November 8, 2013
By Bob Coleman
Editor, Coleman Report
After issuing a summary judgment against Mark Feathers for running a three-year $42 million ponzi scheme with his SBA licensed lending company, Small Business Capital, the judge has issued his financial penalty ruling.
1) Mark Feathers is permanently banned from selling securities in the future.
2) Mark Feathers is personally liable to repay $7.8 million of “illl-gotten gains”
3) Mark Feathers is fined a $10,000 civil penalty.
The $7.8 million is classified as a “disgorgement judgment” and is probably an economic death sentence as it is probably immune to a bankruptcy filing.
Mark did receive a minor victory with the civil penalty. The SEC sought a $300,000 fine, but the judge ruled against the SEC and imposed the $10,000 fine.
The judge earlier ruled, “Essentially, the SEC has shown that Feathers was not using fund profits to pay out returns, but rather other member investments – contrary to the representations of the Funds’ offering documents – as ‘Ponzi-like payments.’ Feathers had instructed his employees to maintain monthly payments to investors in IPF [Investors Prime Fund] and SPF [SB Capital Portfolio Fund] at a return of 7.5 percent per annum and 9-10 percent per annum, respectively, without taking into consideration the funds’ net income or actual profitability.”
“The SEC has presented abundant evidence demonstrating that Feathers acted intentionally or recklessly in carrying out the misrepresentations and misstatements presented in the preceding section.”
Mark Feathers has appealed the ruling and continues to profess SEC malfeasance in this case.
He writes, “It is apparent to all who have half a brain, or more, that SEC’s so called “good faith” errors (see SEC’s Court Dockets 160 and 161) in their financial illustrations stretch credibility well past the breaking point, as does SEC’s pathetic excuse that their anointed receiver was twice labeled a licensed CPA as the result of an “unfortunate typo”. This lawsuit was built upon false pretense, and collaborated actions in bad faith of SEC, the receiver, and the receiver’s counsel. SEC, in short, knew that going into this lawsuit it would have its back covered.”