 UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 16883 / January 31, 2001
Securities
and Exchange Commission v. Stewart, et al., Civil
Action No. 98 CIV 2636 (S.D.N.Y.)
Judgments
Entered Against Two Defendants in Prime Bank Scheme
The
Securities and Exchange Commission announced today
that the Honorable Loretta A. Preska of the United
States District Court for the Southern District
of New York has entered final judgments against
two defendants in a "prime bank" scheme.
The defendants are H.D. Inc. and St. Barth LTD.,
two entities involved in promoting the scheme.
H.D. Inc., formerly a New Jersey corporation,
and St. Barth, formerly registered in the Commonwealth
of the Bahamas, both consented to the judgments,
without admitting or denying the allegations of
the Commission's complaint.
Specifically,
both entities consented to the entry of final
judgments permanently enjoining them from violating
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. They also agreed
to pay disgorgement of $803,470 plus prejudgment
interest of $651,507. The Court, however, waived
the payment of disgorgement and prejudgment interest
and did not impose civil penalties based on the
defendants' demonstrated financial inability to
pay.
The
Commission's complaint alleged that H.D. Inc.
and St. Barth, along with others, fraudulently
obtained more than $1.7 million from at least
three individuals by offering and selling securities
in the form of participations in investment programs
purportedly to trade prime bank instruments. The
trading was to result in spectacular profits for
investors--returns of ten to fifty times their
initial investments in two months to two years--at
no risk. In its complaint, the Commission alleged
that the investment programs were scams, the instruments
themselves bogus. Instead of using the money as
promised, the promoters of the scheme misappropriated
the investors' funds for their own benefit, ultimately
transferring most of the money to offshore accounts.
Previous
judgments were entered against other defendants
in this case. See, Lit. Rel. Nos. 15752, 15819,
and 16207.
Litigation
continues as to the remaining defendants and relief
defendants.
from:
http://www.sec.gov/litigation/litreleases/lr16883.htm
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