March 22, 2007                                                         Contact:Lucas Hamilton

MORRISON ANNOUNCES SETTLEMENT IN CASE AGAINST DAVISON


      Montana State Auditor John Morrison announced that earlier this week his office entered into a consent agreement with former Billings businessman, Patrick Phillip Davison, to resolve the outstanding case against Davison originally filed in August of 2006. In the agreement, Davison agreed to pay a $250,000 fine to the State of Montana and is permanently banned from the securities industry. It is believed to be the largest fine ever imposed on an individual in a Montana state securities case.
      “This fine should send a strong signal that Ponzi schemes and other securities fraud will be firmly punished in Montana,” said Morrison. One of Davison’s former employers, UBS, earlier reached an agreement with Morrison’s office to pay Davison’s clients more than $4.5 million in restitution.
      The $250,000 fine is imposed on top of the penalties Davison faces in a federal criminal case initiated after Morrison’s office enlisted the U.S. Attorney in the case. Davison’s federal court sentencing, scheduled for June before U.S. district judge Richard Cebull, is expected to include imprisonment, fines and payments to reimburse UBS. Davison will have ten years to pay the state fine, not counting time spent in prison.
      Because the Auditor’s office is an administrative agency, it must partner with state or federal prosecutors in order to bring criminal cases. The Davison case is one of several cases initiated by Morrison’s office that led to federal criminal convictions. “Our office has developed a great working partnership with the U.S. Attorney’s office,” Morrison said. “We have brought the U.S. Attorney into a number of cases and worked together to achieve federal convictions.” Morrison said that state securities cases leading to federal convictions is a relatively new development. “As far as we know, this really wasn’t done until we struck up this relationship a few years ago,” Morrison added. Morrison said the relationship with federal prosecutors has taken the prosecution of this type of white collar crime to a new level.
      The Securities Department of the Auditor’s office originally alleged Davison committed securities fraud against two Montana families for a total loss to the families in excess of $1.2 million. Subsequently, the Department filed an Amended Notice of Proposed Agency Disciplinary Action against Patrick Davison, alleging six additional complainants were defrauded by Davison so he could promote and conduct an illegal Ponzi scheme. Davison was ultimately charged with defrauding nine complainants by selling them bogus investments. The allegations stated that Davison sold these fraudulent investments, putting the investment monies into accounts he owned or controlled. The investments Davison created included an investment in a non-existent St. Labre Indian School Trust, fake investments in the Billings Catholic Schools; fake investments in the Mayfair 2/Big Sky Gold Rush Raffle Event; fake Promissory Notes secured by non-existing collateral; a fake investment in coal leases; and fake investments in a bogus entity entitled Foundation Assistance Group, purported by Davison to support the Montana University System.
      Davison was charged by the U.S. Attorney’s office with two counts of securities fraud and he has entered a guilty plea to those charges. Sentencing is currently set for June 8, 2007, in Billings.
      Morrison emphasized the importance of citizens reporting unlawful securities activity and being vigilant to avoid becoming a victim. “Nearly all these cases begin when a victim or potential victim calls us and lets us know about the problem,” he explained. “By calling the Auditor’s office when something doesn’t look right, you can protect yourself and protect others at the same time.”