The SEC complaint, released today, alleges that Charles A. Aiken, 38, of Columbus Ga., owner of Aiken Continental L.L.C. and the firm's Atlanta-based attorney Chalmer E. Detling, 35, of Marietta, Ga., deliberately omitted damaging information with the 2006 offer and sale of $2.96 million of industrial development revenue bonds.

Separate complaints against Aiken and Detling were filed Dec. 29, in the U.S. District Courts for the Southern District of West Virginia and U.S. District Court for the Northern District of Georgia, respectively.

Raleigh County, West Virginia, had issued Aiken the bonds in October 2006 to help him acquire Continental Casket Inc., a casket manufacturer based in Beckley, W. Va.  Aiken had started Aiken Continental earlier in the year to acquire the casket company and serve as its owner, the SEC said.

However, Aiken and his lawyer, according to the SEC complaint, failed to inform the bond issuers that he had been indicted for felony financial fraud in late 2005 for a scheme to defraud payroll companies while  serving as a consultant for Superior Ventures LLC, a construction consulting business. Aiken had served 90 days in federal prison and 90 days of home detention in Georgia following the close of that transaction.

The SEC says Aiken concealed the fact that he was in the process of negotiating a plea agreement with his lawyer Detling just before the bonds were issued in October 2006.

The SEC claims that Aiken's six-month absence hurt operations of the casket company and the Raleigh County bonds are now in default, with the entire principal amount and accrued interest due.

Aiken also failed to disclose information about a $200,000 loan to Aiken and Aiken Continental from a company partially owned by the firm's lawyer, Detling, to close the deal. This loan required a $100,000 interest payment, and gave the lender a 20 percent equity interest in Aiken Continental if the loan plus interest was not fully repaid within six months.

The SEC's complaint seeks permanent injunctions against Aiken and for him to forfeit any illegal financial gains, prejudgment interest, and civil money penalties.

In its sister complaint the SEC alleges that Detling failed to disclose that Aiken had been indicted for financial fraud and that he was negotiating a plea agreement for Aiken just before the bonds were issued in October 2006.

The SEC also alleges that Detling signed a company letter that claimed that no legal proceedings were pending against Aiken or Aiken Continental.

Without admitting or denying the SEC complaint, Detling agreed to the entry of a final judgment and consented to an administrative order suspending him from appearing or practicing before the SEC as an attorney, with the right to reapply after five years. Detling's SEC's settlement is subject to court approval.

Detling also agreed to pay back $10,000 in illegally gained profits, $3,052 in prejudgment interest, and a $25,000 civil penalty. All monies will be distributed on a pro rata basis to Raleigh County bondholders.

—Jim McConville