|
SECURITIES AND EXCHANGE
COMMISSION
Washington,
D.C.
LITIGATION RELEASE NO. 15597 / December 19, 1997
SECURITIES AND EXCHANGE COMMISSION v. STEPHEN DESIMONE, FRANCIS
DECABIA AND
GARY MOODY, Civil Action No. 97-CIV-9359
(S.D.N.Y.)
The Securities and Exchange Commission today filed a complaint
in the
United States District Court for
the Southern District of New York against
Stephen DeSimone, Francis DeCabia
and Gary Moody.
The
complaint alleges
that from August through November
1992, DeSimone, a former registered
representative at PaineWebber Inc.
( PaineWebber ), DeCabia, a former
registered representative at Josephthal
Lyon & Ross, Inc., now Josephthal &
Co.
( Josephthal ), and Gary Moody, a self-described
dealer in prime bank
securities,
engaged in a scheme to defraud the Nauru Phosphate
Royalties
Trust
( the Trust ) out of approximately $20 million
for the purchase of
prime
bank securities.
The
defendants never purchased any prime bank
securities for the Trust because
such securities do not exist.
DeSimone,
DeCabia
and Moody were each convicted of a felony in the
state of New York
as
a result of their involvement in the scheme.
The Commission s complaint alleges that the Trust exists for
the benefit of
the residents of the Republic of Nauru, a small island nation
off the coast
of Australia.
The complaint alleges that by mining and selling phosphate
deposits, a chemical constituent of bird guano, the Trust amassed
considerable funds, some of which the Trust invested with the
defendants. The complaint also alleges that through
a series of fraudulent
misrepresentations, DeCabia persuaded
an agent of the Trust to deposit
$20.75 million of the Trust s funds
into an account at Josephthal for the
purchase of prime bank securities.
DeCabia
was the registered
representative on that account.
According to the complaint, through a
series
of further misrepresentations, the defendants
persuaded an agent of
the
Trust to transfer a total of $20.55 million from
the Josephthal account
to
an account at PaineWebber in the name of Moody
s alter-ego corporation. DeSimone
was the registered representative on that account.
The complaint
alleges that without the knowledge
or consent of the Trust, the defendants
caused $19.75 million of the Trust
s funds to be transferred from the
account at PaineWebber to an account
in Singapore.
The
complaint also
alleges that the defendants never purchased any securities
on behalf of the
Trust.
According to the complaint, with the assistance of various
law
enforcement and regulatory authorities, the Trust has recovered
most of the
money it invested with the defendants.
The Commission's complaint alleges that, based on the foregoing
misconduct,
DeSimone, DeCabia and Moody violated
Section 17(a) of the Securities Act of
1933 and Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-
5 thereunder. The complaint
seeks a permanent injunction restraining the
defendants from committing
further violations of these provisions of the
federal securities laws.
The Commission would like to acknowledge the assistance of
the Australian
Securities Commission.
|
