Investment adviser must repay $19 million from stock fraud

The Associated Press
Tuesday January 08, 2002

LOS ANGELES — An investment adviser must repay nearly $19 million he took from 400 investors and spent on himself, including paying for his honeymoon and his wife’s cosmetic surgery. 

The Securities and Exchange Commission Monday said it won a final judgment in federal court last month against Jerry Womack, a Nevada resident who did business in Los Angeles. 

According to the terms of the judgment, which was entered Dec. 17, Womack must repay $18.9 million, plus interest, and pay a civil penalty of $110,000. Womack was convicted of wire fraud and money laundering in federal court in May because of the same actions cited in the civil case. He is in custody awaiting sentencing. 

The SEC’s judgment was issued in default, because Womack and his attorney never responded to questions or other summonses in the case, according to Nick Morgan, senior trial counsel in the SEC’s Pacific regional office. 

A call to Womack’s attorney was not immediately returned. 

The SEC accused Womack of offering to invest money in the stock market using an investment strategy called the “Womack Dow Principle.” He sold the securities to investors across the country from August 1997 through June 1999. 

While he told investors he was making them money, Womack bought homes, art work, jewelry and cars. The SEC says Womack used the money on a number of personal things, including his honeymoon and cosmetic surgery for his wife. 

Womack used only about a quarter of the money actually trading securities at a loss. He spent some of the money paying investors their purported profits and principal.