A company at least partially operated out of Bowling Green is facing a U.S. District Court complaint in North Carolina over the fraudulent sale of over $12 million in securities.

The U.S. Securities and Exchange Commission has filed a complaint seeking emergency relief against CEP Holdings Inc., which does business as Colon End Parenthesis Trust LLC in Bowling Green. The company has, according to the SEC, fraudulently sold about $12 million worth of securities in unregistered transactions to about 5,000 investors, promising returns of 2 percent. CEP Holdings is owned by Trevor Reed, 25, of Wake Forest, N.C., and Clayton Kimbrell, 23, of Indianapolis.

&#8220The commission alleged that Reed and Kimbrell solicited investors to purchase CEP memberships with a minimum investment of $20 through CEP’s Internet Web site,” according to the report.

The company claimed funds were placed into a CEP account and then invested in safe businesses such as travel agencies and real estate. Instead, according to the SEC, the funds were invested in other high-risk online schemes.

&#8220Moreover, Reed and Kimbrell, through CEP, made numerous other misrepresentations and omissions of material facts concerning the safety and rate of return of the investment; the nature and merits of the investment; CEP’s compliance with commission regulations; and the size and scope of CEP’s overall membership program,” according to the SEC.

Although the business had a Bowling Green address, it wasn’t really based in any one area, said L. Bruce McDaniel, the Raleigh attorney representing Reed and Kimbrell.

CEP Holdings had simply not registered to sell securities as it was supposed to, he said.

&#8220Their recordkeeping wasn’t as good as it should have been,” McDaniel said. &#8220The SEC is reviewing computer records on the companies’ investments. They want to see if the money was spent on what it was supposed to be.”

In this instance, the question is what companies HEP Holdings invested securities money in, he said.

This is simply a civil litigation and no criminal charges have been threatened in this case, McDaniel said.

The Kentucky Office of Financial Institutions also has an open investigation against CEP Holdings, said Kelly May, spokeswoman for the office.

&#8220They have solicited within Kentucky and are not registered to do so,” she said. &#8220There have been no complaints but there have been customers who have asked about them.”

At this point, the office cannot confirm that the business was a scam, May said.

&#8220But anytime something sounds too good to be true, it usually is,” she said.

The state is currently questioning exactly what was done with investor money, May said. The state investigation is similar to the one being conducted by the SEC.

McDaniel said he was unaware of any state investigation but that because CEP holdings was an Internet-based company, it could have done business within any state.

&#8220We just want everyone to be happy in the end,” he said.

The company is currently in bad standing in Kentucky for not filing its mandatory yearly report, according to the Kentucky Secretary of State’s Office.

Colon End Parenthesis Trust LLC is still an active company until Nov. 1, when it will be dissolved if it does not provide a yearly report. The company was formed Feb. 15, 2006.

It has a local address at 760 Campbell Lane, Ste. 106, according to the Secretary of State’s Office. The location is actually a drop box at the UPS store, May said.

The company’s home page at its Web site at www.cepholdings.com remains active, although many of its features and links were not working Tuesday.

Most of the site has been shut down because of the ongoing litigation against the company, May said.

The company voluntarily shut down its entire operation before that was requested by the SEC, McDaniel said.

Internet chat rooms have stated that the company was at least partially run through servers from Bowling Green Municipal Utilities.

But BGMU does not offer server space to businesses, said Miles McDaniel, manager of business development and marketing.

BGMU does lease space to companies so they can securely store a backup server, he said. It is possible that the company had stored a backup server in the BGMU facility.

The company’s connection to Bowling Green appeared to be an employee who was a student at Western Kentucky University, according to the CEP Holdings Web site. The student was not named and is not named in any court documents.

Anyone with questions about the legitimacy of an investment company in Kentucky can call the state Office of Financial Institutions at (800) 223-2579 to see if the company and those who run it are licensed in this state, May said.

People should also check to Kentucky Secretary of State Web site at http://www.sos.ky.gov/secdesk/ to determine if the business is within good standing with the state, she said.