Securities Bulletin

              SECURITIES bulletin
Much has happened recently regarding
investor education and financial literacy.
Two efforts of particular interest — one at
the national level and one in our own
backyard — highlight the importance of
financial literacy among our young people
as well as mature investors.
April was declared Financial Literacy
Month by two resolutions in Congress.
Senate Res. 410, sponsored by Sen.
Daniel Akaka (D-HI), was supported by
Sen. Dick Durbin (D-IL) and 17 other U.S.
Senators. House Res. 737 was co-spon-sored
by U.S. Reps. Judy Biggert (R-IL)
and Ruben Hinojosa (D-TX), and received
support from 89 bipartisan House co-sponsors.
Both resolutions recognize the
growing obligation to equip our citizens
with a basic understanding of savings and
investing and knowledge on how to
avoid fraud.
The Federal Reserve Bank of Chicago
declared May 1-6 Money Smart Week in
Chicago. The bank coordinated activities
throughout the city, including a Financial
Regulators Fair, hosted by the Securities
Department at the James R. Thompson
Center. Banks and civic organizations
across the city opened their doors to
encourage Illinois citizens to learn how to
keep themselves financially fit.
We applaud these efforts and support
continued endeavors toward improving
financial literacy in
Illinois.
Jesse White
Secretary of State
SUMMER 2006
Secretary of State Jesse White, Patrick J. Fitzgerald, U.S. Attorney for the North-ern
District of Illinois, and Kenneth T. Laag of the U.S. Postal Service recently
announced the conviction of a former Naperville man on securities fraud.
Terry L. Spirk was found guilty in federal court of 11 counts of mail fraud, one
count of wire fraud, and three counts of the interstate transportation of secu-rities
obtained by fraud in a scheme to defraud investors in promissory notes
of more than $5 million.
The indictment in June 2005 alleged that between May 1998 and February
2001, Spirk sold more than $5 million in promissory notes issued by Lancaster
Annuity Services Co., or LASCO, and falsely represented that the investors’
monies would be safe when, in fact, LASCO was insolvent. Spirk secretly con-verted
a substantial portion of the loan proceeds for his own use and made
the following misrepresentations and false promises to investors:
• Purchasers of the promissory notes would receive back their principal
and interest when LASCO was already in default on promissory notes pur-chased
by previous investors.
• LASCO was financially sound and would repay the promissory notes,
when it was insolvent and its net earnings were not enough to even pay
the interest on the existing promissory notes.
• Repayment of the promissory notes would be guaranteed by the pro-ceeds
from a life insurance policy on Spirk’s life, when the amount of the
existing promissory notes exceeded the face amount of the insurance
policy and the insurance policy was later cancelled for nonpayment of
premiums.
• Proceeds from the sale of the notes would be used to establish the activ-ities
of Spirk’s businesses, when Spirk used substantial amounts of the pro-ceeds
to pay interest and principal to previous purchasers of the notes.
• A Private Placement Memorandum for the sale of stock had been
approved by the Securities Department, when it had not been approved
and the department had entered an order prohibiting LASCO and Spirk
from selling unregistered securities in Illinois.
Investors came from several states and included many in Winnebago, DeKalb
and Ogle counties.
Spirk faces up to five years in prison and a fine of $250,000 for each of the mail
and wire fraud charges, and up to 10 years in prison and a fine of up to
$250,000 for each of the securities charges, in addition to restitution.
Sentencing is set for Sept. 15, 2006. Spirk will not be eligible for parole.
The case was investigated by agents of the Illinois Securities Department’s
Enforcement Division and U.S. Postal Service inspectors.
Naperville man convicted on 15 counts of fraud
IN
THIS
ISSUE
• NAPERVILLE MAN CONVICTED ON 15 COUNTS OF FRAUD •
• “DON’T GET SCAMMED” CAMPAIGN LAUNCHED •
• SWITCHING FROM STATE- TO SEC-REGISTERED STATUS •
• INVESTOR EDUCATION •
• NEW “BRANCH OFFICE” DEFINITION ADOPTED •
A NEWSLETTER OF THE ILLINOIS SECURITIES DEPARTMENT • SECRETARY OF STATE JESSE WHITE