SEC accuses advisers of fraud

Keating of Columbia, 2 associates in Ohio named in lawsuit

Securities

April 10, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

The Securities and Exchange Commission has sued a Columbia-based investment adviser and two of his associates in Ohio, alleging that they defrauded 148 investors in Maryland and seven other states of $6.4 million through sales of unregistered securities.

Two of the defendants, Andrew P. Bodnar and Thomas E. Buck, both of Ohio, allegedly used $3.69 million of their clients' money to pay for living and business expenses, according to the lawsuit filed in U.S. District Court in the Northern District of Ohio.

The other defendant, Michael P. Keating, who operates Keating Advisory Group in Columbia, raised at least $3 million from investors by selling them CBT Holding Corp. and CBT-Ohio securities in 1997, the SEC alleged. Keating received commissions totaling $42,463 from the sales, according to the SEC.

The securities were not registered by the SEC and were sold in violation of securities laws, said Merri Jo Gillette, district trial counsel for the SEC's office in Philadelphia. "This is, on a relative basis, a significant case," Gillette said.

In its lawsuit, the SEC is seeking to stop the defendants from selling the securities to other investors and to give up all profits, according to court papers.

"We hope that they have stopped. We don't have any information that they are selling these particular securities," Gillette said.

Keating, 38, reached at his office in Columbia, declined to comment. "No way, baby," he said.

Bodnar and Buck could not be reached for comment.

According to the lawsuit, which was filed Thursday, Bodnar and Buck organized a sales force, which included Keating, to sell promissory notes issued by CBT Holding and CBT-Ohio.

He and other representatives told investors that the securities were "low risk," generated an annual return of 12 percent and were backed by the "full faith and credit" of the U.S. government, the lawsuit alleged. Investors were "led to believe" that they were investing in certificates of deposit that were issued or guaranteed by U.S. banks, the suit said.

In addition, Bodnar and Buck allegedly used $118,551 from new investors to make quarterly interest payments to existing investors.

It is unclear whether the investors' money can be recovered, Gillette said.

Pub Date: 4/10/99

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