- The Washington Times - Friday, February 3, 2006


The Securities and Exchange Commission filed a complaint in federal court in Orlando, Fla., yesterday to halt a credit-and-debit-card investment scheme it claims has defrauded mostly elderly investors in Florida, Texas and Michigan.

The SEC is seeking an asset freeze, temporary restraining order and other relief against Edward S. Digges Jr., a Maryland lawyer who spent two years in prison after a 1990 mail-fraud conviction.

In documents filed yesterday, regulators accuse Mr. Digges of defrauding investors who were guaranteed returns from buying and leasing point-of-sale terminals used by retailers to process credit- and debt-card transactions.

Mr. Digges and his companies, including Nexstar Communications, TMT Equipment Co., POSA, Televest Communications and Spin Drift, raised about $15 million from the purported scheme since 2003, according to the SEC.

The agency said the investments were sold through insurance agents, accountants and financial planners, and promised returns of 12 percent to 18 percent a year.

Although Mr. Digges and his sales team told investors that returns were “assured” and backed by a reserve fund, his point-of-sale lease business has been in the red for the past two years and no reserve fund had been created, according to the SEC’s complaint. It said Mr. Digges used personal assets to cover payments to investors.

Federal regulators also said Mr. Digges failed to tell investors that Maryland found the investment offering involved fraud, and that state regulators in Pennsylvania and Ohio have raised concerns about it.

Mr. Digges, 58, was disbarred following his 1990 conviction for overbilling Dresser Industries Inc., then a client of his, and ordered to repay it $1 million.

Dresser later was awarded a $3.1 million judgment in a civil suit against Mr. Digges and his Annapolis firm, Digges, Wharton & Levin.

The SEC is seeking a court order to freeze assets, prevent document destruction, fine Mr. Digges and require him to return his purportedly ill-gotten gains, with interest. A federal court hearing is set for Feb. 21 in Orlando.

Gerard Martin, a Baltimore attorney who represents Mr. Digges, couldn’t be reached immediately for comment.

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