U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19321 / August 2, 2005

SECURITIES AND EXCHANGE COMMISSION v. RC INVESTMENT CORP., PINNACLE INVESTMENT CORP., ROBERT A. COBERLY, JR., AND CURTIS D. SOMOZA, No. CV 04 -7400 GHK (Ex)(C.D. Cal.)

SEC SETTLES WITH DEFENDANTS IN A $6.7 MILLION "PRIME BANK" PONZI SCHEME

The Securities and Exchange Commission has settled its claims against two Southern California companies and their principals with their consent to court orders permanently enjoining them from future securities fraud and securities registration violations. All four defendants - Robert A. Coberly, Jr., 37, of Westlake Village, Curtis Somoza, 37, of Beverly Hills, RC Investment Corp. of Westlake Village, and Pinnacle Investment Corp. of Westlake Village - consented to entry of the judgments without admitting or denying the Commission's allegations. As part of the settlement, the Honorable George H. King, United States District Judge for the Central District of California, ordered Coberly and Somoza to each pay civil penalties in the amount of $40,000. The defendants had previously paid back all of the investors who had been defrauded by the defendants' scheme.

The complaint in this case, filed on September 7, 2004, alleges that, from September 2002 to May 2003, the defendants offered and sold $6.7 million worth of notes to at least fifty investors nationwide, claiming that the funds would be used to finance a purported trading program that would buy and sell high-grade AA and AAA-rated bank notes, which is a common form of "prime bank" instrument. One form of a "prime bank" scheme involves a supposed bank trading program where investor funds are purportedly used to trade high-grade bank notes. In fact, such bank notes do not exist and are used to defraud investors. In this case, the complaint also alleges that the defendants represented that investors would receive a "guaranteed" 120% per year return. The complaint further alleges that, contrary to their representations, the defendants instead operated a Ponzi scheme and used $3.11 million in new investor funds to pay existing investors. The complaint alleges that the defendants misappropriated another $2.61 million in investor funds to support their lavish lifestyles, such as down payments on two luxury homes in Southern California and weekends at posh resorts, and to finance other business ventures. In addition, the complaint alleges that, contrary to the defendants' representations, there was no bank note trading program.

The judgments, entered July 26 and 28, 2005, permanently enjoin the defendants from committing future violations of the securities registration and antifraud provisions of the federal securities laws, Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.

For more information about prime bank frauds, visit the SEC's "Prime Bank Information Center" at http://www.sec.gov/divisions/enforce/primebank.shtml. To report suspicious activity involving possible fraud, visit http://www.sec.gov/complaint.shtml.

http://www.sec.gov/litigation/litreleases/lr19321.htm