy N. England 
Alan M. Lieberman 

Christopher M. McLean 

Securities and Exchange Commission 

100 F Street, N.E. 

Washington, DC 20549 

Tel: (202) 551-4959 (England) 
Email: [email protected] 

UNITED STATES DISTRICT COURT 

DISTRICT OF NEW JERSEY 

SECURITIES AND EXCHANGE COMMISSION,: 

Plaintiff, Case No. 

v. COMPLAINT 

DAVID H. FREDERICKSON and THE LAW 

OFFICES OF DAVID H. FREDERICKSON 

Defendants. 

Plaintiff Securities and Exchange Commission ("Commission"), for its complaint against 

defendants David H. Frederickson ("Frederickson") and The Law Offices ofDavid H. 

Frederickson ("Law Offices"), alleges as follows: 

1. The Commission's address is: United States Securities and Exchange 

Commission, 100 F Street, N.E., Washington, D.C. 20549. Defendants' address is: 901 

Hermosa Avenue, Hermosa Beach, California, 90254. 

SUMMARY OF ALLEGATIONS 

2. In 2010 and 2011, Frederickson, a lawyer licensed in California, participated in 

and aided and abetted a high-yield investment scam perpetrated by Brett A. Cooper ("Cooper") 

Frederickson, a sole practitioner practicing through his Law Offices, served as escrow agent in 

two bank instrument transactions in which Cooper defrauded investors out of a total of $350,000 

mailto:[email protected]


Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 2 of 15 PagelD: 2 

by promising he could acquire and trade bank instruments in foreign "trading programs" that 

would produce extraordinary returns within as little as 60 days with no risk.' In fact, these 

trading programs were fictitious "prime bank" investments, and investors lost all their invested 

funds, which Cooper misappropriated for his personal use. 

Frederickson had no basis to believe that such investments existed, but allowed 

two investors to deposit funds into his Law Offices' client trust account which he then wired out 

to Cooper's company Global Funding Systems, LLC ("Global Funding") or to other persons at 

Cooper's direction. Frederickson provided letters to these investors stating that their investments 

were secured by collateral owned by Global Funding, but Frederickson did nothing to verify the 

value, authenticity, or ownership of the collateral, which Cooper claimed to be seven sapphires 

valued at $376 million. By the time Frederickson served as escrow agent for the second ofthese 

investors, Frederickson had learned facts indicating that Cooper had affixed Frederickson's 

electronic signature to a forged escrow agreement that caused investor funds to be diverted to 

another Cooper company instead of sent to the Law Offices' escrow account. Moreover, 

Frederickson told this second investor that he had served as escrow agent for Cooper in 

numerous other successful bank instrument trading transactions. In fact, none of the bank 

instrument trading transactions had been successful. 

4. Frederickson earned a total of $6, 790 in escrow fees for these two investment 

transactions, and for the transaction involving the forged escrow agreement for which 

Frederickson provided no escrow services. These fees were paid from the funds of the defrauded 

investors. 

The Commission filed a separate enforcement action against Cooper in the U.S. District 
Court for the District of New Jersey for his fraudulent conduct concerning the transactions 

alleged herein and other high-yield investment schemes that in total raised over $2 million from 

investors from November 2008 through March 2012. 

2 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 3 of 15 PagelD: 3 

5. By virtue of the foregoing conduct and as alleged further herein, Frederickson and 

his Law Offices, directly or indirectly, have engaged in transactions, acts, practices, and courses 

of business that violated Section 17(a)(1), (2), and (3) of the Securities Act of 1933 ("Securities 

Act") [15 U.S.C. 77q(a)(1), (2), and (3)] and Section 10(b) of the Securities Exchange Act of 

1934 ("Exchange Act") [15 U.S.C. 78j(b)] and Exchange Act Rules 10b-5(a), (b), and (c) [17 

C.F.R. 240.10b-5(a), (b), and (c)]. 

6. Unless defendants are restrained and enjoined, they will engage in the 

transactions, practices, and courses of business set forth in this Complaint and in transactions, 

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

JURISDICTION AND VENUE 

7. This Court has jurisdiction over this action pursuant to Sections 20(b) and 22(a) 

of the Securities Act [15 U.S.C. 77t(b) and 77v(a)], and Sections 21(d), 21(e) and 27 of the 

Exchange Act [15 U.S.C. 78u(d), 78u(e) and 78aa]. The defendants, directly or indirectly, 

have made use of the means and instrumentalities of interstate commerce, of the mails, or of the 

facilities of a national securities exchange in connection with the acts, practices and courses of 

business alleged in this Complaint. 

8.	 This district is an appropriate venue for this action under Section 22 of the 

TheSecurities Act [15 U.S.C. 77v] and Section 27 of the Exchange Act [15 U.S.C. 78aa]. 

transactions, acts, practices, and courses ofbusiness constituting the violations alleged herein 

occurred in part within the District of New Jersey, and Cooper and the defendants have engaged 

in conduct within this district. 

3 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 4 of 15 PagelD: 4 

DEFENDANTS 

9. David H. Frederickson, age 74, is an attorney licensed in California. He is a 

resident of Hermosa Beach, California. He has been a sole practitioner since 2000. 

10. The Law Offices of David H. Frederickson is Frederickson's law firm and is 

located in Hermosa Beach, California. Frederickson has been the sole employee of his Law 

Offices since 2000. 

RELATED PARTY AND ENTITIES 

11. Brett A. Cooper, age 36, is believed to be a resident of Cirmaminson, New 

Jersey, and is the founder and principal of Global Funding Systems, LLC, Dream Holdings, 

LLC, and certain other entities. During the period of the misconduct alleged in this Complaint, 

Cooper resided in Moorestown, New Jersey. 

12. Global Funding Systems, LLC is a limited liability company formed under the 

laws of Wyoming in September 2010. Global Funding was re-formed under the laws of North 

Carolina in April 2011. Cooper is the Managing Member of Global Funding. 

13. The Commission named Cooper and Global Funding as relief defendants in SEC 

v. Milan Group, Inc., et al., 1:11-cv-02132-RMB (D.D.C. Nov. 30, 2011), an enforcement action 

alleging a separate prime bank scheme that occurred principally during 2010 and 2011. 

14. Dream Holdings, LLC is a limited liability company formed under the laws of 

New Jersey in June 2010. Cooper is the Managing Member ofDream Holdings. 

FACTS 

A. Background 

15. Starting in approximately 2008 and continuing through 2013, persons claiming to 

be seeking investors for the trading overseas of bank guarantees and medium term notes 

4 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 5 of 15 PagelD: 5 

contacted Frederickson to act escrow agent or "paymaster" to receive investor funds and disperse 

resulting trading profits. 

16. Throughout this period, Frederickson had little knowledge of domestic and 

foreign securities and financial markets. 

B. Defendants' Involvement in Cooper's Scheme 

1. The Proposed Investment and Frederickson's Services 

17. In approximately 2010, Pat Lewis and Cooper, persons unknown to Frederickson, 

contacted Frederickson to serve as escrow agent for a bank instrument trading program that 

Lewis and Cooper were arranging to solicit investor funds.2 Cooper directed the investment 

scheme through his company Global Funding. Cooper claimed that he could acquire, monetize, 

leverage, and place into trade bank instruments in overseas markets to produce guaranteed profits 

for investors in a very short period of time with little or no risk. 

18. Cooper asked Frederickson's Law Offices to enter into an escrow agreement with 

investors and Global Funding, which would incorporate the terms of the trading program 

contained in a memorandum of understanding ("MOU") or private placement agreement 

between the investors and Global Funding. Through these agreements, investor funds would be 

deposited into Frederickson's client trust account and thereafter transferred to Global Funding 

after Frederickson provided the investor with a "Collateral Guarantee" letter on his Law Offices' 

letterhead stating that their investment was guaranteed by gemstones which Frederickson would 

control through a power of attorney. 

19. By October 2010, Cooper provided Frederickson with templates for the trading 

program which included an escrow agreement, the "Collateral Guarantee" letter, and a MOU, 

The Commission also named Pat Lewis and a company he controls, GPH Holdings LLC, 
as relief defendants in SEC v. Milan Group, Inc., et al., 1:11-cv-02132-RMB (D.D.C. Nov. 30, 
2011). 

2 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 6 of 15 PagelD: 6 

which Frederickson slightly edited. Frederickson prepared a power of attorney by which Global 

Funding purported to control seven sapphires valued in excess of hundreds of millions of dollars. 

The MOU for the trading program promised returns of "no less than eight times" the invested 

funds in 60 days, guaranteed by the collateral, which could be drawn upon if the investor did not 

receive the promised returns within 90 days. 

20. Frederickson never asked Cooper or Lewis how such enormous short-term returns 

were possible through the purported trading program being offered to investors. He did no due 

diligence concerning the validity of the purported trading program. Nor did Frederickson do any 

due diligence on Cooper, Lewis, or their involved companies. 

21. In fact, the bank instruments and trading programs Cooper offered did not exist. 

None of the investors' funds Cooper raised was used to acquire any purported bank instruments 

or to participate in any trading programs. Rather, Cooper misappropriated the funds for his 

personal use. 

2. The Alleged Collateral 

22. Between September to December 2010, the gemstones purporting to provide the 

collateral for the Collateral Guarantee letter varied from being dozens of different stones valued 

at billions of dollars held in the name of Lewis's company, GPH Holdings LLC, to being seven 

sapphires valued at $376 million owned by Cooper's company, Global Funding. During this 

period, Lewis sent Frederickson multiple appraisals for gemstones and "Safekeeping Receipts" 

("SKRs") from Sarasota Vault Depository in Sarasota, Florida where the stones were allegedly 

deposited. 

23. For example, in September 2010, in an email to Frederickson and Cooper, Lewis 

provided Frederickson an appraisal for seven sapphires and a blank SKR from Sarasota Vault 

6 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 7 of 15 PagelD: 7 

Depository. The appraisal, dated June 8, 2009, purported to be from an appraiser in the United 

Kingdom and stated that the sapphires had a total of 5,023 carats and a value of $753 million. 

The appraisal indicated the sapphires were owned by GPH Holdings LLC. 

24. In early October 2010, in an email to Frederickson and Cooper, Lewis provided 

Frederickson an SKR dated February 3, 2010, which identified that GPH Holdings LLC had on 

deposit 156 rubies and sapphires with a total of 30, 745.9 carats. The SKR stated that Appraisal 

Certificates dated February 2, 2010 valued the gemstones at $4.6 billion. Also in early October 

2010, Lewis emailed Frederickson and Cooper yet another appraisal, this one dated October 4, 

2010 from a Florida appraiser, stating that a different entity owned 39 rubies with a total of 

10,250 carats and a value of $1.3 billion. 

25. Finally, in November and December 2010, Lewis emailed Frederickson and 

Cooper an Appraisal Certificate dated November 19, 2010 from a different appraiser (in Chula 

Vista, CA) stating that Cooper's company Global Funding owned seven sapphires with a total of 

5,023 carats valued at $376 million, and that "this collection is truly the largest in existence 

currently in a private collection." Lewis also emailed Frederickson and Cooper a different SKR 

stating that Global Funding has on deposit the seven sapphires and the Appraisal Certificate 

attesting to their value of $376 million. 

26. Although Frederickson was going to provide investors with letters promising that 

gemstones owned by Global Funding guaranteed their investments, and despite the fact that the 

SKRs and appraisals Frederickson received showed different ownership of various gemstones 

with different valuations, Frederickson did nothing to verify the value or authenticity of any of 

Northe foregoing gemstones, or Lewis's or Cooper's claimed ownership and control of them. 

did Frederickson ask Cooper or Lewis why they needed to raise funds from investors given that 

7 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 8 of 15 PagelD: 8 

Lewis and Cooper purportedly owned such valuable gemstones. 

3. The First Escrow Transaction 

27. In December 2010, at Cooper's request, Frederickson served as the escrow agent 

for a $150,000 investment by an investor ("Investor One") with Cooper's company Global 

Funding. The escrow agreement, entered into between Frederickson's Law Offices, Investor 

One, and Global Funding, provided that Frederickson would receive all documents reflecting the 

escrow.terms of the investment and incorporated all documents and agreements related to the 

Cooper affixed Frederickson's electronic signature to the escrow agreement, which Frederickson 

had not authorized but learned about shortly thereafter. 

28. Investor One wired $150,000 to the Law Offices' client trust account and then 

Frederickson provided the investor with a Collateral Guarantee letter. After retaining $1,290 as 

his escrow fee, Frederickson wired the balance out at Cooper's direction: $73,710 to Cooper's 

company Dream Holdings and $75,000 to Patrick Lewis's company Perk My Interest Inc. 

29. The terms of the trading agreements between Global Funding and Investor One, 

which Frederickson read, stated that Global Funding would provide a $100 million "Bank 

Guarantee" in the form of a "tradable Certificate of Debt". Profits from the "trade program" 

were guaranteed to be at least six times (600%) the funds placed in escrow by the investor for "a 

minimum of $900,000". The MOU for the transaction guaranteed payment ofthose profits 

within 60 days, while the private placement agreement promised payment within 90 days—that 

is, by at least March 2011. If the profits were not paid within 90 days, the investor could collect 

the amount owed under the Collateral Guarantee. 

30. The Collateral Guarantee letter stated that "the integrity of funds deposited in 

escrow by Investor (`Investor Funds') is guaranteed by collateral having a value of three (3) 

8 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 9 of 15 PagelD: 9 

times the dollar amount placed in escrow" and that the collateral "consists of certain described 

semi-precious gemstones which have an appraised value in excess of Ten Million Dollars" held 

at the Sarasota Vault Depository in favor of Global Funding. The letter stated that 

Frederickson's Law Offices "holds a Power of Attorney which grants the power to authorize a 

call against said collateral" under the terms of the trading agreement. Frederickson signed the 

letter on his Law Offices' letterhead. 

31. Investor One never received its $150,000 investment or any returns thereon from 

Cooper's sham transaction. 

4. The Forged Escrow Transaction 

32. In May 2011, Frederickson was contacted by a representative of another investor 

who was seeking the return for the investor of $250,000. The complaining investor believed the 

funds had been sent to Frederickson's Law Offices' client trust account pursuant to a purported 

escrow agreement between the Law Offices and the investor. 

33. The previous month on April 1, 2011, at Cooper's request, Frederickson had 

signed and provided to Cooper an escrow agreement involving this investor. That agreement 

was a three-way agreement between Frederickson's Law Offices, Cooper's company Global 

Funding, and the investor, for the investor to submit $250,000 to Frederickson's escrow account 

by April 5, 2011. This agreement contained no bank infoiination identifying where the investor 

should send the funds. Although Frederickson signed that agreement and provided it to Cooper 

on April 1st, neither Cooper nor the investor had signed the agreement, and Frederickson never 

received funds from this investor. 

34. Frederickson obtained the purported escrow agreement from the complaining 

investor's representative. The escrow agreement purported to be solely between the investor and 

9 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 10 of 15 PagelD: 10 

the Law Offices. The escrow agreement contained Frederickson's electronic signature and wire 

instructions which indicated the investor was to wire $250,000 to a Bank of America account 

having the name "DHF LLC" and described as an "Attorney/Client Trust-IOLTA" account. 

35. Frederickson had never seen or signed this escrow agreement, nor had he received 

funds from this investor in his escrow account. 

36. When Frederickson questioned Cooper about the escrow transaction, Cooper 

acknowledged that the bank account information contained in the investor's escrow agreement 

was for one of Cooper's other companies, Dream Holdings LLC, for which Cooper maintained 

an account at Bank of America. Cooper also acknowledged that Dream Holdings received the 

$250,000 from the investor on or about April 5, 2011. Incredibly, however, Cooper denied 

knowing how the bank account information for Dream Holdings had been included in the 

investor's escrow agreement. He also denied having altered or caused to be altered the original 

escrow agreement Frederickson had signed and provided to Cooper for this investor. 

37. All of these circumstances, including the fact that Cooper had affixed 

Frederickson's electronic signature to another escrow agreement in the past without 

Frederickson's authorization, clearly indicated that Cooper had forged the escrow agreement in 

order to obtain the investor's funds directly while making it appear that the investor was sending 

funds to an attorney escrow account for safekeeping. 

38. Although Frederickson never received any funds from this investor and never 

acted as escrow agent for Cooper and this investor, Frederickson asked for and received from 

Cooper a $2,500 escrow fee. 

5. The Second Escrow Transaction 

39. On June 22, 2011, Cooper emailed to a prospective investor ("Investor Two") a 

10 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 11 of 15 PagelD: 11 

memorandum of understanding for a bank guarantee trading program, a letter outlining the terms 

of the investment, and an escrow agreement between the investor, Global Funding, and 

Frederickson's Law Offices. The investment, described as a "Short-Term Guaranteed High-

Yield Investment Program" for the purchase and trade of a "One Hundred Million Euro Bank 

Guarantee", promised a 1,000% return within 60 days on a $200,000 investment, with the 

principal and return guaranteed and secured by gemstones, and funds administered by an outside 

attorney through an escrow account. The escrow agreement contained Frederickson's electronic 

signature, affixed by Cooper, without Frederickson's authorization. 

40. To allay Investor Two's concern for the validity of the transaction and veracity of 

Cooper, Cooper asked Frederickson to provide Cooper a generic "comfort letter" for the 

prospective investor. Cooper provided the language for the letter, which Frederickson edited. 

Frederickson understood that the letter was being used by Cooper to solicit an investor for 

Cooper's high-yield bank guarantee trading program. 

41. Also on June 22, 2011, Investor Two emailed Frederickson telling him that 

Cooper had identified him as an escrow agent for a potential transaction and asking him to speak 

to him by telephone. In the email exchange, Investor Two asked Frederickson to call him the 

next day (June 23) and asked whether Frederickson was going to provide him a letter. 

42. Frederickson emailed Cooper the letter, dated June 22, 2011, which Frederickson 

signed on the Law Offices' letterhead. The letter was addressed to "Whom it May Concern" and 

regarding "Collateral Guarantee" and "Private Placement Memorandum (`PPMT involving 

Cooper's company "Global Funding Systems, LLC (`GFS')". The letter stated: 

"This will confirm that GFS has never had a collateral call on any of their PPM programs 
that my office has taken part in. The integrity of the funds deposited by Investor 

("Investor Funds") is guaranteed by collateral having a value of four (4) times the dollar 
amount placed in the program. While I hold the Power of Attorney and the ability to call 

11 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 12 of 15 PagelD: 12 

should a need arise from a failure to perform, this need has never arisen." 

43. The collateral referred to in this letter was the purported sapphires Global Funding 

claimed to own, but which Frederickson had done nothing to verify. In addition, Frederickson 

knew or should have known by this time that the 600% return of at least $900,000 Cooper 

guaranteed to Investor One within 90 days, by March 2011, had not paid out in any amount, even 

though it was supposed to be paid through Frederickson's escrow account. Frederickson also 

knew by this time of at least two other investors who were seeking return of their investments 

made with or through Cooper, though these investments did not involve "collateral" guarantees 

by Frederickson. 

44. On June 23, 2011, Cooper emailed the comfort letter to Investor Two. 

45. Also on June 23, 2011, Frederickson spoke to Investor Two by telephone. During 

the call, Frederickson stated generally that he provided escrow services for Cooper in connection 

with bank instrument trading transactions and that he held power of attorney over collateral 

In addition, among other information, Frederickson told Investorguaranteeing investor funds.
 

Two that Frederickson had participated in numerous bank instrument transactions with Cooper,
 

all of which had been successful. In fact, none of the bank instrument trading programs
 

Frederickson had been involved with as escrow agent for Cooper had been successful. 

46. On or about June 23, 2011, Investor Two then wired $200,000 to the Law 

Offices' client escrow account. At Cooper's direction, Frederickson retained a $3,000 fee for the 

transaction and wired $197,000 to Global Funding. 

47. On June 24, 2011, Cooper sent Frederickson the signed escrow agreement for the 

transaction with Investor Two, showing that Frederickson's electronic signature had been affixed 

to the agreement without his authorization. 

12 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 13 of 15 PagelD: 13 

48. Investor Two never received his $200,000 investment or any returns thereon from 

Cooper's sham transaction. 

FIRST CLAIM FOR RELIEF 

Each Defendant Violated Exchange Act Section 10(b) and Rule 10b-5 

49. The Commission realleges paragraphs 1 through 48 above. 

50. Defendants, in connection with the purchase and sale of securities described 

herein, by the use of the means and instrumentalities of interstate commerce, and by use of the 

mails, directly and indirectly: (a) employed devices, schemes, and artifices to defraud; (b) made 

untrue statements of material facts and omitted to state material facts necessary in order to make 

the statements made, in light of the circumstances under which they were made, not misleading; 

and (c) engaged in acts, practices, and courses ofbusiness which would and did operate as a 

fraud and deceit upon the purchasers of such securities, all as more particularly described above. 

51. Defendants knowingly, intentionally, and/or recklessly engaged in the 

aforementioned devices, schemes, and artifices to defraud, made untrue statements ofmaterial 

facts and omitted to state material facts, and engaged in fraudulent acts, practices, and courses of 

business. In engaging in such conduct, the defendants acted with scienter, that is, with an intent 

to deceive, manipulate or defraud, or with a severely reckless disregard for the truth. 

52. By reason of the foregoing, each defendant has violated and aided and abetted the 

violation of, and, unless restrained and enjoined, will continue to violate and aid and abet the 

violation of Exchange Act Section 10(b) [15 U.S.C. 78j(b)] and Rule lOb-5 [17 C.F.R. 

240.10-5]. 

13 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 14 of 15 PagelD: 14 

SECOND CLAIM FOR RELIEF
 

Each Defendant Violated Securities Act Section 17(a)
 

53. The Commission realleges and incorporates by reference Paragraphs 1 through 52 

above. 

54. Each defendant, 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 the 

use of the mails: (a) has employed, is employing, or is about to employ devices, schemes or 

artifices to defraud; (b) has obtained, is obtaining or is about to obtain money or property by 

means of untrue statements of material fact and omissions to state material facts necessary in 

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

not misleading; and (c) has engaged, is engaged, or is about to engage in transactions, acts, 

practices and courses of business that operated or would operate as a fraud upon purchasers of 

securities. 

55. By reason of the foregoing, each defendant has violated and aided and abetted the 

violation of, and, unless restrained and enjoined, will continue to violate and aid and abet the 

violation of Securities Act Section 17(a) [15 U.S.C. 77q(a)]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court: 

I. 

Enter judgment in favor of the Commission finding that the defendants violated the 

federal securities laws and Commission rules as alleged in this Complaint; 

IL 

Permanently enjoin the defendants from further violations of the federal securities laws 

and Commission rules alleged against them in this Complaint; 

14 



Case 1:13-cv-05787-RMB-AMD Document 1 Filed 09/27/13 Page 15 of 15 PagelD: 15 

Order all defendants and relief defendants to disgorge, as the Court may direct, all ill-

gotten gains received or benefits in any form derived from the illegal conduct alleged in this 

Complaint, together with pre-judgment interest thereon; 

IV. 

Order all defendants to pay civil monetary penalties pursuant to Securities Act Section 

20(d) [15 U.S.C. 77t(d)] and Exchange Act Section 21(d)(3) [15 U.S.C. 78u(d)(3)]; 

V. 

Grant such other equitable and legal relief as may be appropriate or necessary for the 

benefit of investors pursuant to Exchange Act Section 21(d)(5) [15 U.S.C. 78u(d)(5)]. 

Date: September 27, 2013 Respectfully submitted. 

Timothydrigland 
Counsel for Plaintiff 
SECURITIES AND EXCHANGE 

COMMISSION 
100 F Street, N.E. 

Washington, D.C. 20549 

Tel: (202) 551-4959 (England) 
Email: [email protected] 

Local Counsel: 
Paul A. Blaine 

Chief, Civil Division 

United States Attorney's Office for the District 
of New Jersey 
Camden Federal Building and U.S. Courthouse 

P.O. Box 2098 

401 Market Street, 4th Floor
 
Of Counsel:
Camden, NJ 08101
 
Alan M. Lieberman
856-757-5412 

[email protected] Stephen T. Kaiser 

Designated Pursuant to Local Rule 101.10 Christopher McLean 

15 

mailto:[email protected]
mailto:[email protected]