The Securities and Exchange Commission (SEC) has charged Gary L. McDuff (McDuff), Gary L. Lancaster (Lancaster), and Robert T. Reese (Reese), with securities fraud in connection with fraudulent sales of the Lancorp Financial Fund Business Trust (Lancorp Fund). Specifically, the SEC alleges that Lancaster created the Lancorp Fund at McDuff’s direction, that the two then created a misleading Private Placement Memorandum (PPM) for the Fund, and that, joined by Lancaster, they raised more than $11 million from more than 100 investors using that misleading PPM. Rather than invest that money as allowed by the PPM, the SEC alleges that the defendants invested $9 million of the money in a Ponzi scheme, paid Reese undisclosed commissions on the sales, and paid Lancaster a management fee greater than that disclosed in the PPM. (more…)
