Prime Bank Scheme Rakes In Millions, Court Orders HUGE Payout!

U.S. Securities and Exchange Commission Litigation Release No. 26409, dated September 23, 2025.

The SEC concluded a long-running case against James R. Harrold and several entities he controlled. They were accused of running a prime bank scheme, raising at least $2 million from investors. A final judgment ordered them to pay over $3.7 million in disgorgement and interest, though most of this amount had already been collected through receivership and a parallel criminal case.

In Plain English

Imagine someone promised to invest your money in a super-secret, high-paying deal that only a few people knew about. They took money from many people, but instead of investing it, they used it to pay other people or for themselves. The government stepped in, stopped the secret deals, and ordered the person to pay back all the money they took, plus some extra for the trouble. Luckily, a lot of the money was already recovered from the person's assets and a separate criminal case, so only a small amount was still owed.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Promise of Exclusive High Returns James R. Harrold and entities he controlled, such as Franklin Management and Consulting, LLC, began soliciting investors. They presented a fraudulent 'prime bank' scheme, promising access to exclusive, high-yield investment opportunities that were supposedly unavailable to the general public.
2. Raising Funds Nationwide Through these representations, Harrold and his associated entities successfully raised at least $2 million from investors across the United States. The funds were collected under the guise of these secret, lucrative investment programs.
3. Misappropriation of Investor Funds Instead of investing the funds as promised, Harrold and the entity defendants allegedly used the money for their own benefit or to pay other investors, characteristic of a prime bank or Ponzi-like scheme. The SEC's complaint detailed these actions as violations of securities laws.
4. SEC Intervention and Initial Relief On September 7, 2001, the SEC filed a complaint on an emergency basis. Shortly thereafter, on September 14, 2001, the Court entered a bifurcated judgment, permanently enjoining Harrold and the entity defendants from violating securities laws and ordering the appointment of a Receiver.
5. Receiver Appointed to Collect Assets The Court-appointed Receiver was tasked with collecting and distributing the defendants' assets. This role was crucial in attempting to recover funds for the defrauded investors and manage the remaining assets of the fraudulent operation.
6. Parallel Criminal Proceedings In addition to the SEC's civil action, a parallel criminal proceeding was initiated against James Harrold. This indicates that the conduct was severe enough to warrant both civil enforcement and criminal prosecution.
7. Final Judgment and Monetary Order On September 11, 2025, the Court entered a final judgment, ordering the defendants to pay a total of $3,780,392.60. This amount comprised $3,635,126.52 in disgorgement and $145,266.08 in prejudgment interest.
8. Offsetting Collected Funds The final judgment credited amounts previously collected by the Receiver and the Department of Justice in the criminal case, totaling $3,534,749.44. This offset significantly reduced the net amount still owed by the defendants.
9. Net Liability Determined After accounting for the collected funds, the net liability remaining under the Final Judgment was $245,643.16. Any further amounts collected by the Receiver or DOJ would be credited against this remaining balance.
10. Civil Penalty Claim Dismissed The SEC voluntarily decided to forgo its claim for a civil monetary penalty in this case. Consequently, the Court dismissed the SEC's claim for relief in the form of a civil monetary penalty.

The Enforcement Action

On September 11, 2025, the U.S. District Court for the Southern District of Indiana entered a final judgment against defendants James R. Harrold; Franklin Management and Consulting, LLC; Accipter, LLC; Franklin Asset Management and Consulting, LLC; Franklin Management and Consulting, Inc.; and Concord Development Group, LLC, ordering them to pay $3,780,392.60. The SEC’s complaint, filed in September 2001, alleged a prime bank scheme that raised at least $2 million from investors. A bifurcated judgment in September 2001 permanently enjoined the defendants and ordered the appointment of a Receiver. The final judgment orders joint and several liability for disgorgement of $3,635,126.52 plus prejudgment interest of $145,266.08, offset by $3,534,749.44 collected by the Receiver and the Department of Justice in a parallel criminal proceeding, leaving a net liability of $245,643.16. The SEC voluntarily dismissed its claim for civil monetary penalties.

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