Release: 3924-96 (94-661-Civ. ORL-18)
For Release: July 12, 1996
FLORIDA DISTRICT COURT ISSUES ORDERS OF DISGORGEMENT AGAINST
REV. GARY A. SMITH & JAY BLEVINS, DEFENDANTS IN CFTC ANTI-FRAUD ACTION
Court's Order Stems from a CFTC Enforcement Action Against Keith Dominick and Main Street Investment Group of Kissimmee, Florida
WASHINGTON - The Commodity Futures Trading Commission (CFTC) announced today that on July 8, 1996, U.S. District Court Judge G. Kendall Sharp for the Middle District of Florida entered an order, after a three-day bench trial, finding the Rev. Gary A. Smith, pastor of the Heartland Worship Center, Inc. and Jay Blevins, a member of Heartland and president of the Jeff Blevins Memorial Childrens Fund, both located in Kissimmee, Florida, liable for violations of the anti-fraud and registration provisions of the Commodity Exchange Act (CEA) in their solicitations for a commodity pool run by Keith Dominick. (See CFTC News Release #3770-94, June 17, 1994, CFTC v. Keith Dominick, et al.)
The court's action stems from an original eight-count civil anti-fraud action that was filed in June 1994 against Keith Dominick and Main Street Investment Group Inc. alleging that they defrauded commodity pool investors in a manner akin to a Ponzi scheme. The CFTC charged that Dominick had obtained approximately $6.1 million from at least 70 investors for the fraudulently operated commodity pool he ran from 1992 through 1994. In July 1995, the CFTC filed an amended 14-count complaint, adding Smith and Blevins to the original complaint (CFTC News Release 3857-95, July 11, 1995).
On March 30, 1996, Judge Sharp entered a consent order of permanent injunction against Keith Dominick -- individually and d/b/a Keith Dominick Investor Group and Dominion Investments -- and Main Street Investment Group, Inc. (Main Street), a Florida corporation, both of Kissimmee, Florida, that requires Dominick to pay $4.5 million of restitution, plus interest, and bars him from the futures industry, among other sanctions (CFTC News Release #3899-96, April 3, 1996).
Smith and Blevins Acted with a Reckless Disregard for the Truth of Representations Made to Potential Investors in Soliciting Investors
The court's July 8, 1996, order in this case finds that Smith and Blevins 1) violated the registration provisions of the CEA, and 2) committed fraud by acting with a reckless disregard for the truth of representations made to potential investors in soliciting them for commodity trading programs operated by Keith Dominick. The order finds that Smith and Blevins recklessly repeated Dominick's fantastic claims to investors, such as claims of a 200 percent to 400 percent profit and the ability to eliminate or limit trading losses, without having any reasonable basis to believe the representations were true.
They also were found to have made material omissions by failing to reveal to investors that they received compensation for soliciting investors for Dominick. Dominick paid Smith $368,339 between April 1993 and April 1994 for attracting investors, and Blevins received $315,859 from Dominick between September 1993 and June 1994 for soliciting investors, the court found.
The court-appointed receiver in this case has pending against Smith's church, the Heartland Worship Center, an order to show cause seeking to have Heartland turn over approximately $550,000 of what is alleged to be investors' funds transferred to Heartland by Dominick.
Court Order Smith and Blevins to Disgorge All Ill-gotten Gains
The court's order directs Smith and Blevins to disgorge all compensation they received from Dominick for soliciting investors, regardless of the form. Rev. Smith was ordered to disgorge $368,339, plus prejudgment interest, and Blevins was ordered to disgorge $315,859, plus prejudgment interest.