POLLY ATKINSON JULIE K. LUTZ (Ca. Bar No.

77246) Securities and Exchange Commission 1801 California Street Denver, Colorado 80202 Telephone: (303) 844-1000 KAREN L. MATTESON (Ca. Bar No. 102103) Securities and Exchange Commission 5670 Wilshire Boulevard 11th Floor Los Angeles, California 90036-3648 Telephone: (213) 965-3998 Attorneys for: The United States Securities and Exchange Commission UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. GERALD A. DOBBINS and FIDELITY SECURED DEPOSIT CORPORATION, Defendants. Civil Action No. SACV 98-229 COMPLAINT Plaintiff Securities and Exchange Commission for its complaint alleges as follows: SUMMARY 1. Gerald A. Dobbins, individually and through entities, including Fidelity Secured Deposit Corporation ("FSDC"), knowingly made misrepresentations to investors nationwide in connection with the offer and sale of securities. Dobbins provided authentications and valuations of bonds, including those issued by the Chicago Saginaw and Canada Railroad Co. ("Saginaw") and the East Alabama & Cincinnati Railroad ("EA&C"). These bonds are collectible memorabilia with essentially no investment value. Nevertheless Dobbins, through FSDC, has valued the Saginaw bonds at up to $110,000,000 and the EA&C bonds at up to $400,000,000. The Saginaw bonds have been offered and sold to investors at prices up to $40,000 each. Dobbins received payments in connection with the offer and sale of these bonds. Dobbins has made material misrepresentations and omitted to state material facts to investors regarding the value of the bonds, risks associated with the investments, rates of return that investors

would receive. 2. Defendants, directly and indirectly, are now and have engaged in, and unless restrained and enjoined by this Court will continue to engage in, transactions, acts, practices, and courses of business that violate Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. �78j(b)] and Rule 10b-5 thereunder [17 C.F.R. �240.10b-5]. 3. Defendants, directly and indirectly, are now, and have engaged in, and unless restrained and enjoined by the Court will continue to engage in, transactions, acts, practices, and courses of business that violate Section 17(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. �77q(a)]. 4. The Commission, pursuant to the authority granted to it by Section 10(b) of the Exchange Act [15 U.S.C. �78j(b)], has promulgated Rule 10b-5 which was in effect at all times relevant to this Complaint and is still in effect. 5. The Commission brings this action pursuant to the authority conferred upon it by Section 20(b) of the Securities Act [15 U.S.C. �77t(b)] and Section 21(d) and (e) of the Exchange Act [15 U.S.C. � 78u(d) and (e)] for an order permanently restraining and enjoining Defendants and granting other equitable relief. JURISDICTION AND VENUE 6. This Court has jurisdiction over this action pursuant to Section 22(a) of the Securities Act [15 U.S.C. � 77u(a)] and Sections 21(e) and 27 of the Exchange Act [15 U.S.C. ��78u(e) and 78aa]. Venue lies in this Court pursuant to Section 22(a) of the Securities Act and Section 27 of the Exchange Act. 7. In connection with the transactions, acts, practices, and courses of business described in this Complaint, each of the Defendants, directly and indirectly, has made use of the means or instrumentalities of interstate commerce, of the mails, and/or of the means and instruments of transportation or communication in interstate commerce. 8. Defendants Dobbins and FSDC reside within this judicial district. In addition, certain of the transactions, acts, practices and courses of business constituting the violations of law alleged herein occurred within this judicial district. DEFENDANTS 9. Gerald A. Dobbins is a California resident. Dobbins prepared fraudulent authentications and valuations of bonds, including Saginaw bonds. 10. Fidelity Secured Deposit Corporation is an entity used by Dobbins. It is located in Hunnington Beach, California. FACTS

The Saginaw Bonds 11. In 1873 Saginaw issued 5,500 thirty year gold backed bearer bonds paying seven percent interest to finance construction of a proposed railroad. 12. Saginaw's creditors forced it into bankruptcy in 1876 and its assets were purchased by a predecessor of CSX Transportation, Inc. ("CSX"). CSX's predecessor did not assume any of Saginaw's outstanding debt, including the railroad bonds. 13. All claims to money due under the bonds, which had a face value of $1000 each, were resolved in the 1876 bankruptcy proceeding. At that time, investors presented their bonds for payments out of funds from the foreclosure sale and received a distribution amounting to less than 25 cents on the dollar. 14. After the bankruptcy proceeding, the bonds remained in court archives until they were discovered in the basement of a federal building. Thereafter a museum in Grand Rapids, Michigan, packaged the bonds with other historical information about the Saginaw railroad for sale as collector items for $22.95 each. The bonds have no value other than as collectible memorabilia. 15. bonds. CSX has disclaimed any liability for redemption of the The EA&C Bonds 16. EA&C was chartered in 1868, and, in 1870, issued bonds for building a railroad line. 17. In 1870, EA&C issued tenty year gold-backed bearer bonds, with a face value of $1,000 each, paying eight percent interest to finance the construction of a railroad. The state of Alabama endorsed the EA&C bonds to a limit of $400,000. 18. EA&C defaulted on the bonds in 1871 and, after a series of sales, the company was placed into receivership. 19. In 1889, the assets of EA&C were sold and the claims of bondholders were resolved. 20. The bonds currently have no investment value and have never been registered with the Commission. Dobbins represented to investors that the Saginaw bonds were worth $110 million 21. Since at least October 1995 Dobbins has prepared Authentications for Saginaw bonds. 22. In his Authentications, Dobbins represents that he is the "Master Curator for the State and the Historical Document Society" 23. In fact, Dobbins is not the master curator for any state. In addition, the Historical Document Society does not

exist. 24. In his Authentications, Dobbins also states "affiant has no knowledge that the bonds have been previously invalidated in any manner. 25. Dobbins knew or had reason to know that the issuer of the bonds had gone into receivership and that several foreclosure sales had been held. 26. Nevertheless, Dobbins concluded his Authentication by stating "there is no evidence to suggest that the document is anything but authentic". 27. bonds. Dobbins, through FSDC, prepared Valuations of Saginaw

28. The stated purpose of the valuations is "for the purpose of expressing assurance that the value of the bonds... are in conformity with generally accepted accounting principles. I have also listed what these bonds are worth as of the stated date listed." 29. Dobbins concludes his valuations, "the total dollar amount due and payable and value of each bond is ...". Dobbins has valued the Saginaw bonds at over $100,000,000. Dobbins represented to investors that the EA&C bonds were worth $400 million 30. Since at least May 1997 Dobbins has prepared at least one Authentication for EA&C bonds. 31. In his Authentication, Dobbins again represents that his is the "Master Curator" for the State and the Historical Document Society" 32. In his Authentication, Dobbins also states that the bonds are considered as debt instruments. Dobbins further asserts that " ... these bonds are guaranteed by the State [of Alabama] and it is the responsibility of the State to make payment." 33. Dobbins knew or had reason to know that the issuer of the bonds had gone into receivership and that several foreclosure sales had been held. 34. bonds. Dobbins, through FSDC, prepared Valuations of EA&C

35. The stated purpose of the valuations is "for expressing assurance that the value of the bonds ... are in conformity with generally accepted accounting principles. I have also listed what this bond is worth as of the stated date listed above." 36. Dobbins concludes this valuation, "the current value of each of these bonds [is] $400,464,081

COUNT I (Violations of Exchange Act �10(b) and Rule 10b-5) 37. above. Plaintiff repeats and realleges Paragraphs 1 through 36

38. Defendants, with scienter, in connection with the purchase or sale of securities, by the use of means or instrumentalities of interstate commerce or of the mails, directly or indirectly: (a) employed devices, schemes or artifices to defraud; (b) made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) engaged in acts, practices or courses of business which operated or would operate as a fraud or deceit upon purchasers of securities in violation of Section 10(b) of the Exchange Act [15 U.S.C. �78j(b)] and Rule 10b-5 [17 C.F.R. �240.10b-5] thereunder. 39. By reason of the foregoing, Defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and unless restrained and enjoined will continue to do so. COUNT II (Violations of Securities Act � 17(a)(1)) 40. above. Plaintiff repeats and realleges Paragraphs 1 through 36

41. Defendants, with scienter, in the offer or sale of securities, by the use of means or instruments of transportation or communication in interstate commerce, or by the use of the mails, directly or indirectly employed devices, schemes or artifices to defraud in violation of Section 17(a)(1) of the Securities Act [15 U.S.C. � 77q(a)]. 42. By reason of the foregoing, Defendants violated Sections 17(a)(1) of the Securities Act and unless restrained and enjoined will continue to do so. Count III (Violations of Securities Act � Section 17(a)(2) and (3)) of the Securities Act of 1933) 43. 36 above. Plaintiff repeates and realleges Paragraphs 1 through

44. Defendants, in the offer or sale of securities, by the use of means or instruments of transportation or communication in interstate commerce, or by the use of the mails, directly or indirectly (a) obtained money or property by means of untrue statements of material facts or omissions to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (b) engaged in transactions, practices or courses of business which operated or would operate as a fraud or deceit upon

purchasers of securities in violation of Section 17(a)(2) and (3) of the Securities Act [15 U.S.C. � 77q(a)(2) and (3)]. 45. By reason of the foregoing, Defendants violated Sections 17(a)(2) and (3) of the Securities Act and unless restrained and enjoined will continue to do so. WHEREFORE, the Commission respectfully requests that this Court: I. Enter an injunction, preliminarily during the pendency of this action and permanents thereafter, restraining and enjoining Defendants, their subsidiaries, officers, directors, agents, servants, employees, and attorneys-in-fact, and all persons in active concert or participation with them, and each of them, from violating, directly or indirectly, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. II. Enter an injunction, preliminarily during the pendency of this action and permanently thereafter, restraining and enjoining Defendants, their subsidiaries, officers, directors, agents, servants, employees, and attorneys-in-fact, and all persons in active concert or participation with them, and each of them, from violating, directly or indirectly, Section 17(a) of the Securities Act. III. Order Defendants and their officers, agents, servants, employees and attorneys, disgorge all illegal gains, together with prejudgment interest. IV. Order Defendants to pay civil money penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. � 77t(d)], Section 21(d)(3) of the Exchange Act [15 U.S.C. 78u(d)(3)], and Section 42(e) of the Investment Company Act [15 U.S.C. � 80a-41]. V. Grant such other relief as this Court may deem just or appropriate. Dated: March 9, 1998 Respectfully submitted, /s/ Polly Atkinson POLLY ATKINSON JULIE K. LUTZ Securities and Exchange Commission