THE US Securities & Exchange Commission has filed charges against the man

it believes masterminded Millennium Financial, the financial services company which authorities claim defrauded Scottish investors out of around (pounds) 1m.

The financial watchdog filed the civil suit against Rodney Sheyhn, Millennium's former president, who is being held in federal custody in San Diego, California, awaiting trial on March 23 on unrelated telemarketing fraud charges.

The lawsuit was also brought against three of Sheyhn's

Millennium associates, Rodney Marr, Donald Marr, and Karen Leigh, each of whom are also listed in legal complaint documents under a number of assumed names.

The lawsuit alleges that Millennium ran ''a sophisticated and fraudulent international boiler room operation'' that defrauded more than 700 investors in more than 20 countries of at least $20m ((pounds) 11m).

The vast majority of those who invested in Millennium - which ran its operation from Montevideo free trade zone in Uruguay, and offices in Brazil, Mexico, Singapore, and Switzerland - are believed to be either UK or Ireland-based, according to an SEC source.

The Herald, in a series of articles over the past 18 months, highlighted the plight of nine Scottish investors allegedly conned by Millennium - with losses approaching the (pounds) 1m mark.

An SEC source close to

the investigation told The

Herald that at least 15 Scottish investors had been targeted by Millennium, and said that

the operation first identified potential investors by renting the subscription lists of English language financial publicat-ions.

The lawsuit says Millennium fraudulently sold pre-initial public offerings in at least

three US companies - Key Card Communications, Knutek Holdings, and Sonic Garden - through a campaign of mass mailings, e-mails and unsolicited telephone calls.

While the companies themselves existed, no IPOs ever occurred, the SEC claims.

The SEC also claims that in the case of Key Card, Millennium told investors they could reap a 900% profit. The lawsuit alleges that Sheyhn ''headed Millennium's operations, and that Rodney Marr, Donald Marr and Karen Leigh each acted, at various times, as

Millennium salespersons and managers of other sales-


It alleges that each of the defendants ''knew of the fraudulent nature of Millennium's operations and took numerous steps to conceal their respective roles'', including the use of a ''variety of aliases when working for Millennium''.

An SEC spokesman said that Sheyhn was initially arrested in connection with an indictment in ''another boiler room operation'' in May 2001. In June of that year, Sheyhn was released pending trial in California.

''He was re-arrested on June 11, 2002 for violating the conditions of his pre-trial release. Since then, he has remained in custody,'' the spokesman said.

However, victims of the

Millennium debacle are likely to get back less than 10p for every pound they invested, according to the US court-appointed receiver.

Andy Robertson, of La Bella & McNamara, said: ''Based on information presently available, it appears that any distribution will be less than 10% of the amounts invested.

''Unfortunately, few identifiable assets remain.''

According to the latest information on the receiver's website, La Bella & McNamara have tracked down around (pounds) 1.1m - including cash in a Charles Schwab account, a Porsche bought with Millennium investment funds and valued at (pounds) 60,000, and (pounds) 650,000 frozen by the US Department of Justice from accounts on the Caribbean island of Nevis.

The receiver said Millennium operated through a maze of nominee accounts, intermediary banks, and offshore accounts in multiple foreign jurisdictions - including ABN Amro accounts in Holland, Banco Continental in Panama, the Banque International du Luxembourg, Charles Schwab in San Francisco, Citibank in Madrid, the Nevis Bank in the West Indies, and the Standard Chartered Bank in Hong Kong.

Some of the accounts were held in the name of Sheyhn himself. Others were designated under the names of Greenwood Pacific, Robert Schmidt,

Merridian International and Rod & Audrey Sheyhn.