|
UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
Litigation Release No. 16100 / March 31, 1999
FINAL JUDGMENT
ENTERED IN SECURITIES AND EXCHANGE COMMISSION v.
JEFFREY
NORTON, DONALD
REYNOLDS, EDWARD
MENSTER AND
JOHN
TARTAGLIA, 95 CIV. 4451 (SHS) (S.D.N.Y.)
On March 8, 1999, a
final judgment of permanent injunction
was
entered against John Tartaglia in SEC v. Norton
et al, No. 95
Civ.
4451 (S.D.N.Y.).
The
judgment permanently enjoins Tartaglia
from future violations of Section
17(a) of the Securities
Act
of
1933,
and Section
10(b) of
the Exchange Act of 1934, and Rule
10b-5
thereunder. In connection
with the
settlement of
this
matter,
Tartaglia agreed
to pay
a $10,000
civil penalty.
Tartaglia
neither
admitted
nor denied
the allegations
of the
Commission's complaint for purposes of the settlement.
On June 14, 1995, the Commission filed a complaint alleging,
in
relevant part,
that defendants
Jeffrey Norton,
Donald
Reynolds,
and John
Tartaglia induced Harold Thurman to deposit
one
million dollars into
an
escrow account
controlled by
an
escrow
holder at
a New
York City
law firm to facilitate the
purchase of "prime bank notes."
The
complaint did
not allege
that
Tartaglia was
a party
to the
escrow agreement.
The
complaint
further alleged
that the prime bank note transaction
never
occurred and that Norton
instructed
the escrow
holder to
wire Thurman's funds out of the escrow account, which Norton
then
misappropriated for his own personal use.
The Commission
has previously
obtained judgments
against
Norton
and Reynolds.
A permanent
injunction was entered against
Norton,
who was ordered to disgorge
approximately
$824,000
in
ill-gotten
gains that
he had
misappropriated from Thurman.
A
civil
penalty was
not imposed
based on
Norton's financial
inability
to pay.
A default judgment was also
previously entered
against Reynolds.
During the litigation,
Tartaglia filed
a motion to dismiss
the Commission's complaint which
the court
granted
in part
and
denied
in part,
on the
grounds that one aspect of the alleged
fraudulent transaction was
not "in connection with" the purchase
or
sale of a security, although
matters
relating to the parties'
escrow agreement were.
Tartaglia also
filed a summary judgment
motion.
The court denied this motion with
respect to
liability
finding that
there were
issues of
material fact
regarding
Tartaglia's
involvement in
the escrow transaction, but granted
the
motion with
respect to
the disgorgement
claim because
Tartaglia
did not receive any of Thurman's funds.
|
