SEC v. Aimsi Technologies, Inc., et al., 05 CV 4724 (LLS) (S.D.N.Y.)
The Commission announced today that it has settled its enforcement action, which involves charges of a deliberate "pump and dump" scheme to defraud investors in the stock of Aimsi Technologies, against Defendant Bruce Pollock. On May 10, 2007, the Honorable Louis L. Stanton of the United States District Court for the Southern District of New York entered a final judgment against Pollock that enjoined him from violating Sections 17(a) of the Securities Act of 1933 and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgment also prohibits Pollock from acting as an officer or director of a public company, and requires him to pay a civil penalty in the amount of $170,000, and disgorgement and prejudgment interest in the amount of $80,000. The Commission also obtained a final judgment against Relief Defendant William Watkins, which requires disgorgement of $250,000. Pollock and Watkins, without admitting or denying the allegations of the complaint, consented to the entry of these final judgments.
The Commission filed its action on an emergency basis on May 16, 2005, alleging that Aimsi Technologies, Inc., its Chief Executive Officer, Reginald Hall, and a group of stock promoters including Pollock (the "Promoter Defendants"), engaged in a deliberate "pump and dump" scheme to defraud investors, in which the Promoter Defendants, with the active cooperation of Hall, acquired a substantial stake in the shares of Aimsi, orchestrated a fraudulent promotional campaign to drive up the price and trading volume of Aimsi's stock, and then sold their shares at a substantial profit to the investing public after their plan succeeded. The Complaint alleges that before the Commission suspended trading in Aimsi's stock on December 15, 2004, the defendants earned illicit trading profits of at least $3.1 million. In connection with the Commission's filing of the Complaint, it also obtained a temporary restraining order that, among other things, froze defendants' assets.
The Complaint charges violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5. The litigation is pending against the remaining defendants.
SEC v. Bradford C. Bleidt, et al., Civil Action No. 04-12415-NG (D. Mass.)
Court Enters Final Judgment Against Former Boston Money Manager Bradford Bleidt and His Investment Advisory Firm The Securities and Exchange Commission announced that, on May 8, 2007, U. S. District Judge Nancy Gertner entered final judgments against Bradford C. Bleidt and his investment advisory firm Allocation Plus Asset Management Co., Inc. (AAllocation Plus") concerning, among other things, their misappropriation of millions of dollars in advisory client funds. The final judgments enjoin Bleidt and Allocation Plus from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act and order them to pay, jointly and severally, disgorgement of $31,734,192.75 plus prejudgment interest of $9,497,553.30.
The Commission's action, which was filed on November 12, 2004, was based on its complaint alleging that Bleidt had admitted to stealing tens of millions of dollars from clients over a period of 20 years in a taped confession delivered to the Commission's Boston office. In its Complaint, the Commission alleged that Bleidt confessed that he diverted client funds into a bank account that he controlled. Bleidt stated in his taped confession that the "day of reckoning" came when he no longer had enough funds to cover a client's request for a withdrawal. "The money's gone. I stole it," Bleidt said in the recording, according to the Complaint.
Previously, on November 12, 2004, the Commission sought and obtained an emergency asset freeze and temporary restraining order against Bleidt and Allocation Plus. On December 2, 2004, the Court entered preliminary injunctions against Bleidt and Allocation Plus extending the asset freeze. On November 18, 2004, the Court appointed Boston attorney David A. Vicinanzo as receiver to preserve the assets of the defendants, including a radio station and other entities owned or controlled by Bleidt.
On December 5, 2005, Bleidt was sentenced to 11 years and three months in prison and ordered to pay restitution of $31,734,192.75 based upon his guilty plea to parallel criminal charges brought by the United States Attorney's Office for the District of Massachusetts.
For more information see Litigation Release Nos. 18972 (November 16, 2004), 18993A (December 15, 2004), and 19488 (December 7, 2005).
SEC v. Larry Michael Parrish, et al., 05 Civ. 1031 (D. Md., filed April 14, 2005) (Judge Motz)
SEC Settles Case Against Two Individuals and their Wholly-Owned Entities Charged with Conducting a Multi-Million Dollar Prime Bank Fraud
The United States Securities and Exchange Commission (Commission) announced today that on April 26, 2007 and May 9, 2007, the United States District Court for the District of Maryland entered final judgments against defendants Larry Michael Parrish ("Parrish"), Michael Edward Zimmerman ("Zimmerman"), Z-Par Holdings, Inc. ("Z-Par Holdings") and Z-Par Investment Fund II, LLC ("Z-Par Investment Fund II") arising from charges that they conducted a fraudulent high-yield investment scheme that raised approximately $8.2 million from eleven investors in Florida and others elsewhere throughout the United States from at least April 2004 to April 2005.
Without admitting or denying the allegations of the Commission's complaint, the defendants consented to the entry of final judgments permanently enjoining them from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. Pursuant to Section 15(b)(6) of the Exchange Act, Parrish and Zimmerman have also consented to the entry of administrative orders barring them from associating with any broker or dealer for at least five years.
On April 14, 2005, the Commission obtained a temporary restraining order and asset freeze against defendants Parrish, Zimmerman, and their wholly-owned entities Z-Par Holdings and Z-Par Investment Fund II. The Commission's complaint alleged that Parrish and Zimmerman marketed the fraudulent prime bank investment scheme by falsely representing to investors that their funds would be pooled with those of other investors in $1 million lots for the purchase of "debt obligations of the top 50 banks in the world," which would be safe and secure investments yielding high rates of return. The complaint alleged that Parrish and Zimmerman fraudulently sold interests in fictitious prime bank debt instruments and payment obligations, claiming that they carried a financial insurance guarantee to further enhance the value and lower the risk of default. The complaint further alleged that in furtherance of the fraudulent scheme, Parrish and Zimmerman sent investor funds to relief defendants, Eduard Akopian, and his wholly-owned entity Capital Bancorp, who unbeknownst to Parrish and Zimmerman, used the funds to purchase precious metals on margin.
On May 4, 2005, the defendants and relief defendants consented to a preliminary injunction and an order maintaining the asset freeze. In December 2005, $7.5 million was returned to investors.
Administrative Proceeding Nos. 34-55778 and 34-55779
SEC v. Empire Development Group, et al., 07 CIV 3896 (S.D.N.Y.)
SEC Announces Emergency Action to Halt Ongoing Fraud Against Senior Citizens
SEC Obtains Temporary Restraining Orders, Asset Freezes, and Accountings
On May 18, 2007 the Securities and Exchange Commission filed an emergency action against Felix Strashnov, a/k/a Felix Straton, and Michael Ayngorn, and three entities they controlled to halt an ongoing fraud in which the defendants claim to have raised nearly $2 million. The defendants used high pressure sales tactics and cold-calling to sell unregistered securities of bogus real estate development companies, to unsuspecting investors, including elderly people with limited means.
The Commission's complaint, filed in the Southern District of New York, charges the defendants, Felix Strashnov, a/k/a Felix Straton, Michael Ayngorn, Castle Hill Ventures, Empire Development Group Fund I LLC, and Empire Development Group LLC, with making fraudulent solicitations, conducting an unregistered offering, and misappropriating investor funds. The Honorable P. Kevin Castel granted the Commission's request for emergency relief and issued temporary restraining orders freezing the defendants' assets, requiring them to provide accountings, and prohibiting them from committing future violations of the securities laws. The Commission's complaint also seeks a final judgment assessing civil penalties and ordering the defendants to disgorge their ill-gotten gains.
The complaint also alleges that the defendants made numerous misrepresentations about the assets, operations and future prospects of the companies, including claims that:
Empire was purchasing, renovating, and reselling real estate properties; Revenues were projected to exceed $40 million within 5 years; Investors would be able to obtain every penny of their money back; and Empire would shortly conduct an initial public offering of its securities. Rather than using funds raised from investors to purchase and develop investment properties for resale, Straton and Ayngorn purchased personal residences, held in their own names rather than in Empire's name. Empire appears to have no properties, assets, or revenue other than funds raised from investors. Empire has taken no steps to conduct an initial registered public offering of its securities.
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