SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

Litigation Release No. 17073 / July 19, 2001

SECURITIES AND EXCHANGE COMMISSION v. KENTON CAPITAL, LTD., et al., Case No. 95CV00829 (D.D.C.)

COURT HOLDS DONALD WALLACE IN CONTEMPT
FOR FAILURE TO SATISFY JUDGMENT IN FAVOR OF SEC

The Securities and Exchange Commission (the "Commission") announced today that on July 12, 2001, Judge Colleen Kollar-Kotelly of the United States District Court for the District of Columbia issued an Order in SEC v. Kenton Capital, Ltd., et al. holding Donald C. Wallace ("Wallace") in civil contempt for his failure to satisfy a judgment the Commission had obtained in its favor on September 30, 1998. The July 12, 2001 Order requires Wallace, within thirty days of the date of the order, to either pay disgorgement in the amount of $265,245.10 (plus prejudgment interest in the amount of $86,665.83 and post judgment interest) and a civil penalty in the amount of $1.2 million, or enter into an alternate payment plan that is acceptable to the Commission and the Court. Should Wallace fail to satisfy either of these options, the Court's order states that it will issue a bench warrant for his arrest and he will remain incarcerated until such time as the Court determines that he has fully complied with all provisions of the Court's orders.

The securities fraud in the underlying case stemmed from a prime bank fraud perpetrated through Kenton Capital, Ltd., an entity incorporated in the Cayman Islands and of which Wallace was President. As is typical in prime bank frauds, Wallace promised investors that they would receive large returns with no effort on their part, with no risk to their principal, and that repayment of their principal was guaranteed. The Commission obtained a second judgment against Wallace on July 24, 2000 in SEC v. Wallace, et. al., Civ. No. 99-0120 (D.D.C). This second securities fraud case also stemmed from a prime bank fraud. Wallace has also failed to satisfy the judgment in SEC v. Wallace, and a motion for contempt filed by the Commission is pending in that case.

For more information about prime bank frauds, visit the SEC's website at http://www.sec.gov/divisions/enforce/primebank.shtml.