The Securities and Exchange Commission has filed suit against a Northern Virginia loan company, claiming that it sold $860,000 in unregistered securities and defrauded 57 investors, and that the firm's president used company funds for his own use.
The Vienna Finance Co. of 308 Maple Ave. West is accused of defrauding 43 investors of $643,000 in debentures and 18 others of $217,000 worth of preferred stock. The company said it was sound when it was continuously losing money, kept inaccurate records and failed to disclose alleged financial finagling by its president, according to the suit filled last week in U.S. District Court in Alexandria.
At least $15,000 of the company's funds was used by President Norman C. Tillette for his personal use, "including but not limited to clothes, jewelry, television sets and charges incurred at restaurants for non-business purposes," the suit said.
The SEC also alleged that from 1976 until last Septmber, Tillette forced the company to provide and maintain for his use and his wife's use at least two and as many as three automobiles.
The company also gave Tillette "unsecured non-interest-bearing loans" totaling about $114,380, the suit claimed.
The company made false statements between February 1977 and May 1978 that it was showing profits and that money collected from investors was being used to help the company grow, the suit said. Vienna Finance also kept inaccurate books and records that failed to reflect the receipt of funds from investors and disbursements of money to Tillette, according to the suit.
From April 1975 to last May the company failed to inform investors that it had lost $420,000 between its inception in 1974 and last June and that, despite continuing losses, Tillette's salary increased each year to a high of $3,765 a month in 1977.
The company also failed to disclose that Tillette was receiving commissions totaling about $20,000 from March 1, 1975, to April 1977 "for sales of credit life and disability insurance policies to the loan customers of Vienna Finance" although the Company didn't receive any insurance commissions or reimbursements for those sales, the suit said.
About 18 months ago, the finance company was told by a Baltimore Circuit Court judge that it had lost the right to collect a total of $276,000 in loans because it failed to keep a Maryland loan license.
Tillette could not be reached for comment yesterday.