Alvin Gebhart, Jr. v. SEC

I. BACKGROUND

Alvin Gebhart has been in the securities industry since 1983.2 1 The NASD is now the Financial Industry Regulatory Authority (FINRA). 2 In May 1983, Gebhart registered with the NASD as an investment company products and variable contracts representative (“IC representa- GEBHART v. SEC 2487 In 1994, he began working at Mutual of New York (MONY) in San Diego, where he sold annuities and mutual funds. While at MONY, Gebhart met Jack Archer, a fellow MONY salesperson. In 1995, Archer told Gebhart about a business venture, Community Service Group (CSG), run by James Scovie. CSG was in the business of converting mobile home parks to resident ownership. CSG purchased parks from the owners and then assisted residents in purchasing them. In late 1996, Scovie and another person, David Mounier, created MHP Conversions, LLC (MHP) to facilitate the conversion process. MHP issued promissory notes that were sold to indi- vidual investors to raise funds for CSG’s purchase of the parks. The MHP notes had one-year terms with fixed interest rates of 18 percent for new investments and 14 percent for reinvested funds. Each note stated that it would…