SEC to Halt State Scam In Ostriches

The Securities and Exchange Commission said Thursday it has been granted an emergency restraining order to halt a "fraudulent investment scheme" in ostrich breeding ventures that it said netted $6.5 million from more than 700 investors nationwide.

The SEC said the group operated from Oklahoma and five other states.

The SEC obtained the emergency restraining order Tuesday in U.S. District Court in Massachusetts. A hearing to consider a permanent injunction is scheduled on Aug. 24.

Named in the action are International Breeders Inc.; First Western Ostrich Corp.;, Ostrich Breeders of America, NSA Inc.; Capital Management and Development Corp.; Jeffrey Davis; Bob Stewart; Steven Floyd Stewart; Clifford Duane Stahl and Rik Foxx.

In a news release, the SEC said the group operated from Arizona, Texas, Florida, Nevada and Massachusetts, as well as Oklahoma.

The SEC accused the defendants of violations of the anti-fraud, registration and broker-dealer provisions of federal securities laws, in connection with a fraudulent unregistered offering of securities in the form of partnership interest in the ostrich breeding ventures.

The SEC's complaint alleged that since at least 1992, those named used "boiler-room" high pressure sales tactics to induce investors into buying into the ostrich ventures.

Among the claims made by the defendants were that investors could make returns of 500 percent or more on the partnerships and that the investment was fully insured and virtually risk free.

In addition, the SEC alleged that the defendants failed to disclose that many of the them had been ordered by several states to cease-and-desist their offer and sale of ostrich investments.

Irving Faught, administrator of the Oklahoma Securities Department, was not available for comment Thursday.

The SEC complaint also alleged that in response to mounting concerns of investors who had received no return on their investments, the defendants sent a letter pressuring investors to exchange their partnership interests for stock in a public company.

To date, the SEC alleged, investors who participated in the exchange have received no stock, dividends or other returns on their investments.

The SEC said that Davis, chief executive officer of International Breeders Inc., has gone to Brazil with investor funds, and that wire transfers totaling nearly $200,000 had been sent to the Virgin Islands to the attention of Freddie Don Stewart.

In the upcoming hearing, a federal court will consider a permanent injunction against the group, plus a return of all money invested, with interest, and civil monetary penalties. BIOG: NAME:

Archive ID: 620662