U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17490 / April 25, 2002

SECURITIES AND EXCHANGE COMMISSION v. CAPITAL CONSULTANTS, LLC, JEFFREY L. GRAYSON, AND BARCLAY L. GRAYSON, Civil Action No. 1290 KI (D. Ore.)

UNITED STATES v. JEFFREY LLOYD GRAYSON, CR-01-377-BR (D. Or.)

The United States Attorney for the District of Oregon announced that on April 23, 2002, Jeffrey L. Grayson pleaded guilty to one count of mail fraud and one count of assisting in the preparation of a false tax return in connection with his role as the former principal of Capital Consultants, LLC, a registered investment adviser located in Portland, Oregon. Jeffrey Grayson admitted that between 1994 and 2000, he engaged in a scheme to defraud Capital Consultants' clients, mostly union pension and benefit plans. The criminal charges against Jeffrey Grayson carry a maximum penalty of 8 years in prison and maximum fine of $500,000.

The Securities and Exchange Commission charged Capital Consultants, Jeffrey Grayson and his son, Barclay L. Grayson, with fraud and obtained emergency relief against them in September 2000. The complaint alleged that the defendants were operating an undisclosed Ponzi-like scheme in which they used client funds to make interest payments to other clients who were invested in a $160 million loan that Capital Consultants made to Wilshire Credit Corp. On April 30, 2001, the United States District Court for the District of Oregon entered permanent injunctions against Capital Consultants and the Graysons. Capital Consultants is currently in receivership. On February 26, 2002, an amended permanent judgment of permanent injunction was entered against Barclay Grayson that did not assess a civil penalty against him based upon his demonstrated inability to pay. On November 20, 2001, Barclay Grayson was sentenced to two years in prison in a related criminal action.

For additional information, see Litigation Release Nos. 16720 (September 21, 2000), 16995 (May 11, 2001) and 17405 (March 7, 2002).