U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20123 / May 22, 2007 SEC v. One Wall Street, Inc., Donte C. Jarvis, Alan Brown, Willis "Bill" White III, and Cecil Baptiste, a/k/a John Latorri, 06 Civ. 4217 (NGG) (ARL) (E.D.N.Y.) Court Permanently Enjoins Alan Brown in Fraud against Senior Citizens On May 22, 2007, the United States District Court for the Eastern District of New York entered a partial consent judgment against defendant Alan Brown, of Wheatley Heights, New York, in an action filed last year by the Securities and Exchange Commission. Without admitting or denying the allegations of the Commission's complaint, Brown consented to the entry of a judgment by the Honorable Nicholas Garaufis permanently enjoining Brown from further violations of the antifraud and registration provisions of the federal securities laws. The Court also ordered that Brown pay disgorgement and prejudgment interest in an amount to be determined after further proceedings, and that it would also determine in those proceedings if Brown should be ordered to pay a civil money penalty and, if so, the amount of that penalty.
The Commission's complaint alleged that Brown made numerous oral and written false and misleading statements to investors, primarily senior citizens, who were induced to purchase One Wall Street, Inc. common stock. The defendants, including Brown, raised at least $1.6 million from at least 64 investors.
The litigation is continuing against the remaining defendants and the relief defendant.
For further information, see Litigation Release No. 19809 (Aug. 21, 2006) and Litigation Release No. 19823 (Sept. 6, 2006).
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20124 / May 22, 2007 Accounting and Auditing Enforcement Release No. 2610 / May 22, 2007 SEC v. Gerald H. Levine and Marie A. Levine, Civil Action No. 99 CIV 02568 (D.D.C.) (May 8, 2007) Court Enters Judgment of Securities Fraud Against Gerald and Marie Levine On May 8, 2007, the Honorable Henry H. Kennedy, U.S. District Judge for the District of Columbia, entered judgment against defendants Gerald H. Levine and Marie A. Levine in the Commission's litigation against them for violations of the federal securities laws. In addition to finding both Levines liable for securities fraud and other federal securities law violations, the Court held the defendants jointly and severally liable for disgorgement of $217,368.59 plus prejudgment interest and ordered them to pay, jointly and severally, a civil penalty of $200,000. The Court also enjoined the Levines for a period of ten years from violating the anti-fraud provisions of the federal securities laws, and barred each of them for a period of ten years from serving as an officer or director of a public company.
The judgment followed a December 2006 hearing during which the Court heard evidence on what remedies should be imposed as a result of the October 2003 jury verdict that found that the defendants had fraudulently overstated the assets of C.E.C. Industries Corporation (CEC) and filed false annual and quarterly reports with the Commission. In his Findings of Fact and Conclusions of Law, Judge Kennedy stated, among other things, that "[t]he Levines undertook a complex scheme of stealth and concealment by which they defrauded investors and brought financial gain to themselves," and that they were the "undisputed kingpins" of the scheme. Judge Kennedy further stated the Levines "utterly failed to acknowledge their wrongdoing or show contrition."
The Commission's complaint, filed on September 28, 1999, alleged that the Levines overstated CEC's assets in reports that they filed with the Commission for CEC's fiscal years 1996 and 1997. Gerald Levine was CEC's chief executive officer; his wife Marie was CEC's secretary-treasurer, and the company's principal financial officer. The complaint also alleged that the Levines, acting through another corporate entity, Wire to Wire Inc., profited from their fraud by selling CEC stock while they knew that they had overstated CEC's assets. In particular, the complaint alleged that the Levines overstated the value of two purported corporate assets: (1) a 9,000-acre tract of land in Tennessee that they claimed held 52 million tons of coal and substantial timber assets; and (2) forty one paintings by "Sky Jones," which they claimed had a value of $1.7 million. The Commission proved at trial that CEC (and its corporate affiliates) did not own the land and that the paintings were worth no more than $10,350. Previously, on September 11, 2001, CEC settled the Commission's financial fraud charges against the company, without admitting or denying the allegations, by consenting to the entry of a final judgment that included a permanent injunction.
Judge Kennedy specifically found that Gerald and Marie Levine each violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 13b2-1 thereunder, and Sections 17(a)(1), (2) and (3) of the Securities Act of 1933, and enjoined the Levines for a period of ten years from violating these provisions. The Court also barred the Levines for a period of ten years from serving as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act, or that is required to file reports pursuant to Section 15(d) of the Exchange Act.
For further background information, please see Litigation Release No. 18420 (October 21, 2003), Litigation Release No. 17139 (September 19, 2001) and Litigation Release No. 16299 (September 28, 1999).
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