Department of Financial Institutions
Ernest Cadick Sentenced to Jail for Contempt
FRANKFORT, KY (Sept. 18, 2009) – Franklin County Circuit Court Judge Phillip Shepherd today sentenced Ernest Cadick to 180 days in jail for contempt of court.
The Kentucky Department of Financial Institutions (DFI) brought the contempt motion. DFI alleged that Cadick violated a previous court order enjoining him from selling securities and deceived the court and DFI about his ability to pay restitution owed.
“(Mr. Cadick) is continuing to take advantage of innocent citizens and to fleece them of money they have made,” said Judge Shepherd. “The court is also concerned about Mr. Cadick’s consistent inability to pay the minimal $500 monthly payment.”
The judge found Cadick in contempt for selling or marketing investment contracts without the prior approval of DFI. He sentenced Cadick to 180 days in Franklin County Jail and set bond at $20,000. Cadick was immediately taken into custody.
Allegations of the victims were uncontested on the record. Three victims had filed a criminal complaint with the Louisville Metro Police stating that Cadick had scammed them and stolen their money. Interviews revealed that Cadick solicited them at church and their homes about investing money overseas to avoid losing money via the economy. The three invested nearly $20,000 total with Cadick in November 2008.
DFI and Cadick had entered into a settlement agreement on Aug. 25, 2006. Cadick admitted he had unlawfully sold interests in oil and gas exploration projects and private loan agreements, both of which were unregistered securities. The agreement states that if Cadick ever wishes to sell any investments he must have the prior approval of DFI’s Securities Division director. The settlement agreement also requires Cadick to make restitution to several investors; however, Cadick has consistently failed to make timely payments.
“Cadick did not have our approval to sell any investment, nor would we grant him approval, given his past record,” said DFI Commissioner Charles Vice. “Cadick’s latest scam, in which he tried to earn trust through his church membership, is egregious. Operation of scams such as this will not be tolerated in Kentucky.”
Before investing in any securities product, investors should contact DFI to check out the license/registration and complaint history of both the product and the person selling it by calling 800-223-2579. For more information and links on investing, visit DFI’s Investment Help Web page at www.kfi.ky.gov/public/invest.htm. Past DFI orders against Cadick are online at www.kfi.ky.gov/legalresources/enforcementactions/securitiesea.htm/.
Cadick also is awaiting a trial date in federal court. In December 2008, he was arrested after a federal grand jury indicted him on 17 counts of wire fraud regarding investments in oil and gas ventures and overseas business ventures. The indictment charges that Cadick did not invest the over $718,000 he solicited, but expended it for his personal benefit and gain. In the event of a conviction, the maximum potential penalties are 340 years imprisonment, a $4,250,000 fine and supervised release for a period of three years. That case is being prosecuted by the United States Attorney’s Office. DFI has cooperated with federal authorities with the investigation of the case.
DFI is an agency in the Public Protection Cabinet. It supervises the financial services industry by examining, chartering, licensing and registering various financial institutions, securities firms and professionals operating in Kentucky. DFI’s mission is to serve Kentucky residents and protect their financial interests by maintaining a stable financial industry, continuing effective and efficient regulatory oversight, promoting consumer confidence, and encouraging economic opportunities.