SEC v. K2 UNLIMITED

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v.
K2 UNLIMITED, INC.
211·
VENTURES, LLC,
DIANE GLATFELTER,
ROBERT C. RICE, and
ROBERT S. ANDERSON,
Defendants.
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COMPLAINT
Civil Action No.
JURY TRIAL
DEMANDED
Plaintiff Securities and Exchange Commission ("Commission") alleges the
following against defendants K2 Unlimited, Inc.
("K2"), 211 Ventures LLC ("211
Ventures "), Diane Glatfelter ("Glatfelter"), Robert
C. Rice ("Rice") and Robert S.
Anderson ("Anderson"):
SUMMARY
1. From at least 2007 through 2008 Defendants Glatfelter and Rice, through
their companies K2 and
211 Ventures, purported to offer venture capital financing to
clients by the use of fictitious instruments called bank guarantees. In addition to offering
(but failing to provide) venture capita110ans based on the use of fictitious financial
instruments, Glatfelter, Rice and
211 Ventures offered direct investments in fraudulent
and non-existent trading programs, promising high returns and guarantees against loss.
They solicited at least seven investors from Florida, Minnesota, California, Ohio, as well

as Costa Rica. Glatfelter, Rice, K2, and 211 Ventures defrauded investors of at least $1.8
million
by offering these fictitious investments.
2. In early 2009, Glatfelter associated herself with Anderson in another
investment scheme utilizing fictitious investment instruments and trading programs.
Glatfelter induced investors to purchase Anderson's non-existent securities in expectation
of earning huge commissions. Anderson created a fraudulent scheme and made
misstatements and omissions
of material fact to investors. They solicited at least thirty­
three investors from Illinois, Delaware, Georgia, Nevada, Florida, Virginia, North
Carolina, California, Texas as well
as Trinidad/Tobago, Malaysia, and Indonesia.
Together Anderson and Glatfelter caused at  least another $425,000 in investor loss.
JURISDICTION AND VENUE
3. The court has jurisdiction over this action pursuant to Sections 20( d) and
22(a)
of the Securities Act of 1933 ("Securities Act") [15 U.S.C. §§77t(d) and 77v(a)]
and Sections 21(d), 21(e), and
27 of the Securities Exchange Act of 1934 ("Exchange
Act")[15 U.S.C.
§§ 78u(d), 78u(e), and 78aa].
4. The Commission seeks a permanent injunction and disgorgement pursuant
to Section 21(d)(I) of the Exchange Act [15 U.S.c. § 78u(d)(I)] and Section 20(b) of the
Securities Act [
15 U.S.C. § 77t(b)].
5. The Commission seeks the imposition of a civil monetary penalty pursuant
to Section 21(d)(3) of the Exchange Act [15 U.S.c. § 78u(d)(3)] and Section 20(d) of the
Securities Act
[15 U.S.c. § 77t(d)].
6. Venue is  proper in this district pursuant to 28 U.S.C. § 1331, Section 22(a)
of the Securities Act [15 U.S.c. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.c.
2

§ 78aa] because certain of the transactions, acts, practices and courses of conduct
constituting the violations alleged herein occurred within this district.
7. In connection with the conduct described in this Complaint, Defendants
directly or indirectly have made and/or are making use of the mails or the means or
instruments
of transportation or communication in interstate commerce, in the District of
Massachusetts and elsewhere, in connection with the acts, practices and courses of
business alleged in the Complaint.
DEFENDANTS
8. K2 Unlimited, Inc. ("Kl") is a Massachusetts corporation organized in
August 2001,
by Glatfelter as sole shareholder, doing business in Billerica,
Massachusetts.
Kl is not registered with the Commission in any capacity and has not
registered any offering of securities under the Securities Act or any class of securities
under the Exchange Act.
9. 211 Ventures, LLC ("211 Ventures") is  a Massachusetts Limited
Liability Company organized in January 2007 by Glatfelter and Rice, doing business in
Billerica, Massachusetts. Rice, Glatfelter, and Glatfelter's sister, Susan Lorigan
("Lorigan") are its managing members. Glatfelter and Rice each own 48%
of 211
Ventures. 211 Ventures is not registered with the Commission in any capacity and has
not registered any offering of securities under the Securities Act or any class of securities
under the Exchange Act.
10.
Diane Glatfelter ("Glatfelter"), age 45, is a resident of Billerica,
Massachusetts. Glatfelter is  sole shareholder
of K2, and one of the founding managing
members
of211 Ventures. From approximately May 2006 to July 30,2010, Glatfelter
3

was the secretary, treasurer, and principal financial officer of Clean Power Technologies,
Inc., a publicly-traded company whose securities are registered with the Commission.
11. Robert C. Rice ("Rice"), age 48, is a resident of Tallahassee, Florida.
K2's website described Rice
as K2's chief operating officer at  all times relevant to this
complaint. Rice is also one
of the founding managers of 211 Ventures.
12. Robert S. Anderson ("Anderson"), age 48, is  a resident of Madison,
Indiana. Anderson is a partner ofE-Trust Clearing House, KB ("E-Trust"), an entity
based in Sweden. E-Trust has not registered any offering
of securities under the
Securities Act or any class
of securities under the Exchange Act.
FACTS
Background
13. From at  least 2006 forward, and during all relevant times as alleged in this
complaint, Glatfelter and Rice forwarded K2 clients
to programs offered by others,
charging their K2 clients fees for Glatfelter, Rice, and K2's efforts
to connect clients with
a source ofloans or investment returns based on fictitious securities and financial
instruments. None
of the programs based on fictitious securities and financial
instruments returned any loans or profit to K2's clients.
14. In January 2007, Glatfelter and Rice created 211 Ventures, through which
they offered their own loan and investment scheme to K2's clients. Although Glatfelter
and Rice operated
211 Ventures from Glatfelter's home, they used Lorigan's address on
211 Ventures documents and used her signature on most 211 Ventures documents,
including client contracts and letters
to K2. Using Lorigan's address and signature on
211 Ventures documents allowed Glatfelter and Rice to misrepresent that K2 was
4

forwarding its clients to a separate entity. Furthennore, it allowed them to collect client
fees paid both to K2 and
211 Ventures. Both Glatfelter and Rice solicited investors and
prospective investors through their own statements, and by statements made under the
auspices
of both K2 and 211 Ventures.
15. Glatfelter and Rice made representations to investors through and
concerning both K2 and
211 Ventures, but omitted from most communications that they
actually controlled
211 Ventures.
16. Beginning in at least January 2007, when clients contacted K2 to search
for financing for their businesses, Glatfelter, Rice and K2 collected K2's fee, and referred
clients to
211 Ventures. Glatfelter and Rice described 211 Ventures to clients as a so­
called "venture capital" company that could lend huge amounts to clients, which the
clients would repay.
Investment in Fictitious Securities Programs Through "Self-Liquidating" Loans
17. Through oral and written communications, Glatfelter, Rice, and 211
Ventures offered 211 Ventures clients direct investments in a fictitious trading program.
Glatfelter, Rice, and
211 Ventures represented to prospective investors that the program
involved the trading
of purported financial instruments for quick, risk-free, sky-high
returns, from a separate, secret trade program provider. Prospective investors could then
use the promised investment proceeds to repay
211 Ventures, for what they called a "self­
liquidating" loan.
18. These communications contained numerous misrepresentations including
the existence
of the instruments, the amount of profit that the investor would receive, as
5

well as the ability of the profits to repay purported loans obtained by 211 Ventures
clients.
Direct Investment Based on Investment of Fictitious Bank Guarantees.
19. Glatfelter, Rice, and 211 Ventures also represented to investors through
emailed and oral communications that they could directly invest sums ranging from
$350,000
to $1 million or more to obtain a bank guarantee with and/or through 211
Ventures. They represented that they would then provide that bank guarantee to a secret
trader who would use the guarantee
to increase the trader's line of credit, which then
could be used.in a trading scheme. They represented to prospective investors that the
trade program would provide risk-free investment returns from the profits generated from
the trading
of other fictitious instruments. None of these representations were true.
20. For example, through oral and emailed communications, Glatfelter
represented to one investor that he could receive returns
of 50% per month from an
investment of$350,000, risk-free, for a $240 million return in
12 months. She further
represented that another client was doing this type
of trade, and that she knew the trade
was "reputable" -  all
of which were false.
21. In fact, on infonnation and belief, she knew
of no other client involved in
the type
of trade she had described to the investor. Moreover, she had no reasonable
basis
to represent that such trading was "reputable."
22. Through oral and emailed communications, Glatfelter, Rice, and
211
Ventures represented to another investor (the "Trade Program Investor") that it could pay
$1 million to 211 Ventures to secure a bank guarantee from a source from whom, in fact,
211 Ventures had never been able to obtain such a bank guarantee.
6

23. Glatfelter, Rice, and 211 Ventures represented to the Trade Program
Investor that when
211 Ventures obtained the purported guarantee, a separate trading
group could use the guarantee in a trading program involving trading
of financial
instruments through so-called leveraging transactions over a 40-week period, generating
returns of$30-$40 million
per month. All of these representations were false.
24. On or about November 11, 2007, Glatfelter and Rice caused 211 Ventures
to enter into a Profit Sharing Joint Venture Agreement ("Investor Joint Venture
Agreement") with the Trade Program Investor. The agreement promised the Trade.
Program Investor that, in return for an investment
of$l million, 211 Ventures would
obtain a "'AA' rated or better Bank Guarantee from a top 25 Western European or United
States Bank" for the joint use
of 211 Ventures and the Trade Program Investor. The
Investor Joint Venture Agreement promised that
211 Ventures would obtain a credit line
secured by the bank guarantee. It further represented that 211 Ventures would use cash
proceeds from that line
of credit to engage in "investment transactions and/or the
purchase
of certain debentures and other financial assets" for a profit; that 211 Ventures
would receive a portion of the returns as compensation; and that "211 Ventures
guarantees that there will be absolutely no risk of loss of any nature deductible from the
mutually agreed upon initial deposit"
of the bank guarantee.
25. All of these representations were false. 211 Ventures, Glatfelter, and
Rice had no basis to represent that 211 Ventures could obtain a credit line based on a
bank guarantee that does not exist. Moreover, they had no basis to represent that the cash
proceeds would be used in a trading program that, in fact, did not exist. Further, although
Glatfelter, Rice, K2, and
211 Ventures told clients that 211 Ventures would be paid for its
7

efforts through a percentage of the loan proceeds or compensated through the joint
venture agreements through a percentage
of trading profits, Glatfelter and Rice omitted
from those statements that they also planned to keep and/or to spend a significant portion
of211 Ventures client money. Glatfelter and Rice also omitted
to disclose that they were
using some incoming client monies to refund complaining clients and for their own
purposes, rather than waiting for investment returns.
26. When
211 Ventures failed to perform under the terms of the Investor
Joint Venture Agreement, Glatfelter, Rice, and
211 Ventures made statements directly to
the Trade Program Investor assuring the investor that they were continuing to work with
and through banks worldwide
to obtain a credit line and use the bank guarantee in trade.
27. On November
13, 2007, the Trade Program Investor wired $1 million to a
211 Ventures bank account. Glatfelter, Rice, and 211 Ventures solicited other investors
in similar oral and written communications and ultimately obtained a total
of at least $1.8
million from those who they had solicited
to invest in either the self-liquidating loan
scheme or the direct investment scheme.
28. Glatfelter and Rice spent a large percentage
of the funds collected on
Ponzi-style refunds
to selected complaining clients and personal expenses including
groceries, football tickets, and jewelry, without providing any
of the promised investment
return
to their clients.
Misstatements to Continue the Schemes
29. In 2008 and 2009, Glatfelter, Rice, K2, and 211 Ventures sent a series of
letters to 211 Ventures investors and prospective investors purporting to be from 211
Ventures to K2, or from third-party sources of bank guarantees to 211 Ventures or K2.
8

These communications created the false impression that 211 Ventures and K2 were
separate entities that independently advanced the purported aims
of the investment
scheme.
30. Through oral and ernailed communications, Glatfelter, Rice, and
211
Ventures also made statements to 211 Ventures investors and prospective investors
repeating some
of the same assurances contained in the letters purporting to be sent by or
between
211 Ventures, K2, and the program providers.
31. The letters assured
211 Ventures investors and prospective investors that
progress was steady and loans
or returns would come soon. These purported updates
provided false reasons for the delay and explained that
211 Ventures was in the process
of monetizing its bank guarantee by increasing credit lines that would result in 211
Ventures obtaining cash that would flow to investors.
32. As late as September 2008, following more than a year
of total failure to
provide any investment returns to clients, K2 sent at least one newsletter to clients and
prospective clients, which offered "Hot Financing Programs" including "Mid-Term Notes
(MTNs) Platforms," "Stand
By Letters of Credit, Bank Guarantee, Borrow 4 Million to A
Billions
+ Fund in 30 + Days!," as well as "A Project Funding Solution That Does Not
Require a Repayment of the Loan." K2 omitted from the statements about those apparent
investments that K2,
211 Ventures, Glatfelter, and Rice had not seen any investor
actually obtain funding by use
of those or similar programs.
33. From at least January 2007 to as late as May 2010, K2 maintained a
website at http://www.k2unlimitedinc.com that touted that K2 could assist in obtaining
"Bank Guarantees/Stand
By Letters of Credit (leased)" for funding.
9

34. Glatfelter, Rice, K2, and 211 Ventures failed to conduct any due diligence
as regarding whether the bank guarantees they told investors could provide millions in
risk-free returns even existed or could be invested, and about various details
of the
investment schemes. Glatfelter, Rice, K2, and
211 Ventures had no basis for their
multiple misstatements
to investors about their due diligence efforts and about each of
these topics.
35. In February 2008, Glatfelter was warned
by her attorneys that, according
to the FBI's website, bank debenture programs and other programs akin to the 211
Ventures trading programs were non-existent and fraudulent. Yet, Glatfelter, Rice, K2,
and
211 Ventures continued their business with no apparent changes, including sending
letters regarding their investment scheme, maintaining K2's website, and sending K2's
newsletter.
36. In January 2009, Glatfelter's lawyer reminded her
of the advice again, and
advised her
to tum herself in to law enforcement. She instead associated herself with
Anderson, the purveyor
of other fictitious trading schemes, and continued to sell
investment in non-existent securities, causing further losses
to investors.
37. Glatfelter and Rice have continued into 2011 to contact various entities
that promise to secure loan funding using instruments such
as stand-by letters of credit,
bank guarantees, or similar instruments.
38. Throughout their years
of offering non-existent investment to others,
Glatfelter and Rice never invested a single dime
of their own money.
10

Glatfelter and Anderson Defrauded Investors through E-Trust.
39. Beginning in early 2009, Glatfelter began to work with Anderson, through
his entity,
E-Trust. Anderson described E-Trust to investors as a trust established in
Sweden that employed several traders, invested in humanitarian efforts, and offered
trading programs based on gold or precious metals, medium term notes, or other assets.
Such trading programs do not exist. Therefore,
E-Trust did not participate in the
activities represented. Anderson obtained access to a bank account for E-Trust investor
deposits and instructed Glatfelter how
to handle the wire transfer deposits to the bank
account.
40. Glatfelter told prospective
211 Ventures investors that she was now
associated with a secret source, referring to E-Trust, that could finally successfully use
211 Ventures' bank guarantees in its trading programs that would return investment for
211 Ventures' benefit. She told other investors that she would use the commissions she
earned to refund their payments.
41. Anderson provided Glatfelter with all investor contracts for the trading
programs, which among other things informed investors that E-Trust would offer a
"direct managed buy/sell program" with an investor's cash or other asset, for which both
E-Trust and the investors would share in the profits. Glatfelter emailed Anderson
contracts filled out
by investors, which he ernailed back to her bearing his signature on E­
Trust's behalf.
42. Anderson maintained an E-Trust website at all relevant times, at
http://www.e-tch.com. The website described E-Trust
as a "boutique asset management
and investment firm [offering] High Yield Investments" and "Private Placement
11

Investments," and claimed, among other things: "we obtain funding for investments and
projects globally through monetizing
of instruments (BG's, MTN's, SBLC's, CD's, and
SKR's). We also offer investments for clients in commodities, precious metals, and gems
etc." The website also touted E-Trust's "Trade Programs, High Yield Investments,
Commodities (for trade), [and] Foreign Currency Exchange (buy/sell)." None
of these
statements were true.
43. Glatfelter offered E-Trust's so-called "40-week" program to investors.
Glatfelter represented
to investors they could provide an asset -  such as a bank guarantee,
a CD, a "safe-keeping receipt" for an account held at a bank, or a precious stone -  that E­
Trust would add to its purported line
of credit for cash used for trading. Glatfelter told
investors that E-Trust would pay the investor returns on E-Trust trading activity
attributable
to use of the asset. Anderson also described the 40-week investments to
investors through oral communications.
44. Glatfelter told prospective "40-week" investors that investors could expect
high returns, telling some they could expect returns
of as much as 1 00 percent per month,
and others that they could expect profits
of"225% minimum in returns guaranteed."
45. Glatfelter also offered investors E-Trust's cash "gold leveraging" program.
Through oral representations and emailed communications, Glatfelter represented to
investors that E-Trust offered a trading program with minimum investment
of $1 00,000
cash, with returns of75%-100% per month with no risk ofloss. Glatfelter described that
"the trades are done either with the Forex market or via the buy/sell
of medium term
notes." Anderson also described the investment program to investors through oral
communications. The trading programs did not exist.
12

46. The E-Trust website provided a section reserved for investor access for
those investing in the "gold leveraging" program. Each gold-leveraging investor was
provided by Anderson, through Glatfelter, with a password to the website, which
investors could
use to access what purported to be their account balance. The accounts
reflected the returns and running balance following each leveraging trade, and indicated
falsely to investors that the program was proceeding,
by reflecting phony account
balances.
47. In at least one other document Glatfelter prepared and provided to
prospective investors, Glatfelter described that investors could invest the $100,000 cash
with E-Trust, which E-Trust would combine with money from other clients, use to obtain
a bank guarantee, and enter cash generated from the bank guarantee into a "fed buy/sell"
program, for which the investor would receive weekly returns.
48. She later advised prospective investors through oral representations and
emailed communications that Anderson would use the minimum $100,000 cash
investment to obtain gold to buy and sell in leveraging transactions, which again would
return approximately 75-140% each month, with no risk ofloss.
49. On April 15, 2009, Investor A entered into the Memorandum
of
Understanding and Profit/Trust Management Agreement with E-Trust, signed by
Anderson, and facilitated by Glatfelter. This investor sent $100,000 on May 7,2009, to
the bank account as instructed
by Glatfelter. Investor A signed an Addendum to
Memorandum of Understanding and Profit/Trust Management Agreement on June 1,
2009, signed by Anderson and facilitated by Glatfelter, agreeing to two leveraging
transactions.
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50. On April 15, 2009, Investor B entered into the Memorandum of
Understanding and Profit/Trust Management Agreement with E-Trust, signed by
Anderson, and facilitated by Glatfelter. Investor B sent a total of $325,000 in two
installments on April 14 and
15,2009, to the bank account as instructed by Glatfelter.
On June
1,2009, Investor B entered into the Addendum to Memorandum of
Understanding and Profit/Trust Management Agreement with E-Trust, signed by
Anderson and facilitated by Glatfelter, agreeing to six leveraging transactions.
51. Glatfelter provided investors with emailed explanations and updates on the
progress
of the leveraging and prospective returns that were untrue. In one example,
Glatfelter projected that an initial investment
of $325,000 with E-Trust would, after ten
leveraging transactions over seven months, result in total earnings
of $87,551,552.
Glatfelter also drafted spreadsheets she called a "Detailed Revenue Plan" projecting
"optimistic" or "pessimistic" gains; for an initial investment
of $1 00,000 invested
through ten leveraging transactions, Glatfelter projected "pessimistic" earnings
of $1 0.6
million.
52. Glatfelter cited her position with a publicly-traded company to provide
false assurances that her efforts on
behalf of K2 and E-Trust were legitimate, telling one
investor in April 2009, for example:
"If! was a scam artist or anything other than
upstanding, I would not
be allowed to hold the CFO position of Clean Power
Technologies, Inc., which is a publicly traded company in the US and in Frankfurt.
My
background is checked constantly by the SEC."
53. During 2009 and continuing through at least January 2010, Glatfelter sent
investors e-mailed updates on the progress
of their investment that were false. By Fall
14

2009, Glatfelter began to tell investors that the investment would not return any money at
all, because the gold that supposedly backed the investment was seized due to unrest in
Guinea where the gold mine was supposedly located. Glatfelter told one investor: " ...
the gold transaction that you were involved in stopped due
to the gold being seized, and
all the turbulence over in Guinea
.... Unfortunately, everything was lost."
54. For each purported E-Trust investment, Glatfelter explained all offerings
to investors. She arranged client meetings by telephone with Anderson as well.
Glatfelter handled client contracts
as given to her by Anderson for the 40-week and for
the gold-leveraging program, and facilitated investor wire transfers
to the bank account to
which E-Trust had access. Glatfelter undertook each
of these activities in expectation of
receiving a commission as compensation for her work.
55. Anderson ultimately withdrew more than $252,000 from the bank account
that held investors' money.
56. Anderson failed
to provide any investment return to any gold-leveraging
investor, yet continued to make statements on the E-Trust website reflecting phony
investment gains.
FIRST CLAIM FOR RELIEF
Unregistered Offer and Sale
of Securities
Violations
of Sections Sea) and S(c) of the Securities Act
(Against 211 Ventures, Glatfelter, and Rice)
57. The Commission realleges and incorporates by reference paragraphs 1
through
56 above. By engaging in the conduct described above, Defendants 211
Ventures, Glatfelter, and Rice directly or indirectly, made use of means of instruments of
transportation or communications in interstate commerce or of the mails, to offer to sell
15

or to sell securities, or to carry or cause such securities to be carried through the mails or
in interstate commerce for the purpose
of sale or for delivery after sale.
58. No registration statement has been filed with the Commission or has been
in effect with respect to the offerings alleged herein.
59. By engaging in the conduct described above, Defendants
211 Ventures,
Glatfelter, and Rice violated, and unless restrained and enjoined will continue
to violate,
Sections 5(a) and 5(c)
of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)].
SECOND CLAIM FOR RELIEF
Fraud
in the Offer or Sale of Securities
Violations
of Section 17(a) of the Securities Act
(Against K2, 211 Ventures, Glatfelter and Rice)
60. The Commission realleges and incorporates by reference paragraphs 1
through 56 above.
61. By engaging in the conduct described above, Defendants K2,
211
Ventures, Glatfelter, and Rice directly or indirectly, in the offer or sale of securities by
the use of means or instruments of transportation or communication in interstate
commerce or
by use of the mails: a) with scienter, employed devices, schemes, or
artifices to defraud; b) obtained money or property by means
of untrue statements of a
material fact or
by omitting to state a material fact necessary in order to make the
statements made, in light
of the circumstances under which they were made, not
misleading; and/or
c) engaged in transactions, practices or courses of business which
operated or would operate as a fraud or deceit upon the purchaser.
62. The conduct
ofK2, 211 Ventures, Glatfelter, and Rice involved fraud,
deceit, manipulation, or deliberate or reckless disregard
of regulatory requirements and
directly or indirectly resulted in substantial losses to other persons.
16

63. By engaging in the conduct described above, Defendants K2, 211
Ventures, Glatfelter, and Rice violated, and unless restrained and enjoined will continue
to violate, Section 17(a)
of the Securities Act [15 U.S.C. § 77q(a)].
THIRD CLAIM FOR RELIEF
Fraud in Connection with the Purchase or Sale of Securities
Violations of Section 10(b) of the Exchange Act and Rule 10b-S Thereunder
(Against K2, 211 Ventures, Glatfelter and Rice)
64. The Commission realleges and incorporates by reference paragraphs 1
through
56 above.
65. By engaging in the conduct described above, Defendants K2,
211
Ventures, Glatfelter, and Rice directly or indirectly, in connection with the purchase or
sale
of a security, by the use of means or instrumentalities of interstate commerce, of the
mails, or
of the facilities of a national securities exchange, with scienter: a) employed
devices, scheme or artifices to defraud; b) made untrue statements
of a material fact, or
omitted to state a material fact necessary in order to make the statements made, in light
of
the circumstances under which they were made, not misleading; and/or c) engaged in
acts, practices or courses
of business which operated or would operate as a fraud or deceit
upon other persons.
66. The conduct
of K2, 211 Ventures, Glatfelter, and Rice involved fraud,
deceit, manipulation, or deliberate or reckless disregard
of regulatory requirements and
directly or indirectly resulted in substantial losses
to other persons.
67. By engaging in the conduct described above, Defendants K2,
211
Ventures, Glatfelter, and Rice violated, and unless restrained and enjoined will continue
to violate, Section 10(b) of the Exchange Act [15 U.S.c. § 78j(b)] and Rule 10b-5 [17
C.F.R. § 240.l0b-5] thereunder.
17

FOURTH CLAIM FOR RELIEF
Aiding and Abetting K2's and 211 Ventures' Securities Fraud
Violations
of Section lO(b) ofthe Exchange Act and Rule lOb-S Thereunder
(Glatfelter and Rice)
68. The Commission repeats and incorporates by reference the allegations in
paragraphs 1 through
56 above.
69. By reason
of the foregoing, K2 and 211 Ventures, directly or indirectly,
acting knowing or recklessly, in connection with the purchase or sale
of securities, by the
use
of means and instrumentalities of interstate commerce, or of the mails, or a facility of
a national securities exchange: (a) employed or are employing devices, schemes or
artifices
to defraud; (b) made or are making untrue statements of material fact or has
omitted or is omitting
to state a material fact necessary to make the statements made, in
the light
of the circumstances under which they were made, not misleading; or ( c)
engaged or are engaging in acts, practices or courses of business which operate as a fraud
or deceit upon certain persons.
70. Glatfelter and Rice knew or recklessly disregarded that
K2's and 211
Ventures' conduct was improper and knowingly rendered to K2 and 211 Ventures
substantial assistance in this conduct.
71. The conduct
of Glatfelter and Rice involved fraud, deceit, manipulation,
or deliberate or reckless disregard
of regulatory requirements and directly or indirectly
resulted in substantial losses
to other persons.
72. As a result, Glatfelter and Rice aided and abetted, and, unless enjoined,
will continue to aid and abet, K2 and
211 Ventures' violations of Section 1 O(b) of the
Exchange Act
[15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder.
18

FIFTH CLAIM FOR RELIEF
Failure to Register as a Broker Dealer
Violation of Section 15(a) of the Exchange Act
(Against K2, Glatfelter, and Rice)
73. The Commission realleges and incorporates
by reference paragraphs 1
through 56 above.
74. Defendants K2, Glatfelter, and Rice, by engaging in the conduct described
above, made
use of the mails or means or instrumentalities of interstate commerce to
effect transactions in, or to induce or attempt to induce the purchase
or sale of securities,
without being registered as a broker or dealer in accordance with Section 15(b)
of the
Exchange Act [15 U.S.C. § 780(a)].
SIXTH CLAIM FOR RELIEF
Unregistered Offer and Sale
of Securities
Violations
of Sections 5(a) and 5(c) of the Securities Act
(Against Anderson)
75. The Commission realleges and incorporates
by reference paragraphs 1
through 56 above. By engaging in the conduct described above, Defendant Anderson,
directly or indirectly, made use
of means of instruments of transportation or
communications in interstate commerce or of the mails, to offer to sell or to sell
securities, or to carry or cause such securities to be carried through the mails or in
interstate commerce for the purpose
of sale or for delivery after sale.
76. No registration statement has been filed with the Commission or has been
in effect with respect to the offerings alleged herein.
77.
By engaging in the conduct described above, Defendants Anderson
violated, and unless restrained and enjoined will continue to violate, Sections 5(a) and
5(c)
of the Securities Act [15 U.S.c. §§ 77e(a) and 77e(c)].
19

SEVENTH CLAIM FOR RELIEF
Fraud in the Offer or Sale
of Securities
Violations
of Section 17(a) ofthe Securities Act
(Against Glatfelter and Anderson)
78. The Commission realleges and incorporates by reference paragraphs 1
through
56 above.
79. By engaging in the conduct described above, Defendants Glatfelter and
Anderson directly or indirectly, in the offer or sale
of securities by the use of means or
instruments
of transportation or communication in interstate commerce or by use of the
mails:
a) with scienter, employed devices, schemes, or artifices to defraud; b) obtained
money or property by means
of untrue statements of a material fact or by omitting to state
a material fact necessary in order
to make the statements made, in light of the
circumstances under which they were made, not misleading; and/or
c) engaged in
transactions, practices or courses
of business which operated or would operate as a fraud
or deceit upon the purchaser.
80. The conduct
of Glatfelter and Anderson involved fraud, deceit,
manipulation, or deliberate or reckless disregard
of regulatory requirements and directly
or indirectly resulted in substantial losses
to other persons.
81. By engaging in the conduct described above, Defendants Glatfelter and
Anderson violated, and unless restrained and enjoined will continue
to violate, Section
17(a)
of the Securities Act [15 U.S.C. § 77q(a)].
20

EIGHTH CLAIM FOR RELIEF
Fraud in Connection with the Purchase or Sale
of Securities
Violations
of Section lOeb) ofthe Exchange Act and Rule lOb-5 Thereunder
(Against Glatfelter and Anderson)
82. The Commission realleges and incorporates
by reference paragraphs 1
through 56 above.
83.
By engaging in the conduct described above, Defendants Glatfelter and
Anderson directly or indirectly, in connection with the purchase or sale
of a security, by
the use of means or instrumentalities of interstate commerce, of the mails, or of the
facilities
of a national securities exchange, with scienter: a) employed devices, scheme or
artifices to defraud; b) made untrue statements
of a material fact, or omitted to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; and/or c) engaged in acts,
practices or courses
of business which operated or would operate as a fraud or deceit
upon other persons.
84.
By engaging in the conduct described above, Defendants Glatfelter and
Anderson violated, and unless restrained an enjoined will continue to violate, 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.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court:
A. Find that each Defendant committed the violations charged and alleged
herein;
B. Enter a permanent injunction restraining each Defendant and their officers,
agents, servants, employees and attorneys, and those in active concert or participation
21

with them, who receive actual notice of the order by personal service or otherwise, and
each
of them, from further violations of the relevant securities laws identified above;
C. Order the Defendants to disgorge all ill-gotten gains from the illegal
conduct alleged herein, together with prejudgment interest thereon;
D. Order the Defendants to
pay civil penalties pursuant to Section 20(d) of
the Securities Act [15 U.S.C. §77t(d)] and Section 21(d) of the Exchange Act [15 U.S.c.
§ 78l!(d)];
E. Order that defendant Glatfelter
be permanently barred from serving as an
officer
or director of any public company;
F. Retain jurisdiction
of this action to implement and carry out the terms of
all orders and decrees that may be entered, or to entertain any suitable application or
motion for additional relief within the jurisdiction of this Court; and
G. Award such other and further
relief as the Court deems just and proper.
Respectfully submitted,
SECURITIES AND EXCHANGE
COMISSION,
By its attorney,
Deena R. Bernstein (BBO #558721)
Senior Trial Counsel
Securities
& Exchange Commission
33 Arch Street,
23rd Floor
Boston, Massachusetts 02110
(617) 573-8813 (Bernstein)
(617) 573-4590 (Facsimile)
22

UNITED STATES DISTRICT COURT 
DISTRICT OF MASSACHUSETTS 

SECURITIES AND EXCHANGE COMMISSION, 

Plaintiff, 

v. 

K2 UNLIMITED, INC. 
211· VENTURES, LLC, 
DIANE GLATFELTER, 
ROBERT C. RICE, and 
ROBERT S. ANDERSON, 

Defendants. 

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------------------------------------~) 
COMPLAINT 

Civil Action No. 

JURY TRIAL 
DEMANDED 

Plaintiff Securities and Exchange Commission ("Commission") alleges the 

following against defendants K2 Unlimited, Inc. ("K2"), 211 Ventures LLC ("211 

Ventures "), Diane Glatfelter ("Glatfelter"), Robert C. Rice ("Rice") and Robert S. 

Anderson ("Anderson"): 

SUMMARY 

1. From at least 2007 through 2008 Defendants Glatfelter and Rice, through 

their companies K2 and 211 Ventures, purported to offer venture capital financing to 

clients by the use of fictitious instruments called bank guarantees. In addition to offering 

(but failing to provide) venture capita110ans based on the use of fictitious financial 

instruments, Glatfelter, Rice and 211 Ventures offered direct investments in fraudulent 

and non-existent trading programs, promising high returns and guarantees against loss. 

They solicited at least seven investors from Florida, Minnesota, California, Ohio, as well 

Case 1:11-cv-11649-MLW Document 1 Filed 09/19/11 Page 1 of 22 



    

as Costa Rica. Glatfelter, Rice, K2, and 211 Ventures defrauded investors of at least $1.8 

million by offering these fictitious investments. 

2. In early 2009, Glatfelter associated herself with Anderson in another 

investment scheme utilizing fictitious investment instruments and trading programs. 

Glatfelter induced investors to purchase Anderson's non-existent securities in expectation 

of earning huge commissions. Anderson created a fraudulent scheme and made 

misstatements and omissions of material fact to investors. They solicited at least thirty­

three investors from Illinois, Delaware, Georgia, Nevada, Florida, Virginia, North 

Carolina, California, Texas as well as Trinidad/Tobago, Malaysia, and Indonesia. 

Together Anderson and Glatfelter caused at least another $425,000 in investor loss. 

JURISDICTION AND VENUE 

3. The court has jurisdiction over this action pursuant to Sections 20( d) and 

22(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. §§77t(d) and 77v(a)] 

and Sections 21(d), 21(e), and 27 of the Securities Exchange Act of 1934 ("Exchange 

Act")[15 U.S.C. §§ 78u(d), 78u(e), and 78aa]. 

4. The Commission seeks a permanent injunction and disgorgement pursuant 

to Section 21(d)(I) of the Exchange Act [15 U.S.c. § 78u(d)(I)] and Section 20(b) of the 

Securities Act [ 15 U.S.C. § 77t(b)]. 

5. The Commission seeks the imposition of a civil monetary penalty pursuant 

to Section 21(d)(3) of the Exchange Act [15 U.S.c. § 78u(d)(3)] and Section 20(d) of the 

Securities Act [15 U.S.c. § 77t(d)]. 

6. Venue is proper in this district pursuant to 28 U.S.C. § 1331, Section 22(a) 

of the Securities Act [15 U.S.c. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.c. 

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§ 78aa] because certain of the transactions, acts, practices and courses of conduct 

constituting the violations alleged herein occurred within this district. 

7. In connection with the conduct described in this Complaint, Defendants 

directly or indirectly have made and/or are making use of the mails or the means or 

instruments of transportation or communication in interstate commerce, in the District of 

Massachusetts and elsewhere, in connection with the acts, practices and courses of 

business alleged in the Complaint. 

DEFENDANTS 

8. K2 Unlimited, Inc. ("Kl") is a Massachusetts corporation organized in 

August 2001, by Glatfelter as sole shareholder, doing business in Billerica, 

Massachusetts. Kl is not registered with the Commission in any capacity and has not 

registered any offering of securities under the Securities Act or any class of securities 

under the Exchange Act. 

9. 211 Ventures, LLC ("211 Ventures") is a Massachusetts Limited 

Liability Company organized in January 2007 by Glatfelter and Rice, doing business in 

Billerica, Massachusetts. Rice, Glatfelter, and Glatfelter's sister, Susan Lorigan 

("Lorigan") are its managing members. Glatfelter and Rice each own 48% of 211 

Ventures. 211 Ventures is not registered with the Commission in any capacity and has 

not registered any offering of securities under the Securities Act or any class of securities 

under the Exchange Act. 

10. Diane Glatfelter ("Glatfelter"), age 45, is a resident of Billerica, 

Massachusetts. Glatfelter is sole shareholder of K2, and one of the founding managing 

members of211 Ventures. From approximately May 2006 to July 30,2010, Glatfelter 

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was the secretary, treasurer, and principal financial officer of Clean Power Technologies, 

Inc., a publicly-traded company whose securities are registered with the Commission. 

11. Robert C. Rice ("Rice"), age 48, is a resident of Tallahassee, Florida. 

K2's website described Rice as K2's chief operating officer at all times relevant to this 

complaint. Rice is also one of the founding managers of 211 Ventures. 

12. Robert S. Anderson ("Anderson"), age 48, is a resident of Madison, 

Indiana. Anderson is a partner ofE-Trust Clearing House, KB ("E-Trust"), an entity 

based in Sweden. E-Trust has not registered any offering of securities under the 

Securities Act or any class of securities under the Exchange Act. 

FACTS 

Background 

13. From at least 2006 forward, and during all relevant times as alleged in this 

complaint, Glatfelter and Rice forwarded K2 clients to programs offered by others, 

charging their K2 clients fees for Glatfelter, Rice, and K2's efforts to connect clients with 

a source ofloans or investment returns based on fictitious securities and financial 

instruments. None of the programs based on fictitious securities and financial 

instruments returned any loans or profit to K2's clients. 

14. In January 2007, Glatfelter and Rice created 211 Ventures, through which 

they offered their own loan and investment scheme to K2's clients. Although Glatfelter 

and Rice operated 211 Ventures from Glatfelter's home, they used Lorigan's address on 

211 Ventures documents and used her signature on most 211 Ventures documents, 

including client contracts and letters to K2. Using Lorigan's address and signature on 

211 Ventures documents allowed Glatfelter and Rice to misrepresent that K2 was 

4 

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forwarding its clients to a separate entity. Furthennore, it allowed them to collect client 

fees paid both to K2 and 211 Ventures. Both Glatfelter and Rice solicited investors and 

prospective investors through their own statements, and by statements made under the 

auspices of both K2 and 211 Ventures. 

15. Glatfelter and Rice made representations to investors through and 

concerning both K2 and 211 Ventures, but omitted from most communications that they 

actually controlled 211 Ventures. 

16. Beginning in at least January 2007, when clients contacted K2 to search 

for financing for their businesses, Glatfelter, Rice and K2 collected K2's fee, and referred 

clients to 211 Ventures. Glatfelter and Rice described 211 Ventures to clients as a so­

called "venture capital" company that could lend huge amounts to clients, which the 

clients would repay. 

Investment in Fictitious Securities Programs Through "Self-Liquidating" Loans 

17. Through oral and written communications, Glatfelter, Rice, and 211 

Ventures offered 211 Ventures clients direct investments in a fictitious trading program. 

Glatfelter, Rice, and 211 Ventures represented to prospective investors that the program 

involved the trading of purported financial instruments for quick, risk-free, sky-high 

returns, from a separate, secret trade program provider. Prospective investors could then 

use the promised investment proceeds to repay 211 Ventures, for what they called a "self­

liquidating" loan. 

18. These communications contained numerous misrepresentations including 

the existence of the instruments, the amount of profit that the investor would receive, as 

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well as the ability of the profits to repay purported loans obtained by 211 Ventures 

clients. 

Direct Investment Based on Investment of Fictitious Bank Guarantees. 

19. Glatfelter, Rice, and 211 Ventures also represented to investors through 

emailed and oral communications that they could directly invest sums ranging from 

$350,000 to $1 million or more to obtain a bank guarantee with and/or through 211 

Ventures. They represented that they would then provide that bank guarantee to a secret 

trader who would use the guarantee to increase the trader's line of credit, which then 

could be used.in a trading scheme. They represented to prospective investors that the 

trade program would provide risk-free investment returns from the profits generated from 

the trading of other fictitious instruments. None of these representations were true. 

20. For example, through oral and emailed communications, Glatfelter 

represented to one investor that he could receive returns of 50% per month from an 

investment of$350,000, risk-free, for a $240 million return in 12 months. She further 

represented that another client was doing this type of trade, and that she knew the trade 

was "reputable" - all of which were false. 

21. In fact, on infonnation and belief, she knew of no other client involved in 

the type of trade she had described to the investor. Moreover, she had no reasonable 

basis to represent that such trading was "reputable." 

22. Through oral and emailed communications, Glatfelter, Rice, and 211 

Ventures represented to another investor (the "Trade Program Investor") that it could pay 

$1 million to 211 Ventures to secure a bank guarantee from a source from whom, in fact, 

211 Ventures had never been able to obtain such a bank guarantee. 

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23. Glatfelter, Rice, and 211 Ventures represented to the Trade Program 

Investor that when 211 Ventures obtained the purported guarantee, a separate trading 

group could use the guarantee in a trading program involving trading of financial 

instruments through so-called leveraging transactions over a 40-week period, generating 

returns of$30-$40 million per month. All of these representations were false. 

24. On or about November 11, 2007, Glatfelter and Rice caused 211 Ventures 

to enter into a Profit Sharing Joint Venture Agreement ("Investor Joint Venture 

Agreement") with the Trade Program Investor. The agreement promised the Trade. 

Program Investor that, in return for an investment of$l million, 211 Ventures would 

obtain a "'AA' rated or better Bank Guarantee from a top 25 Western European or United 

States Bank" for the joint use of 211 Ventures and the Trade Program Investor. The 

Investor Joint Venture Agreement promised that 211 Ventures would obtain a credit line 

secured by the bank guarantee. It further represented that 211 Ventures would use cash 

proceeds from that line of credit to engage in "investment transactions and/or the 

purchase of certain debentures and other financial assets" for a profit; that 211 Ventures 

would receive a portion of the returns as compensation; and that "211 Ventures 

guarantees that there will be absolutely no risk of loss of any nature deductible from the 

mutually agreed upon initial deposit" of the bank guarantee. 

25. All of these representations were false. 211 Ventures, Glatfelter, and 

Rice had no basis to represent that 211 Ventures could obtain a credit line based on a 

bank guarantee that does not exist. Moreover, they had no basis to represent that the cash 

proceeds would be used in a trading program that, in fact, did not exist. Further, although 

Glatfelter, Rice, K2, and 211 Ventures told clients that 211 Ventures would be paid for its 

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efforts through a percentage of the loan proceeds or compensated through the joint 

venture agreements through a percentage of trading profits, Glatfelter and Rice omitted 

from those statements that they also planned to keep and/or to spend a significant portion 

of211 Ventures client money. Glatfelter and Rice also omitted to disclose that they were 

using some incoming client monies to refund complaining clients and for their own 

purposes, rather than waiting for investment returns. 

26. When 211 Ventures failed to perform under the terms of the Investor 

Joint Venture Agreement, Glatfelter, Rice, and 211 Ventures made statements directly to 

the Trade Program Investor assuring the investor that they were continuing to work with 

and through banks worldwide to obtain a credit line and use the bank guarantee in trade. 

27. On November 13, 2007, the Trade Program Investor wired $1 million to a 

211 Ventures bank account. Glatfelter, Rice, and 211 Ventures solicited other investors 

in similar oral and written communications and ultimately obtained a total of at least $1.8 

million from those who they had solicited to invest in either the self-liquidating loan 

scheme or the direct investment scheme. 

28. Glatfelter and Rice spent a large percentage of the funds collected on 

Ponzi-style refunds to selected complaining clients and personal expenses including 

groceries, football tickets, and jewelry, without providing any of the promised investment 

return to their clients. 

Misstatements to Continue the Schemes 

29. In 2008 and 2009, Glatfelter, Rice, K2, and 211 Ventures sent a series of 

letters to 211 Ventures investors and prospective investors purporting to be from 211 

Ventures to K2, or from third-party sources of bank guarantees to 211 Ventures or K2. 

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These communications created the false impression that 211 Ventures and K2 were 

separate entities that independently advanced the purported aims of the investment 

scheme. 

30. Through oral and ernailed communications, Glatfelter, Rice, and 211 

Ventures also made statements to 211 Ventures investors and prospective investors 

repeating some of the same assurances contained in the letters purporting to be sent by or 

between 211 Ventures, K2, and the program providers. 

31. The letters assured 211 Ventures investors and prospective investors that 

progress was steady and loans or returns would come soon. These purported updates 

provided false reasons for the delay and explained that 211 Ventures was in the process 

of monetizing its bank guarantee by increasing credit lines that would result in 211 

Ventures obtaining cash that would flow to investors. 

32. As late as September 2008, following more than a year of total failure to 

provide any investment returns to clients, K2 sent at least one newsletter to clients and 

prospective clients, which offered "Hot Financing Programs" including "Mid-Term Notes 

(MTNs) Platforms," "Stand By Letters of Credit, Bank Guarantee, Borrow 4 Million to A 

Billions + Fund in 30 + Days!," as well as "A Project Funding Solution That Does Not 

Require a Repayment of the Loan." K2 omitted from the statements about those apparent 

investments that K2, 211 Ventures, Glatfelter, and Rice had not seen any investor 

actually obtain funding by use of those or similar programs. 

33. From at least January 2007 to as late as May 2010, K2 maintained a 

website at http://www.k2unlimitedinc.com that touted that K2 could assist in obtaining 

"Bank Guarantees/Stand By Letters of Credit (leased)" for funding. 

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34. Glatfelter, Rice, K2, and 211 Ventures failed to conduct any due diligence 

as regarding whether the bank guarantees they told investors could provide millions in 

risk-free returns even existed or could be invested, and about various details of the 

investment schemes. Glatfelter, Rice, K2, and 211 Ventures had no basis for their 

multiple misstatements to investors about their due diligence efforts and about each of 

these topics. 

35. In February 2008, Glatfelter was warned by her attorneys that, according 

to the FBI's website, bank debenture programs and other programs akin to the 211 

Ventures trading programs were non-existent and fraudulent. Yet, Glatfelter, Rice, K2, 

and 211 Ventures continued their business with no apparent changes, including sending 

letters regarding their investment scheme, maintaining K2's website, and sending K2's 

newsletter. 

36. In January 2009, Glatfelter's lawyer reminded her of the advice again, and 

advised her to tum herself in to law enforcement. She instead associated herself with 

Anderson, the purveyor of other fictitious trading schemes, and continued to sell 

investment in non-existent securities, causing further losses to investors. 

37. Glatfelter and Rice have continued into 2011 to contact various entities 

that promise to secure loan funding using instruments such as stand-by letters of credit, 

bank guarantees, or similar instruments. 

38. Throughout their years of offering non-existent investment to others, 

Glatfelter and Rice never invested a single dime of their own money. 

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Glatfelter and Anderson Defrauded Investors through E-Trust. 

39. Beginning in early 2009, Glatfelter began to work with Anderson, through 

his entity, E-Trust. Anderson described E-Trust to investors as a trust established in 

Sweden that employed several traders, invested in humanitarian efforts, and offered 

trading programs based on gold or precious metals, medium term notes, or other assets. 

Such trading programs do not exist. Therefore, E-Trust did not participate in the 

activities represented. Anderson obtained access to a bank account for E-Trust investor 

deposits and instructed Glatfelter how to handle the wire transfer deposits to the bank 

account. 

40. Glatfelter told prospective 211 Ventures investors that she was now 

associated with a secret source, referring to E-Trust, that could finally successfully use 

211 Ventures' bank guarantees in its trading programs that would return investment for 

211 Ventures' benefit. She told other investors that she would use the commissions she 

earned to refund their payments. 

41. Anderson provided Glatfelter with all investor contracts for the trading 

programs, which among other things informed investors that E-Trust would offer a 

"direct managed buy/sell program" with an investor's cash or other asset, for which both 

E-Trust and the investors would share in the profits. Glatfelter emailed Anderson 

contracts filled out by investors, which he ernailed back to her bearing his signature on E­

Trust's behalf. 

42. Anderson maintained an E-Trust website at all relevant times, at 

http://www.e-tch.com. The website described E-Trust as a "boutique asset management 

and investment firm [offering] High Yield Investments" and "Private Placement 

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Investments," and claimed, among other things: "we obtain funding for investments and 

projects globally through monetizing of instruments (BG's, MTN's, SBLC's, CD's, and 

SKR's). We also offer investments for clients in commodities, precious metals, and gems 

etc." The website also touted E-Trust's "Trade Programs, High Yield Investments, 

Commodities (for trade), [and] Foreign Currency Exchange (buy/sell)." None of these 

statements were true. 

43. Glatfelter offered E-Trust's so-called "40-week" program to investors. 

Glatfelter represented to investors they could provide an asset - such as a bank guarantee, 

a CD, a "safe-keeping receipt" for an account held at a bank, or a precious stone - that E­

Trust would add to its purported line of credit for cash used for trading. Glatfelter told 

investors that E-Trust would pay the investor returns on E-Trust trading activity 

attributable to use of the asset. Anderson also described the 40-week investments to 

investors through oral communications. 

44. Glatfelter told prospective "40-week" investors that investors could expect 

high returns, telling some they could expect returns of as much as 1 00 percent per month, 

and others that they could expect profits of"225% minimum in returns guaranteed." 

45. Glatfelter also offered investors E-Trust's cash "gold leveraging" program. 

Through oral representations and emailed communications, Glatfelter represented to 

investors that E-Trust offered a trading program with minimum investment of $1 00,000 

cash, with returns of75%-100% per month with no risk ofloss. Glatfelter described that 

"the trades are done either with the Forex market or via the buy/sell of medium term 

notes." Anderson also described the investment program to investors through oral 

communications. The trading programs did not exist. 

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46. The E-Trust website provided a section reserved for investor access for 

those investing in the "gold leveraging" program. Each gold-leveraging investor was 

provided by Anderson, through Glatfelter, with a password to the website, which 

investors could use to access what purported to be their account balance. The accounts 

reflected the returns and running balance following each leveraging trade, and indicated 

falsely to investors that the program was proceeding, by reflecting phony account 

balances. 

47. In at least one other document Glatfelter prepared and provided to 

prospective investors, Glatfelter described that investors could invest the $100,000 cash 

with E-Trust, which E-Trust would combine with money from other clients, use to obtain 

a bank guarantee, and enter cash generated from the bank guarantee into a "fed buy/sell" 

program, for which the investor would receive weekly returns. 

48. She later advised prospective investors through oral representations and 

emailed communications that Anderson would use the minimum $100,000 cash 

investment to obtain gold to buy and sell in leveraging transactions, which again would 

return approximately 75-140% each month, with no risk ofloss. 

49. On April 15, 2009, Investor A entered into the Memorandum of 

Understanding and Profit/Trust Management Agreement with E-Trust, signed by 

Anderson, and facilitated by Glatfelter. This investor sent $100,000 on May 7,2009, to 

the bank account as instructed by Glatfelter. Investor A signed an Addendum to 

Memorandum of Understanding and Profit/Trust Management Agreement on June 1, 

2009, signed by Anderson and facilitated by Glatfelter, agreeing to two leveraging 

transactions. 

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50. On April 15, 2009, Investor B entered into the Memorandum of 

Understanding and Profit/Trust Management Agreement with E-Trust, signed by 

Anderson, and facilitated by Glatfelter. Investor B sent a total of $325,000 in two 

installments on April 14 and 15,2009, to the bank account as instructed by Glatfelter. 

On June 1,2009, Investor B entered into the Addendum to Memorandum of 

Understanding and Profit/Trust Management Agreement with E-Trust, signed by 

Anderson and facilitated by Glatfelter, agreeing to six leveraging transactions. 

51. Glatfelter provided investors with emailed explanations and updates on the 

progress of the leveraging and prospective returns that were untrue. In one example, 

Glatfelter projected that an initial investment of $325,000 with E-Trust would, after ten 

leveraging transactions over seven months, result in total earnings of $87,551,552. 

Glatfelter also drafted spreadsheets she called a "Detailed Revenue Plan" projecting 

"optimistic" or "pessimistic" gains; for an initial investment of $1 00,000 invested 

through ten leveraging transactions, Glatfelter projected "pessimistic" earnings of $1 0.6 

million. 

52. Glatfelter cited her position with a publicly-traded company to provide 

false assurances that her efforts on behalf of K2 and E-Trust were legitimate, telling one 

investor in April 2009, for example: "If! was a scam artist or anything other than 

upstanding, I would not be allowed to hold the CFO position of Clean Power 

Technologies, Inc., which is a publicly traded company in the US and in Frankfurt. My 

background is checked constantly by the SEC." 

53. During 2009 and continuing through at least January 2010, Glatfelter sent 

investors e-mailed updates on the progress of their investment that were false. By Fall 

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2009, Glatfelter began to tell investors that the investment would not return any money at 

all, because the gold that supposedly backed the investment was seized due to unrest in 

Guinea where the gold mine was supposedly located. Glatfelter told one investor: " ... 

the gold transaction that you were involved in stopped due to the gold being seized, and 

all the turbulence over in Guinea .... Unfortunately, everything was lost." 

54. For each purported E-Trust investment, Glatfelter explained all offerings 

to investors. She arranged client meetings by telephone with Anderson as well. 

Glatfelter handled client contracts as given to her by Anderson for the 40-week and for 

the gold-leveraging program, and facilitated investor wire transfers to the bank account to 

which E-Trust had access. Glatfelter undertook each of these activities in expectation of 

receiving a commission as compensation for her work. 

55. Anderson ultimately withdrew more than $252,000 from the bank account 

that held investors' money. 

56. Anderson failed to provide any investment return to any gold-leveraging 

investor, yet continued to make statements on the E-Trust website reflecting phony 

investment gains. 

FIRST CLAIM FOR RELIEF 
Unregistered Offer and Sale of Securities 

Violations of Sections Sea) and S(c) of the Securities Act 
(Against 211 Ventures, Glatfelter, and Rice) 

57. The Commission realleges and incorporates by reference paragraphs 1 

through 56 above. By engaging in the conduct described above, Defendants 211 

Ventures, Glatfelter, and Rice directly or indirectly, made use of means of instruments of 

transportation or communications in interstate commerce or of the mails, to offer to sell 

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or to sell securities, or to carry or cause such securities to be carried through the mails or 

in interstate commerce for the purpose of sale or for delivery after sale. 

58. No registration statement has been filed with the Commission or has been 

in effect with respect to the offerings alleged herein. 

59. By engaging in the conduct described above, Defendants 211 Ventures, 

Glatfelter, and Rice violated, and unless restrained and enjoined will continue to violate, 

Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)]. 

SECOND CLAIM FOR RELIEF 
Fraud in the Offer or Sale of Securities 

Violations of Section 17(a) of the Securities Act 
(Against K2, 211 Ventures, Glatfelter and Rice) 

60. The Commission realleges and incorporates by reference paragraphs 1 

through 56 above. 

61. By engaging in the conduct described above, Defendants K2, 211 

Ventures, Glatfelter, and Rice directly or indirectly, in the offer or sale of securities by 

the use of means or instruments of transportation or communication in interstate 

commerce or by use of the mails: a) with scienter, employed devices, schemes, or 

artifices to defraud; b) obtained money or property by means of untrue statements of a 

material fact or by omitting to state a material fact necessary in order to make the 

statements made, in light of the circumstances under which they were made, not 

misleading; and/or c) engaged in transactions, practices or courses of business which 

operated or would operate as a fraud or deceit upon the purchaser. 

62. The conduct ofK2, 211 Ventures, Glatfelter, and Rice involved fraud, 

deceit, manipulation, or deliberate or reckless disregard of regulatory requirements and 

directly or indirectly resulted in substantial losses to other persons. 

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63. By engaging in the conduct described above, Defendants K2, 211 

Ventures, Glatfelter, and Rice violated, and unless restrained and enjoined will continue 

to violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]. 

THIRD CLAIM FOR RELIEF 
Fraud in Connection with the Purchase or Sale of Securities 

Violations of Section 10(b) of the Exchange Act and Rule 10b-S Thereunder 
(Against K2, 211 Ventures, Glatfelter and Rice) 

64. The Commission realleges and incorporates by reference paragraphs 1 

through 56 above. 

65. By engaging in the conduct described above, Defendants K2, 211 

Ventures, Glatfelter, and Rice directly or indirectly, in connection with the purchase or 

sale of a security, by the use of means or instrumentalities of interstate commerce, of the 

mails, or of the facilities of a national securities exchange, with scienter: a) employed 

devices, scheme or artifices to defraud; b) made untrue statements of a material fact, or 

omitted to state a material fact necessary in order to make the statements made, in light of 

the circumstances under which they were made, not misleading; and/or c) engaged in 

acts, practices or courses of business which operated or would operate as a fraud or deceit 

upon other persons. 

66. The conduct of K2, 211 Ventures, Glatfelter, and Rice involved fraud, 

deceit, manipulation, or deliberate or reckless disregard of regulatory requirements and 

directly or indirectly resulted in substantial losses to other persons. 

67. By engaging in the conduct described above, Defendants K2, 211 

Ventures, Glatfelter, and Rice violated, and unless restrained and enjoined will continue 

to violate, Section 10(b) of the Exchange Act [15 U.S.c. § 78j(b)] and Rule 10b-5 [17 

C.F.R. § 240.l0b-5] thereunder. 

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FOURTH CLAIM FOR RELIEF 
Aiding and Abetting K2's and 211 Ventures' Securities Fraud 

Violations of Section lO(b) ofthe Exchange Act and Rule lOb-S Thereunder 
(Glatfelter and Rice) 

68. The Commission repeats and incorporates by reference the allegations in 

paragraphs 1 through 56 above. 

69. By reason of the foregoing, K2 and 211 Ventures, directly or indirectly, 

acting knowing or recklessly, in connection with the purchase or sale of securities, by the 

use of means and instrumentalities of interstate commerce, or of the mails, or a facility of 

a national securities exchange: (a) employed or are employing devices, schemes or 

artifices to defraud; (b) made or are making untrue statements of material fact or has 

omitted or is omitting to state a material fact necessary to make the statements made, in 

the light of the circumstances under which they were made, not misleading; or ( c) 

engaged or are engaging in acts, practices or courses of business which operate as a fraud 

or deceit upon certain persons. 

70. Glatfelter and Rice knew or recklessly disregarded that K2's and 211 

Ventures' conduct was improper and knowingly rendered to K2 and 211 Ventures 

substantial assistance in this conduct. 

71. The conduct of Glatfelter and Rice involved fraud, deceit, manipulation, 

or deliberate or reckless disregard of regulatory requirements and directly or indirectly 

resulted in substantial losses to other persons. 

72. As a result, Glatfelter and Rice aided and abetted, and, unless enjoined, 

will continue to aid and abet, K2 and 211 Ventures' violations of Section 1 O(b) of the 

Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder. 

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FIFTH CLAIM FOR RELIEF 
Failure to Register as a Broker Dealer 

Violation of Section 15(a) of the Exchange Act 
(Against K2, Glatfelter, and Rice) 

73. The Commission realleges and incorporates by reference paragraphs 1 

through 56 above. 

74. Defendants K2, Glatfelter, and Rice, by engaging in the conduct described 

above, made use of the mails or means or instrumentalities of interstate commerce to 

effect transactions in, or to induce or attempt to induce the purchase or sale of securities, 

without being registered as a broker or dealer in accordance with Section 15(b) of the 

Exchange Act [15 U.S.C. § 780(a)]. 

SIXTH CLAIM FOR RELIEF 
Unregistered Offer and Sale of Securities 

Violations of Sections 5(a) and 5(c) of the Securities Act 
(Against Anderson) 

75. The Commission realleges and incorporates by reference paragraphs 1 

through 56 above. By engaging in the conduct described above, Defendant Anderson, 

directly or indirectly, made use of means of instruments of transportation or 

communications in interstate commerce or of the mails, to offer to sell or to sell 

securities, or to carry or cause such securities to be carried through the mails or in 

interstate commerce for the purpose of sale or for delivery after sale. 

76. No registration statement has been filed with the Commission or has been 

in effect with respect to the offerings alleged herein. 

77. By engaging in the conduct described above, Defendants Anderson 

violated, and unless restrained and enjoined will continue to violate, Sections 5(a) and 

5(c) of the Securities Act [15 U.S.c. §§ 77e(a) and 77e(c)]. 

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SEVENTH CLAIM FOR RELIEF 
Fraud in the Offer or Sale of Securities 

Violations of Section 17(a) ofthe Securities Act 
(Against Glatfelter and Anderson) 

78. The Commission realleges and incorporates by reference paragraphs 1 

through 56 above. 

79. By engaging in the conduct described above, Defendants Glatfelter and 

Anderson directly or indirectly, in the offer or sale of securities by the use of means or 

instruments of transportation or communication in interstate commerce or by use of the 

mails: a) with scienter, employed devices, schemes, or artifices to defraud; b) obtained 

money or property by means of untrue statements of a material fact or by omitting to state 

a material fact necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading; and/or c) engaged in 

transactions, practices or courses of business which operated or would operate as a fraud 

or deceit upon the purchaser. 

80. The conduct of Glatfelter and Anderson involved fraud, deceit, 

manipulation, or deliberate or reckless disregard of regulatory requirements and directly 

or indirectly resulted in substantial losses to other persons. 

81. By engaging in the conduct described above, Defendants Glatfelter and 

Anderson violated, and unless restrained and enjoined will continue to violate, Section 

17(a) of the Securities Act [15 U.S.C. § 77q(a)]. 

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Fraud in Connection with the Purchase or Sale of Securities 

Violations of Section lOeb) ofthe Exchange Act and Rule lOb-5 Thereunder 
(Against Glatfelter and Anderson) 

82. The Commission realleges and incorporates by reference paragraphs 1 

through 56 above. 

83. By engaging in the conduct described above, Defendants Glatfelter and 

Anderson directly or indirectly, in connection with the purchase or sale of a security, by 

the use of means or instrumentalities of interstate commerce, of the mails, or of the 

facilities of a national securities exchange, with scienter: a) employed devices, scheme or 

artifices to defraud; b) made untrue statements of a material fact, or omitted to state a 

material fact necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading; and/or c) engaged in acts, 

practices or courses of business which operated or would operate as a fraud or deceit 

upon other persons. 

84. By engaging in the conduct described above, Defendants Glatfelter and 

Anderson violated, and unless restrained an enjoined will continue to violate, 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. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court: 

A. Find that each Defendant committed the violations charged and alleged 

herein; 

B. Enter a permanent injunction restraining each Defendant and their officers, 

agents, servants, employees and attorneys, and those in active concert or participation 

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with them, who receive actual notice of the order by personal service or otherwise, and 

each of them, from further violations of the relevant securities laws identified above; 

C. Order the Defendants to disgorge all ill-gotten gains from the illegal 

conduct alleged herein, together with prejudgment interest thereon; 

D. Order the Defendants to pay civil penalties pursuant to Section 20(d) of 

the Securities Act [15 U.S.C. §77t(d)] and Section 21(d) of the Exchange Act [15 U.S.c. 

§ 78l!(d)]; 

E. Order that defendant Glatfelter be permanently barred from serving as an 

officer or director of any public company; 

F. Retain jurisdiction of this action to implement and carry out the terms of 

all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court; and 

G. Award such other and further relief as the Court deems just and proper. 

Respectfully submitted, 

SECURITIES AND EXCHANGE 
COMISSION, 

By its attorney, 

Deena R. Bernstein (BBO #558721) 
Senior Trial Counsel 

Securities & Exchange Commission 
33 Arch Street, 23rd Floor 
Boston, Massachusetts 02110 
(617) 573-8813 (Bernstein) 
(617) 573-4590 (Facsimile) 

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