August 23, 2010                                                         Contact:Lucas Hamilton

COMMISSIONER LINDEEN REACHES $1 MILLION SETTLEMENT WITH KMS FOR VICTIMS OF PONZI SCHEME


      Montana Commissioner of Securities and Insurance, Monica J. Lindeen, and KMS Financial Services, Inc., a Seattle-based securities firm, have entered into a settlement agreement that provides restitution to the victims identified in the Commissioner's action against Arthur Heffelfinger, a former KMS stock broker. In an effort to be responsive to the victims affected by Heffelfinger's illegal activities and to the communities in which KMS Financial Services does business, the firm has agreed to pay the victims just over $975,000 in restitution. The firm was also agreed to pay a total of $50,000 in fines and investigative costs to the State of Montana.
      
      "Nationally, it is very unusual for victims of a Ponzi scheme to ever be given their money back from the scam," said Lindeen. "This settlement allows the victims of this Ponzi scheme to recover the money they lost."
      
      "Ponzi schemes work on the 'rob Peter to pay Paul' principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses," said Lindeen. "Because in the end there is generally no money, the later investors become the victims and typically get nothing back. If KMS Financial Services hadn't agreed to pay restitution, these victims would likely have no chance of recovering their losses."
      
      In January 2010, Lindeen's office charged Heffelfinger with three felonies in Lewis & Clark County District Court: operating a Ponzi scheme, theft, and exploitation of an older person. In July, Heffelfinger pled guilty to operating a Ponzi scheme and Theft, and a trial is currently set for September 20, 2010, on the charge of exploitation of an older person.