U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20140 / June 4, 2007 SEC v. Harold S. Longs and Your Money Worth, Inc., Civil Action No. 4-07-CV-00000537-SWW (U.S.D.C./E.D. Arkansas, Western Division) SEC Files Emergency Enforcement Action to Halt an Ongoing Ponzi Scheme On June 1, 2007, the Securities and Exchange Commission (SEC) filed an emergency action against Harold S. Longs (Longs) and Your Money Worth, Inc. (YMW), alleging that the defendants have raised at least $755,000 and defrauded over 60 investors by promising annual returns of up to 96% in connection with the unregistered offer and sale of YMW securities.
In its complaint, the SEC alleges that from at least January 2006 to the present, the defendants solicited investors nationwide by selling memberships into a "private community of invested believers sharing a new trend of higher finance." The complaint further alleges that, after paying a membership fee, investors are allowed to invest in any of at least eight investment programs or "opportunities" that claim to guarantee principal and provide investors with annual returns from 36% to 96% through investments in "high growth investment products on all major markets of the world." In actuality, the complaint alleges, the defendants used investor funds to pay the returns in a classic ponzi scheme. The complaint also alleges that the defendants enriched themselves at the expense of investors by misappropriating investor funds for their benefit, including payments to restaurants, hotels, and airlines.
The complaint charges Longs and YMW with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The court granted, among other relief, a temporary restraining order that included an asset freeze. In its enforcement action, the SEC is seeking additional relief, including permanent injunctions, disgorgement, and civil penalties against Longs and YMW.
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20141 / June 4, 2007 SEC v. Justin Scott and Omid Kamshad, et al., Civil Action No. 03-12082-EFH (D. Mass.) SEC Settles Action Against Former Putnam Portfolio Managers The Commission announced today that a final judgment by consent was entered by the United States District Court of the District of Massachusetts against Justin Scott and Omid Kamshad, two former Managing Directors and portfolio managers at Putnam Investments. The final judgments against Scott, age 49 of Marblehead, Massachusetts, and Kamshad, age 44, of London, England, permanently enjoin them from violating antifraud provisions of the Investment Advisers Act, require them to disgorge their ill-gotten gain, plus prejudgment interest, and order them each to pay a $400,000 civil penalty. Scott and Kamshad have also consented to entry of an Order suspending them from association with an investment adviser for one year.
The Commission's Complaint, filed October 28, 2003, alleged that Scott and Kamshad engaged in inappropriate trading of Putnam mutual funds shares, including in mutual funds over which they had investment authority. The Commission charged that Scott and Kamshad's short-term trades, which were made in their Putnam-administered deferred compensation and retirement accounts, violated their responsibilities to other fund shareholders, that Scott and Kamshad failed to disclose their trading and that, by their trading, they potentially harmed other fund shareholders.
To settle the Commission's charges, Scott consented, without admitting or denying the allegations of the Complaint, to the entry of a final judgment permanently enjoining him from violation of Sections 206(1) and (2) of the Advisers Act. The judgment orders Scott to pay disgorgement of ill-gotten gain in the amount of $489,439, plus prejudgment interest in the amount of $159,475. The judgment also orders Scott to pay a civil penalty in the amount of $400,000. The judgment provides that half of Scott's total liability of $1,048,914 may be offset by payments made by Scott to settle a related action brought by the Secretary of State of the Commonwealth of Massachusetts. In addition, Scott also consented to the issuance of an SEC order, based on the entry of the injunction in the federal court action, which suspends him from association with any investment adviser for one year.
To settle the Commission's charges, Kamshad similarly consented, without admitting or denying the allegations of the Complaint, to the entry of a final judgment permanently enjoining him from violation of Sections 206(1) and (2) of the Advisers Act. The judgment orders Kamshad to pay disgorgement of ill-gotten gain in the amount of $57,157, plus prejudgment interest in the amount of $13,709. The judgment also orders Kamshad to pay a civil penalty in the amount of $400,000. The judgment provides that half of Kamshad's total liability of $470,866 may be offset by payments made by Kamshad to settle a related action brought by the Secretary of State of the Commonwealth of Massachusetts. In addition, Kamshad also consented to the issuance of an SEC order, based on the entry of the injunction in the federal court action, which suspends him from association with any investment adviser for one year.
The Commission acknowledges the assistance of the Secretary of State of the Commonwealth of Massachusetts in this matter.
For further information, see Litigation Release No. 18428 (October 28, 2003)
Administrative Proceeding Nos. IA-2608 and IA-2609
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20142 / June 4, 2007 SEC v. Michael J. Snyder (United States District Court for the District of Colorado, Civil Action No. 07-CV-01162) SEC Charges Former Chief Executive Officer of Red Robin Gourmet Burgers, Inc. With Fraud Arising From Failure to Report Compensation The Securities and Exchange Commission today filed civil fraud charges against Michael J. Snyder, the former CEO of Red Robin Gourmet Burgers, Inc. ("Red Robin"), arising from Snyder's misrepresentation of personal travel expenses as business expenses to Red Robin and its accountants. The Commission's complaint, filed in the United States District Court for the District of Colorado, alleges that Snyder's misrepresentations caused Red Robin to fail to report material amounts of Snyder's compensation in Commission filings for the years 2002 through 2004.
Red Robin, headquartered in Greenwood Village, Colorado, owns and franchises a chain of restaurants in the United States and Canada. The Commission's complaint alleges that, during 2002, 2003 and 2004, Snyder incurred personal travel expenses of roughly $1.2 million for charter jet travel, and hotel and dinner expenses. The Complaint further alleges that Snyder submitted expense reports and invoices to Red Robin for payment of these personal expenses, misrepresenting that a business purpose existed for the charter jet trips and hotel and dinner expenses, failing to report the presence of personal guests on the trips, and failing to accurately report the destinations of the charter flights.
The Commission's complaint charges Snyder with violations of Sections 10(b) and 14(a) of the Securities and Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 14a-9 thereunder, and Section 17(a) of the Securities Act of 1933. The complaint further charges Snyder with violations of Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder, and with aiding and abetting Red Robin's violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-1 thereunder, and with directly violating Rule 13a-14. The Commission's complaint seeks a permanent injunction, civil penalties, and an order barring Snyder from serving as an officer or director of a public company.
Without admitting or denying the allegations in the Commission's complaint, Snyder consented to the entry of a final judgment permanently enjoining him from violating or aiding and abetting violations of the federal securities laws listed above. Snyder also consented to the imposition of a $250,000 civil penalty, and an officer and director bar.
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