U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.

Litigation Release No. 19497 / December 16, 2005

Securities And Exchange Commission v. Credit First Fund, L.P., Credit First, LLC, Credit First Income Plus, LLC, Investors Guild, Inc., Investors First Financial Services, Inc., and David Lund, Case No. CV05-8741-DSF(PJWx) (C.D. Cal.)

SEC Halts a $10 Million Ongoing Ponzi Scheme

The Securities and Exchange Commission ("Commission") yesterday obtained a temporary restraining order, asset freeze, and other emergency relief to halt a fraudulent Ponzi scheme operated in Orange County, California, that raised more than $10 million from more than 200 investors, mostly elderly, nationwide. The Commission alleges that from approximately April 2001 to the present, David Lund, age 32, of Huntington Beach, California, and his companies, Investors Guild, Inc. and Investors First Financial Services, Inc., raised $10.7 million mainly from elderly and retired individuals by selling them ownership interests in three California entities-Credit First Fund, LP, Credit First, LLC, and Credit First Income Plus, LLC (collectively "Credit First"). Lund, Investors Guild, Investors First Financial Services, and Credit First currently operate from the same location in Anaheim Hills, California, and are named defendants in the Commission's action.

According to the Commission's complaint filed yesterday in federal district court, the defendants represented to investors that they would use the investor funds to purchase distressed debt, which Credit First would collect on or resell at a profit. The defendants also represented that Credit First would pay the investors a monthly return of one to three percent on their investment from Credit First's operations. The Commission alleges that, in reality, Credit First was not profitable and that Lund was, in fact, operating a Ponzi scheme-using new investor monies to pay the promised returns to existing investors-in violation of the federal securities laws. The complaint further alleges that the defendants have profited from this scheme by receiving various fees totaling approximately $1.5 million paid out of the investor funds. Finally, the complaint alleges that the defendants engaged in an unlawful unregistered securities offering by selling Credit First's securities to at least 233 investors nationwide through general solicitations.

Acting on the Commission's lawsuit, the Honorable Dale S. Fischer, United States District Judge for the Central District of California, granted the Commission's application for a temporary restraining order against the defendants and issued orders freezing the defendants' assets, prohibiting the destruction of documents by the defendants, and granting expedited discovery. The Court also appointed Thomas F. Lennon, Inc. as the temporary receiver over the assets of Credit First, Investors Guild, and Investors First Financial. The Court ordered the temporary restraining order and asset freeze to remain in effect until December 23, 2005, on which date the Court will hold a hearing on the Commission's motion for a preliminary injunction and appointment of a permanent receiver at 3:00 p. m. In addition to emergency relief, the Commission's complaint seeks preliminary and permanent injunctions, repayment of al ill-gotten gains, and also civil penalties.

The Commission's complaint alleges that the defendants violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act.

http://www.sec.gov/litigation/litreleases/lr19497.htm