Friday, July 6, 2012

SEC Litigation Releases: Week in Review

SEC Freezes Assets of Missing Georgia-Based Investment Adviser July 3, 2012, (Litigation Release No. 22409).

According to the complaint (opens to PDF), Aubrey Lee Price has gone into hiding after allegedly "orchestrating a $40 million investment fraud." Price, who started his scam in 2008, not only raised money from more than 100 investors by "selling shares in an unregistered investment fund" but also made illiquid investments in South American real estate and a failing bank. Price then fabricated account statements with false account balances and returns to hide the increasing loss of investors' funds. Price admitted he falsified account statements in a June 2012 letter to some of the investors. Price and his related companies, PFG, LLC; PFGBI, LLC; Montgomery Asset Management, LLC (Florida); and Montgomery Asset Management, LLC (Georgia), have all been charged by the SEC. A temporary restraining order and asset freeze has been placed on Price for the benefit of the investors.

SEC Charges Gold Standard Mining Corp. and Others for False and Misleading Statements Concerning Russian Gold Mining Operations July 3, 2012, (Litigation Release No. 22408).

According to the complaint (opens to PDF), between May 2009 and April 2011 Gold Standard Mining Corp filed materially false and misleading statements about its Russian gold mining operations. Gold Standard, its Chief Executive Officer/Chief Financial Officer Panteleimon Zachos, attorney Kenneth G. Eade, auditor E. Randall Gruber and his firm Gruber & Company LLC have all had a civil action filed against them by the SEC. Gold Standard and Zachos, along with the assistance of Eade, Gruber, and Gruber & Co., are allegedly responsible for these false statements. Furthermore, Edward Randall Gruber misrepresented in audits from 2007 to 2009 that the company had been audited in compliance with the standards of the Public Company Accounting Oversight Board. Gold Standard and Zachos have consented to the final judgments that enjoin them from violating various sections of the Securities Exchange Act and Exchange Act. "Zachos will also be barred from serving as an officer or director of a public company." The SEC "seeks permanent injunctions, disgorgement, prejudgment interest and civil penalties against Eade, Gruber and Gruber & Co. and seeks to bar Eade from serving as an officer or director of a public company."

SEC Charges Peter Madoff with Fraud and False Statements to Regulators June 29, 2012, (Litigation Release No. 22407).

Peter Madoff, the brother of Bernie Madoff, has been charged with "committing fraud, making false statements to regulators, and falsifying books and records in order to create the false appearance of a functioning compliance program over Madoff’s fraudulent investment advisory operations." Peter Madoff  served as Chief Compliance Officer and Senior Managing Director of Bernard L. Madoff Investment Securities LLC (BMIS) from 1969 to December 2008. Allegedly, Madoff created a multitude of compliance documents detailing policies, reviews, certifications, and procedures that were never implemented. Peter Madoff helped Bernie Madoff distribute money to family, friends, and favored investors before the scheme's collapse in late 2008. Peter Madoff pocketed tens of millions of dollars through the scheme. "Among other things, the SEC's complaint seeks permanent injunctions, financial penalties and a court order requiring Peter Madoff to disgorge his ill-gotten gains."

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