Securities & Exchange Com'n v. Glenn W. Turner Ent., Inc., 72-2544.

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Citation474 F.2d 476
Docket NumberNo. 72-2544.,72-2544.
PartiesSECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. GLENN W. TURNER ENTERPRISES, INC., et al., Defendants-Appellants.
Decision Date01 February 1973

474 F.2d 476 (1973)

GLENN W. TURNER ENTERPRISES, INC., et al., Defendants-Appellants.

No. 72-2544.

United States Court of Appeals, Ninth Circuit.

February 1, 1973.

474 F.2d 477

Jeffrey A. Tew (argued), Miami, Fla., Charles R. Mowry, of Dardano, Mowry & Hanson, Portland, Or., Clarke C. Brown, Salem, Or., Theodore I. Koskoff, Bridgeport, Conn., Bruce Jarman, Salem, Or., John A. Burgess, Montpelier, Vt., for defendants-appellants.

David Ferber, Solicitor (argued), James E. Newton, Jack H. Bookey, Francis N. Mithoug, Jerry King, Attys., Richard E. Nathan, Asst. Gen. Counsel, Securities and Exchange Comm., Washington, D. C., for plaintiff-appellee.

Before DUNIWAY, HUFSTEDLER, and TRASK, Circuit Judges.

DUNIWAY, Circuit Judge:

This is an appeal from an order, 348 F.Supp. 766, granting the Securities and Exchange Commission a preliminary injunction. The injunction prohibits offering and selling by appellants of certain of their "Adventures" and "Plans", and also any withdrawal by appellants of funds from the assets of the corporate defendants other than in the regular course of business. Dare To Be Great, Inc. (Dare), a Florida corporation, is a wholly owned subsidiary of Glenn W. Turner Enterprises, Inc. The individual defendants are, or were, officers, directors,

474 F.2d 478
or employees of the defendant corporations.1

The trial court's findings, which are fully supported by the record, demonstrate that defendants' scheme is a gigantic and successful fraud. The question presented is whether the "Adventures" or "Plan" enjoined are "securities" within the meaning of the federal securities laws. Of the five that Dare offers — Adventures I, II, III, and IV, and the $1,000 Plan — the court held that Adventures III and IV and the $1,000 Plan are securities. We affirm.

I. The Adventures and the $1000 Plan — the facade.

The five courses offered by Dare ostensibly involve two elements. In return for his money, the purchaser is privileged to attend seminar sessions and receives tapes, records, and other material, all aimed at improving self-motivation and sales ability. He also receives, if he purchases either Adventure III or IV or the $1,000 Plan, the opportunity to help to sell the courses to others; if successful he receives part of the purchase price as his commission. There is no doubt that this latter aspect of the purchase is in all respects the significant one.

Adventure I costs $300. The purchaser receives one portable tape recorder, twelve tape recorded lessons, and certain written material in notebooks. He is entitled to attend a 12-16 hour group session.

Adventure II includes Adventure I, and costs $700. The purchaser receives twelve more tape recorded lessons. He is offered approximately 80 hours of group sessions.

Adventure III includes Adventures I and II, and costs $2,000. The purchaser receives six more tape recordings, one notebook of written material called "The Fun of Selling," and a limited amount of written instructions and material, as well as thirty more hours of group sessions. The purchaser also receives a different sort of benefit. After fulfilling a few nominal requirements he becomes an "independent sales trainee," empowered to sell the Adventures. He receives $100 for each Adventure I, $300 for each Adventure II, and $900 for each Adventure III that he sells.

Adventure IV costs $5,000, and includes Adventures I, II and III. The purchaser receives six more tapes, the opportunity for thirty more hours of group sessions, the opportunity to attend two other week-long courses in Florida, at his own expense, and he may or may not receive a movie projector with six cartridge-type films. He also is now empowered to sell all of the Adventures to others. For selling Adventure IV he gets $2,500.

Finally, there is the $1,000 Plan. For this sum the purchaser receives the tape cassettes sold in Adventure II, but not the accompanying written material. He also receives some additional sales instruction, and may be entitled to a 24-hour group session. He may also sell the Plan, if he brings two individuals to the person who sold him the Plan, and if these two also purchase the Plan from the first seller. If that occurs, he may then sell the Plan on his own, receiving $400 for each additional sale that he makes. If one brings three people into the scheme, he may sell the $1,000 Plan without buying it himself, and would earn the same $400 commission for each additional sale that he makes.

II. The Adventures and the Plan in operation.

It is apparent from the record that what is sold is not of the usual "business motivation" type of courses. Rather, the purchaser is really buying the possibility of deriving money from the sale of the plans by Dare to individuals whom the purchaser has brought to Dare. The promotional aspects of the plan, such as seminars, films, and records, are aimed at interesting others

474 F.2d 479
in the Plans. Their value for any other purpose, is, to put it mildly, minimal

Once an individual has purchased a Plan, he turns his efforts toward bringing others into the organization, for which he will receive a part of what they pay. His task is to bring prospective purchasers to "Adventure Meetings."

A. The meetings.

These meetings are like an old time revival meeting, but directed toward the joys of making easy money rather than salvation. Their purpose is to convince prospective purchasers, or "prospects," that Dare is a sure route to great riches. At the meetings are employees, officers, and speakers from Dare, as well as purchasers (now "salesmen") and their prospects. The Dare people, not the purchaser-"salesmen", run the meetings and do the selling. They exude great enthusiasm, cheering and chanting; there is exuberant handshaking, standing on chairs, shouting, and "moneyhumming".2 The Dare people dress in expensive, modern clothes; they display large sums of cash, flaunting it to those present, and even at times throwing it about; they drive new and expensive automobiles, which are conspicuously parked in large numbers outside the meeting place. Dare speakers describe, usually in a frenzied manner, the wealth that awaits the prospects if they will purchase one of the plans. Films are shown, usually involving the "rags-to-riches" story of Dare founder Glenn W. Turner. The goal of all of this is to persuade the prospect to purchase a plan, especially Adventure IV, so that he may become a "salesman", and thus grow wealthy as part of the Dare organization. It is intimated that as Glenn W. Turner Enterprises, Inc. expands, high positions in the organization, as well as lucrative opportunities to purchase stock, will be available. After the meeting, pressure is applied to the prospect by Dare people, in an effort to induce him to purchase one of the Adventures or the plan. The sale is sometimes closed by the purchaser who brought the prospect to the meeting, but primarily, by Dare salesmen, specialists in the "hard sell."3

The format of the meeting is preordained. A script created by Dare is strictly adhered to. The format applies even to the sale, there being a standard procedure for inducing the prospect to sign his name to the agreement and to part with his money. While no express guarantee of success is made at the meetings, and the statement is made that the purchaser must expect to work, the impression which is fostered is of the near inevitability of success to be achieved by anyone who purchases a plan and follows Dare's instructions.

Dare also arranges, in addition to the Adventure Meetings, "GO Tours," or "Golden Opportunity Tours." Prospects are taken by plane or bus to one of Dare's regional centers where further meetings and sales efforts are undertaken. A significant effort is made during the trip itself to sell the plans to prospects. Much the same atmosphere as at the meetings pervades the trip — exuberant shouting, chanting, handshaking, relating of success stories, and lavish displays of cash.

In a scheme such as this, the possibility that a market will become "saturated" is a real one. Saturation has in fact occurred in some markets, but this is not mentioned at the meetings. Few, if any, purchasers of these plans have achieved any success remotely approaching

474 F.2d 480
that described by defendants and their agents

B. The role of the purchaser-salesman.

Once he has bought a plan that empowers him to help sell the plans to others, the task of the purchaser is to find prospects and induce them to attend Adventure...

To continue reading

Request your trial
372 cases
  • State v. Brewer
    • United States
    • Court of Appeals of Tennessee. Court of Criminal Appeals of Tennessee
    • 13 Febrero 1996
    ...rigid and thus easily circumvented. See e.g., SEC v. Koscot Inter., Inc., 497 F.2d 473, 479-84 (5th Cir.1974); SEC v. Glenn W. Turner Ent., Inc., 474 F.2d 476, 482 (9th Cir.1973); State v. Hawaii Market Center, 52 Haw. 642, 485 P.2d 105, 108 (1971); 2 Louis Loss & Joel Seligman, Securities ......
  • Smith v. Manausa, Civ. No. 1639.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Eastern District of Kentucky
    • 22 Noviembre 1974
    ...ones, those essential managerial efforts which affect the failure or success of the enterprise." Securities & Exchange Com'n v. Glenn W. Turner Ent., Inc., 9th Cir., 474 F.2d 476, 482 (1973), cert. denied 414 U.S. 821, 94 S.Ct. 117, 38 L.Ed.2d 53 Compare Lino v. City Investing Co., 3d Cir.,......
  • Wong v. Restoration Robotics, Inc., A161489
    • United States
    • California Court of Appeals
    • 28 Abril 2022
    ...relative to the issuance of securities" ( Securities and Exchange Commission v. Glenn W. Turner Enterprises, Inc. (9th Cir. 1973) 474 F.2d 476, 480 ), we hesitate to agree that an investor is excused from attending to the required disclosures, particularly when they concern the governing do......
  • Ruefenacht v. O'Halloran, 83-5493
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • 11 Junio 1984
    ...Cir.1974) (chinchillas); SEC v. Koscot Interplanetary, Inc., 497 F.2d 473, 478-85 (5th Cir.1974) (cosmetics); SEC v. Glenn W. Turner Enters., 474 F.2d 476, 480-83 (9th Cir.) (self-improvement courses), cert. denied, 414 U.S. 821, 94 S.Ct. 117, 38 L.Ed.2d 53 (1973).8 See Exchange National Ba......
  • Request a trial to view additional results
1 firm's commentaries
  • Taking the “Fun” Out of Non-Fungible Tokens: Could Securities Laws Apply to NFTs?
    • United States
    • LexBlog United States
    • 1 Abril 2022
    ...may take the form of ‘goods and services,’ or some other ‘exchange of value.’”). [9]. See, e.g., S.E.C. v. Glenn W. Turner Enterprises, 474 F.2d 476, 482 (9th Cir. 1973) (appropriate inquiry is “whether the efforts made by those other than the investor are the undeniably significant ones, t......
3 books & journal articles
  • Considerations in using the LLC
    • United States
    • James Publishing Practical Law Books The Limited Liability Company - Volume 1-2 Volume 1
    • 1 Abril 2022
    ...For our analysis of LLCs, the key phrase is: “solely from the efforts of others.” But see S.E.C. v. Glenn W. Turner Enterprises, Inc. , 474 F.2d 476, 482 (9th Cir. 1973) (expanding the “solely from the efforts of others” test to the more flexible “efforts of others” test). There is an excel......
    • United States
    • Harvard Journal of Law & Technology Vol. 35 No. 1, September 2021
    • 22 Septiembre 2021
    ...See SEC Framework, supra note 109. (132.) Id. (133.) DAO Report, supra note 24, at 12 (citing SEC v. Glenn W. Turner Enters., Inc., 474 F.2d 476, 482 (9th Cir. (134.) See, e.g., Metjahic, supra note 89, at 1562 (describing the determinants of DAO token values: "Each token provides the inves......
    • United States
    • William and Mary Law Review Vol. 62 No. 6, May 2021
    • 1 Mayo 2021
    ...187-88 (3d Cir. 2000). (418.) See Henderson & Raskin, supra note 194, at 455, 458, 461-62. (419.) Compare SEC v. Glenn Turner Enters., 474 F.2d 476, 482 (9th Cir. 1973) (stating that the critical inquiry is "whether the efforts made by those other than the investor are the undeniably si......
1 provisions
  • Act 110, SB 588 – Uniform Securities Act of 2005
    • United States
    • South Carolina Session Laws
    • 1 Enero 2005
    ...and state courts. The secondclause in Section 102(29)(D) is based, in part, on the leading caseof SEC v. Glenn W. Turner Enter., Inc., 474 F.2d 476, 482 n.7 (9thCir. 1973), cert. denied, 419 U.S. 900 (1974).The courts have divided over the interpretation of the"common enterprise" element of......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT