Source: http://www.jdsupra.com/post/documentViewer.aspx?fid=6bb451e9-9d44-41ae-991f-2d565bb1bba8
Timestamp: 2017-08-23 16:25:08
Document Index: 119280940

Matched Legal Cases: ['§ 78', '§ 77', '§ 78', '§ 77', '§ 78', '§ 77', '§ 78', '§ 77', '§ 77', '§ 77', '§ 78', '§ 77', '§ 78', '§ 240', '§ 77', '§ 78', '§ 240', '§ 77', '§78', '§ 77', '§ 78', '§ 240', '§ 77', '§78']

SEC Complaint against International Realty Holdings, Inc., et al. | SEC v. International Realty Holdings, Inc., et al. | Doug Cornelius - JDSupra
SEC v. International Realty Holdings, Inc., et al.
SEC Complaint against International Realty Holdings, Inc., et al.
According to the SEC's complaint, International Realty Holdings, Inc., Ottoniel Medrano (a prison guard at California City Correctional Center), and Leticia Isabel Medrano have raised hundreds of thousands of dollars from investors through a preferred stock offering. They defrauded investors by falsely claiming that Warren Buffett is IRH's "Honorary Chairman."
IRH represented to investors that it is a private real estateinvestment trust that owns at least fifteen real properties throughout Asia. IRH promises annual returns of 10%-15% from IRH's investment in these foreign real estate properties.
However, at least ten of the properties it claims to own appear to be owned by Starhill Global REIT, a company listed on the Singapore Stock Exchange that is not associated with IRH.
After obtaining money from investors, the Medranos transferred funds to offshore bank accounts.
1 2 3 4 6 7 8 9 11 12 13 14 17 19 21 22 23' 24 25· C. GLYNN, Cal Bar. No. 39999 Email: glyIlIlg(Q),sec~ov 7nnQ.M.A,R 23 AM 10: 12 FINOLA H. MANVELIAN, Cal. Bar No. 1"8(168 I manvelianf~sec~ov CLEnt\ U~.. r:::STRICT COU£:T ~r;~I~~u~th~~~ot.A~se~~~N, Cal. BarC:N-o·~~8p~~F~!£ ...cAut-, BERNA-W B. SMY fI III, Cal. Bar No. ~J'..J..7.l-74~1__. _ smythb@sec.gov for Plaintiff and Exchange Commission R. Ty:son, Region~l Direc!or . G. PetI1lon, Associate RegIOnal DIrector J000 M.. M~Coy III, Regional Trial Counsel ,5670 WIlshIre BoulevarCk 11th Floor California ~0036-3648 965-3998 FacsImile: 965-3908 STATES DISTRICT COURT DISTRICT OF CALIFORNIA FILED AND EXCHANGE REALTY INC.; OTTONIEL and LETICIA ISABEL CaQ Wr('\ 9:-1 945 ~lSL u y\J FOR VIOLATIONS FEDERAL SECURITIES {\}f.",~ .lii~lj.H'H;l"fjf}Securities and Exchange Commission ("COmniission") alleges as AND VENUE 1. has jurisdiction over this action pursuant to Sections 20(b), . I) and 22(a) ofthe Securities Act of 1933 ("Securities Act"), 15 U.S.C. 77t(77t(d)(l), and 77v(a), and Sections 21(d)(1), 21(d)(3)(A), 21(e),and 27 ofthe Exchange Act of 1934 ("Exchange Act"), 15 U.S.C;§§ 78u(d)(1), FILED COPY GREGORY C. GLYNN, Cal Bar. No. 39999 FINOLlMB$gLIAN, Cal. Bar No. lRlP 23 SH l():'2 Email: manvelianf@sec.gov e< e r; k ',' :. :• '. t r ic ; cous 3 JESSICA R. PUATHASNANON, Cal. BarW.*™*^*-<-, cati* Email: puathasnanonj@sec.gov LOS ANGFi BERNATU) B. SMYTH III, Cal. Bar No. 2,17741 Email: smythb@sec.gov 5 Attorneys for Plaintiff Securities and Exchange Commission Rosalind R. Tyson, Regional Director Andrew G. Petillon, Associate Regional Director John M. McCoy III, Regional Trial Counsel 5670 Wilshire Boulevard, 11th Floor Los Angeles, California 90036-3648 Telephone: (323) 965-3998 Facsimile: (323) 965-3908 10 11 12 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA 14 SECURITIES AND EXCHANGE ca0vo9-1945 «&£ ft.?.*?* 15 COMMISSION, COMPLAINT FOR VIOLATIONS 16 Plaintiff, OF THE FEDERAL SECURITIES LAWS 17 vs. 18 INTERNATIONAL REALTY HOLDINGS, INC.; OTTONIEL 19 MEDRANO; and LETICIA ISABEL MEDRANO, 20 Defendants. 21 22 Plaintiff Securities and Exchange Commission ("Commission") alleges as 23 follows: 24 JURISDICTION AND VENUE 25 1. This Court has jurisdiction over this action pursuant to Sections 20(b), 26 20(d)(1) and 22(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. 27 §§ 77t(b), 77t(d)(l), and 77v(a), and Sections 21(d)(1), 21(d)(3)(A), 21(e), and 27 28 of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §§ 78u(d)(l), Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=6bb451e9-9d44-41ae-991f-2d565bb1bba81 78u(d)(3)(A), 78u(e), and 78aa. Defendants have, directly or indirectly, made use 2 of the means or instrumentalities of interstate commerce, of the mails, or ofthe 3 facilities of a national securities exchange in connection with the transactions, acts, practices and courses of business alleged in this Complaint. 5. 2. Venue is proper in this district pursuant to Section 22(a) ofthe Securities Act, 15 U.S.C. § 77v(a), and Section 27 ofthe Exchange Act, 15 U.S.C. 7 § 78aa, because certain of the transactions, acts, practices and courses of conduct 8 constituting violations ofthe federal securities laws occurred within this district, 9 and all ofthe defendants reside and/or are located in this district. 10 SUMMARY 11 3. This matter involves the ongoing fraudulent offer and sale of several" 12 hundred thousand dollars of securities by defendants International Realty 13 Holdings, Inc. ("IRH"), Ottoniel Medrano ("0. Medrano"), and Leticia Isabel 14" Medrano ("L. Medrano") (collectively, "Defendants"). From October 2008 15 through the present, IRH, a California corporation~ has been engaged in offering 16 IRH preferred stock and has raised at least $485,000 and likely more than 17 $700,000 from at least 15 investors in six states from the offering. Over the past 18 two months, investor deposits have increased to about $250,000 per month and, 19 to IRH's offering materials, it intends to raise up to $6 billion from the 20" offering. 21" 4. In soliciting investors, representatives ofIRH falsely claim that 22. Buffett, chief executive officer and chairman ofBerkshire Hathaway, is the Chairman" ofIRH's board ofdirectors and that IRH was established in 24 a Berkshire Hathaway entity. .25"." representatives also falsely claim to investors that Credit Suisse ·owner of IRH. 27 6. Finally, IRH represents to investors that it is a private real estate 28 investment trust that owns at least fifteen real properties throughout Asia. 1 78u(d)(3)(A), 78u(e), and 78aa. Defendants have, directly or indirectly, made use 2 of the means or instrumentalities of interstate commerce, of the mails, or of the 3 facilities of a national secuities exchange in connection with the transactions, acts, 4 practices and courses of business alleged in this Complaint. 5 2. Venue is proper in this distict pursuant to Section 22(a) of the 6 Secuities Act, 15 U.S.C. § 77v(a), and Section 27 of the Exchange Act, 15 U.S.C. 7 § 78aa, because certain of the transactions, acts, practices and courses of conduct 8 constituting violations of the federal secuities laws occurred within this distict, 9 and all of the defendants reside and/or are located in this distict. 10 SUMMARY 11 3. This matter involves the ongoing raudulent offer and sale of several 12 hundred thousand dollars of secuities by defendants International Realty 13 Holdings, Inc. ("IRH"), Ottoniel Medrano ("O. Medrano"), and Leticia Isabel 14 Medrano ("L. Medrano") (collectively, "Defendants"). From October 2008 15 through the present, IRH, a Califonia corporation, has been engaged in offeing 16 IRH preferred stock and has raised at least $485,000 and likely more than 17 $700,000 rom at least 15 investors in six states rom the offeing. Over the past 18 two months, investor deposits have increased to about $250,000 per month and, 19 according to IRH's offeing mateials, it intends to raise up to $6 billion rom the 20 offeing. 21 4. In soliciting investors, representatives of IRH falsely claim that 22 Warren Buffett, chief executive officer and chairman of Berkshire Hathaway, is the 23 "Honorary Chairman" of IRH's board of directors and that IRH was established in 24 2005 by a Berkshire Hathaway entity. 25 5. IRH representatives also falsely claim to investors that Credit Suisse 26 is a 50% owner of IRH. 27 6. Finally, IRH represents to investors that it is a pivate real estate 28 investment trust that owns at least fiteen real properties throughout Asia. 2 Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=6bb451e9-9d44-41ae-991f-2d565bb1bba8124610 11 12 13 14 15 16 17 18 19 21 23 25 26 27 28 However, at least ten ofthe properties it claims to own appear to be owned by Starhill Global REIT, a company listed on the Singapore Stock Exchange that is IRH. 7. Representatives ofIRH, as well as offering materials provided to investors, also promise annual returns of 10%-15% from IRH's investment in foreign real estate properties. Rather than investing in international IRH, O. Medrano, and L. Medrano have transferred $535,000 ofthe almost $700,000 deposited into IRH's bank account (at least $485,000 of is investor money) to bank accounts in the Philippines held by a law firm. 8. The Defendants, by engaging in the conduct described in this have violated, and unless enjoined will continue to violate, the antifraud and securities registration provisions ofthe federal securities laws. By this Complaint, the Commission seeks emergency relief against the Defendants, including a temporary restraining order, an asset freeze, an order repatriating assets, accountings, an order prohibiting the destruction of documents, and an order expediting discovery, as well as preliminary and permanent injunctions, with prejudgment interest, and civil penalties. DEFENDANTS 9. Realty Holdings, Inc. is an active California registered with the·California Secretary of State since August 2008. place ofbusiness is in Palmdale, California. IRH has not registered an offering of securities under the Securities Act or a class of securities under the Exchange Act. Nor has it registered any offering of securities with the state of 10. Medrano, ofPalmdale, California, is a guard with the California City Correctional Center, a federal prison maintained by Corrections Corporation ofAmerica. O. Medrano has signing authority and control over IRH's bank account. 3 1 However, at least ten of the properties it claims to own appear to be owned by 2 Starhill Global REIT, a company listed on the Singapore Stock Exchange that is 3 not associated with IRH. 4 7. Representatives of IRH, as well as offeing mateials provided to 5 potential investors, also promise annual returns of 10%-15% rom IRH's 6 investment in foreign real estate properties. Rather than investing in international 7 real estate, however, IRH, O. Medrano, and L. Medrano have transferred $535,000 8 of the almost $700,000 deposited into IRH's bank account (at least $485,000 of 9 which is investor money) to bank accounts in the Philippines held by a law firm. 10 8. The Defendants, by engaging in the conduct descibed in this 11 Complaint, have violated, and unless enjoined will continue to violate, the 12 antiraud and securities registration provisions of the federal securities laws. By 13 this Complaint, the Commission seeks emergency relief against the Defendants, 14 including a temporary restraining order, an asset reeze, an order repatiating 15 assets, accountings, an order prohibiting the destruction of documents, and an 16 order expediting discovery, as well as preliminary and permanent injunctions, 17 disgorgement with prejudgment interest, and civil penalties. 18 19 9. International Realty Holdings, Inc. is an active Califonia 20 corporation registered with the California Secretary of State since August 2008. Its 21 principal place of business is in Palmdale, Califonia. IRH has not registered an 22 offeing of secuities under the Secuities Act or a class of secuities under the 23 Exchange Act. Nor has it registered any offeing of secuities with the state of 24 California. 25 10. Ottoniel Medrano, of Palmdale, Califonia, is a guard with the 26 Califonia City Correctional Center, a federal pison maintained by Corrections 27 Corporation of Ameica. O. Medrano has signing authoity and control over IRH's 28 bank account. Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=6bb451e9-9d44-41ae-991f-2d565bb1bba812456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 11. Leticia Isabel Medrano, has signing authority and control over IRH's bank account. ·IRH OFFERING 12. IRH was incorporated in California in August 2008. Beginning in October 2008, representatives ofIRH began generally soliciting investors to purchase preferred stock in IRH. Potential investors were -and continue to be initially contacted through cold calls by IRH representatives. Investors have also spoken with a woman who identified herself only as an administrative assistant at IRH. In addition, IRH solicits investors through the mailing of offering materials and through an Internet·website. 13. IRH claims to be a privately held real estate company that owns numerous properties in Asia. Although investors are told that their investment is for the purchase ofIRH preferred stock, some investors have been told that a portion oftheir investment would also be (1) used to acquire up to 40,000,000 "Series C" shares ofBerkshire Hathaway stock, which investors were told were being issued but were not yet trading publicly, and (2) placed in an off-shore Credit Suisse money market account. IRH claims that investors will receive annual returns of10 to 15% on their investment. 14. As ofFebruary 28,2009, IRH has raised at least $485,000 and likely more than $700,000 from at least 15investors in at least six states. IRH continues to solicitinvestors and raise additional funds. In fact, within the last week, an IRR investorsent anadditional $5,000 to IRH. The rate at which IRH has raised funds has increased significantly, averaging about $250,000 a month over the last two months. 15. At least one ofthe investors was not accredited and was asked no questions regarding his accreditation status or sophistication level prior to his investment. 1 11. Leticia Isabel Medrano, has signing authoity and control over IRH's 2 bank account. 3 THE IRH OFFERING 4 12. IRH was incorporated in Califonia in August 2008. Beginning in 5 October 2008, representatives of IRH began generally soliciting investors to 6 purchase preferred stock in IRH. Potential investors were -and continue to be -7 initially contacted through cold calls by IRH representatives. Investors have also 8 spoken with a woman who identiied herself only as an administrative assistant at 9 IRH. In addition, IRH solicits investors through the mailing of offeing mateials 10 and through an Internet website. 11 13. IRH claims to be a pivately held real estate company that owns 12 numerous properties in Asia. Although investors are told that their investment is 13 for the purchase of IRH preferred stock, some investors have been told that a 14 portion of their investment would also be (1) used to acquire up to 40,000,000 15 "Seies C" shares of Berkshire Hathaway stock, which investors were told were 16 being issued but were not yet trading publicly, and (2) placed in an off-shore Credit 17 Suisse money market account. IRH claims that investors will receive annual 18 retuns of 10 to 15% on their investment. 19 14. As of February 28, 2009, IRH has raised at least $485,000 and likely 20 more than $700,000 rom at least 15 investors in at least six states. IRH continues 21 to solicit investors and raise additional funds. In fact, within the last week, an IRH 22 investor sent an additional $5,000 to IRH. The rate at which IRH has raised funds 23 has increased signiicantly, averaging about $250,000 a month over the last two 24 months. 25 15. At least one of the investors was not accredited and was asked no 26 questions regarding his accreditation status or sophistication level pior to his 27 investment. 28 4 Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=6bb451e9-9d44-41ae-991f-2d565bb1bba812346789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16. Investor funds are deposited into a single account held by IRH. O. Medrano and L. Medrano are the only signatories on the account. In addition, the Palmdale, California address that IRH claims as its business address is the same address as o. Medrano's personal address on file with his employer. Material Misrepresentations 17. In offering and selling IRH preferred stock, IRH and the Medranos have made a number of false representations to investors. First, investors are told over the phone, as well as through representations on IRH's website and offering materials, that the company was established in 2005 by a Berkshire Hathaway entity and that Warren Buffett is IRH's "Honorary Chairman." In fact, IRH was not even incorporated until 2008 and neither Berkshire Hathaway nor Warren Buffett have ever had any business relationship with IRH. 18. IRH's offering materials also include a photograph ofMr. Buffett with a group of eight people that is captioned "Mr. Warren Buffet [sic] with IRH staff." In fact, the photograph appears to have been copied from photograph on the website ofthe University ofMichigan's business school documenting a visit to the school from Mr. Buffett. 19. Second, investors are being told that IRH is in partnership with Credit Suisse and that Credit Suisse is a 50% owner of IRH. They are also being told that money not being invested directlyin international properties or used to purchase Class.C shares of Berkshire Hathaway stock is being deposited into money market accounts atCredit Suisse. However, Credit Suisse has no documents in its possessionthat relate to IRH. Irid~ed, information regarding Credit Suisse contained in IRH offering material~ appears to have been directly copied from CreditSuisse's website. 20. IRHhas also provided ,elt least one investor with falsified Credit Suisse money market account statelIlents. Moreover, there are no transfers of money from the IRH bank to any accounts at Credit Suisse. 5 1 16. Investor funds are deposited into a single account held by IRH. O. 2 Medrano and L. Medrano are the only signatoies on the account. In addition, the 3 Palmdale, Califonia address that IRH claims as its business address is the same 4 address as O. Medrano's personal address on ile with his employer. 5 IRH's Material Misrepresentations 6 17. In offeing and selling IRH preferred stock, IRH and the Medranos 7 have made a number of false representations to investors. First, investors are told 8 over the phone, as well as through representations on IRH's website and offeing 9 mateials, that the company was established in 2005 by a Berkshire Hathaway 10 entity and that Warren Buffett is IRH's "Honorary Chairman." In fact, IRH was 11 not even incorporated until 2008 and neither Berkshire Hathaway nor Warren 12 Buffett have ever had any business relationship with IRH. 13 18. IRH's offeing mateials also include a photograph of Mr. Buffett 14 with a group of eight people that is captioned "Mr. Warren Buffet [sic] with IRH 15 staff." In fact, the photograph appears to have been copied rom photograph on the 16 website of the University of Michigan's business school documenting a visit to the 17 school rom Mr. Buffett. 18 19. Second, investors are being told that IRH is in partnership with Credit 19 Suisse and that Credit Suisse is a 50% owner of IRH. They are also being told that 20 money not being invested directly in intenational properties or used to purchase 21 Class C shares of Berkshire Hathaway stock is being deposited into money market 22 accounts at Credit Suisse. However, Credit Suisse has no documents in its 23 possession that relate to IRH. Indeed, information regarding Credit Suisse 24 contained in IRH offeing mateials appears to have been directly copied rom 25 Credit Suisse's website. 26 20. IRH has also provided at least one investor with falsiied Credit 27 Suisse money market account statements. Moreover, there are no transfers of 28 money rom the IRH bank to any accounts at Credit Suisse. 5 Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=6bb451e9-9d44-41ae-991f-2d565bb1bba81 2 3 4 5. 6 .. 7 8· 9 10 11 12 13 14 15 16 17 19 20 . 21: 22 23 . ··24 25 27 28 21. IRH represents to investors that it owns at least fifteen real properties in Singapore, Japan, Hong Kong, and China. At least ten of the properties IRH claims to own appear to be owned by Starhill Global REIT, a company listed on· the Singapore Stock Exchange that is not associated with IRH. It appears that the photographs ofa number ofthe properties that are included in IRH's offering materials and website were lifted directly from Starhill's website. 22. IRH also makes false representations to investors regarding IRH's financial performance. IRH's website includes purported annual· financial information f9rthe company dating back to 2005. Specifically, IRH claims in its offering materials that it generated $17.4 million in revenue in 2005, $223 million in revenue in 2006, and $254.3 million in revenue in 2007. IRH also claims that as ofDecember 31,2007, ithad $4.S.1Jillion in total assets (including $4.7 billion in investment properties). Moreover, IRH claims that in 2005, the value of its preferred shares were $3.25 per share, $3.42 per share in 2006, and $3.66 per share in 2007. 23. IRH was not incorporated until 2008. The Commission therefore alleges upon information and belief that IRH did not generate revenues of almost $500 million from 2005 through 2Q07, and does not hold over $4 billion in assets. Investor Futtds Have Been Wired To International Bank Accounts . 24. Ofthe approximately $700,000 deposited into IRH's accounts as of . . . February 28, 2009 (at least $485,000 ofwhich is investor money), at least $535,000 has been wired by the Medranos into bank accounts held by a law firm in the Philippines. FIRST CLAIM FOR RELIEF Offer And Sale Of Securities . Violations ofSections5(a) and 5(c) of the Securities Act All Defendants) 25. The Commission reaHeges and incorporates by reference paragraphs 1 1 21. IRH represents to investors that it owns at least fiteen real properties 2 in Singapore, Japan, Hong Kong, and China. At least ten of the properties IRH 3 claims to own appear to be owned by Starhill Global REIT, a company listed on 4 the Singapore Stock Exchange that is not associated with IRH. It appears that the 5 photographs of a number of the properties that are included in IRH's offeing 6 materials and website were lited directly from StarhilFs website. 7 22. IRH also makes false representations to investors regarding IRH's 8 inancial performance. IRH's website includes purported annual inancial 9 information for the company dating back to 2005. Speciically, IRH claims in its 10 offeing mateials that it generated $17.4 million in revenue in 2005, $223 million 11 in revenue in 2006, and $254.3 million in revenue in 2007. IRH also claims that as 12 of December 31, 2007, it had $4.8 billion in total assets (including $4.7 billion in 13 investment properties). Moreover, IRH claims that in 2005, the value of its 14 preferred shares were $3.25 per share, $3.42 per share in 2006, and $3.66 per share 15 in 2007. 16 23. IRH was not incorporated until 2008. The Commission therefore 17 alleges upon information and belief that IRH did not generate revenues of almost 18 $500 million rom 2005 through 2007, and does not hold over $4 billion in assets. 19 Investor Funds Have Been Wired To International Bank Accounts 20 24. Of the approximately $700,000 deposited into IRH's accounts as of 21 February 28, 2009 (at least $485,000 of which is investor money), at least 22 $535,000 has been wired by the Medranos into bank accounts held by a law firm in 23 the Philippines. 24 FIRST CLAIM FOR RELIEF 25 Unregistered Offer And Sale Of Securities 26 Violations of Sections 5(a) and 5(c) of the Securities Act 27 (Against All Defendants) 28 25. The Commission realleges and incorporates by reference paragraphs 1 6 Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=6bb451e9-9d44-41ae-991f-2d565bb1bba8123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 through 24 above. 26. The Defendants, and each of them, by engaging in the conduct described above, directly or indirectly, made use of means or instrumentalities of transportation or communication in interstate commerce or ofthe mails, to offer to sell or to sell securities, or to carry or cause such securities to be carried through the mails or in interstate commerce for the purpose of sale or delivery after sale. 27. No registration statement has been filed with the Commission or has been in effect with respect to the offering alleged herein. 28. By engaging in·the conduct described above, each ofthe Defendants violated, and unless restrained and enjoined will continue to violate, Sections 5(a) and 5(c) ofthe Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c). SECOND CLAIM FOR RELIEF Fraud In The Offer Or Sale Of Securities Violations of Section 17(a) ofthe Securities Act (Against All Defendants) 29. The Commission realleges and incorporates by reference paragraphs 1 through 24 above. 30. The Defendants, and each ofthem, by engaging in the conduct described above, in the offer or sale of securities by the use ofmeans or instruments oftransportation or communication in interstate commerce or by use ofthe mails directly or indirectly: a. with·scienter, employed devices, schemes, or artifices to defraud; b. obtainedmon~yorpropertybymeans ofuntrue statements ofa material fact ()1" by omitting to state a material fact necessary in order to makethe statements made, in light ofthe circumstances under which they were made, not misleading; or c. engaged in transactions, practices, or courses ofbusiness which 1 through 24 above. 2 26. The Defendants, and each of them, by engaging in the conduct 3 described above, directly or indirectly, made use of means or instrumentalities of 4 transportation or communication in interstate commerce or of the mails, to offer to 5 sell or to sell securities, or to carry or cause such secuities to be caried through 6 the mails or in interstate commerce for the purpose of sale or delivery ater sale. 7 27. No registration statement has been iled with the Commission or has 8 been in effect with respect to the offeing alleged herein. 9 28. By engaging in the conduct descibed above, each of the Defendants 10 violated, and unless restrained and enjoined will continue to violate, Sections 5(a) 11 and 5(c) of the Secuities Act, 15 U.S.C. §§ 77e(a) and 77e(c). 12 SECOND CLAIM FOR RELIEF 13 Fraud In The Offer Or Sale Of Securities 14 Violations of Section 17(a) of the Securities Act 15 (Against All Defendants) 16 29. The Commission realleges and incorporates by reference paragraphs 1 17 through 24 above. 18 30. The Defendants, and each of them, by engaging in the conduct 19 descibed above, in the offer or sale of secuities by the use of means or 20 instruments of transportation or communication in interstate commerce or by use 21 of the mails directly or indirectly: 22 a. with scienter, employed devices, schemes, or artiices to 23 defraud; 24 b. obtained money or property by means of untrue statements of a 25 mateial fact or by omitting to state a mateial fact necessary in 26 order to make the statements made, in light of the 27 circumstances under which they were made, not misleading; or 28 c. engaged in transactions, practices, or courses of business which 7 Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=6bb451e9-9d44-41ae-991f-2d565bb1bba8operate as a fraud or deceit upon the engaging in the conduct described above, the Defendants violated, and enjoined will continue to violate, Section 17(a) ofthe Securities Act, 15 U.S.C. § 77q(a). CLAIM FOR RELIEF In Connection With The Purchase Or Sale Of Securities of Section lO(b) of the Exchange Act and Rule lOb-5 Thereunder All Defendants) realleges and incorporates by reference paragraphs 1 24 above. and each ofthem, by engaging in the conduct described above, directly or indirectly, in connection with the purchase or sale of a security, by the use ofmeans or instrumentalities ofinterstate commerce, ofthe or ofthe facilities of a national securities exchange, with scienter: devices, schemes, or artifices to defraud; a material fact or omitted to state a fact necessary in order to make the statements made, in ofthe circumstances under which they were made, not or or courses ofbusiness which operate as a fraud or deceit upon other in the conduct described above, the Defendants violated, and enjoined·will continue to violate, Section 10(b) ofthe 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. ·27 240.10b-5. III 1 operated or would operate as a raud or deceit upon the 2 purchaser. 3 31. By engaging in the conduct descibed above, the Defendants violated, 4 and unless restrained and enjoined will continue to violate, Section 17(a) of the 5 Secuities Act, 15 U.S.C. § 77q(a). 6 THIRD CLAIM FOR RELIEF 7 Fraud In Connection With The Purchase Or Sale Of Securities 8 Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 9 (Against All Defendants) 10 32. The Commission realleges and incorporates by reference paragraphs 1 11 through 24 above. 12 33. The Defendants, and each of them, by engaging in the conduct 13 descibed above, directly or indirectly, in connection with the purchase or sale of a 14 secuity, by the use of means or instrumentalities of interstate commerce, of the 15 mails, or of the facilities of a national securities exchange, with scienter: 16 a. employed devices, schemes, or artiices to deraud; 17 b. made untrue statements of a mateial fact or omitted to state a 18 material fact necessary in order to make the statements made, in 19 the light of the circumstances under which they were made, not * 20 misleading; or 21 c. engaged in acts, practices, or courses of business which 22 operated or would operate as a raud or deceit upon other 23 persons. 24 34. By engaging in the conduct described above, the Defendants violated, 25 and unless restrained and enjoined will continue to violate, Section 10(b) of the 26 Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. 27 § 240.10b-5. 28 ///8 Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=6bb451e9-9d44-41ae-991f-2d565bb1bba8123 4569 10 11 12 13 14 15 16 17 18 20 21 22 23 24 25 26 27 PRAYER FOR RELIEF WHEREFORE, the Commission respectfully requests that the Court: Issue findings of fact and conclusions of law that the Defendants committed the alleged violations. Issue judgments, in forms consistent with Fed. R. Civ. P. 65(d), temporarily, preliminarilyand permanently enjoining the Defendants and their officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with any ofthem, who receive actual notice ofthe judgment by personal service or otherwise, and each ofthem, from violating Sections 5(a), 5(c), and l7(a) ofthe Securities Act, 15 U.S.C. §§ 77e(a), 77e(c), and 77q(a), and Section lOeb) ofthe Exchange Act, 15 U.S.C. § 78j(b), and Rule lOb-5 thereunder, . 17 C.F.R. § 240.10b-5. Issue, in a form consistent with Fed. R. Civ. P. 65, a temporary restraining order and a preliminary injunction freezing the assets of each ofthe Defendants and any entity affiliated with any ofthem, repatriating assets Defendants have transferred outside of the United States, requiring accountings from the Defendants, prohibiting each ofthe Defendants from destroying documents, and granting expedited discovery. IV. Order each ofthe Defen.dants to disgorge all ill-gotten gains from their illegal conduct, together with prejlldgment interest thereon. V. Order each ofthe Defendants to pay civil penalties under Section 20(d) of the SecuritiesAct, 15 U.S.C. § 77t(d), and Section 21 (d)(3) ofthe Exchange Act, 15 U.S.C. §78u(d)(3). 9 1 PRAYER FOR RELIEF 2 WHEREFORE, the Commission respectfully requests that the Court: I. 4 Issue indings of fact and conclusions of law that the Defendants committed 5 the alleged violations 6 II. 7 Issue judgments, in forms consistent with Fed. R. Civ. P. 65(d), temporaily, 8 preliminaily and permanently enjoining the Defendants and their oficers, agents, 9 servants, employees, and attorneys, and those persons in active concert or 10 participation with any of them, who receive actual notice of the judgment by 11 personal service or otherwise, and each of them, rom violating Sections 5(a), 5(c), 12 and 17(a) of the Secuities Act, 15 U.S.C. §§ 77e(a), 77e(c), and 77q(a), and 13 Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 14 17 C.F.R. § 240.10b-5. 15 III. 16 Issue, in a form consistent with Fed. R. Civ. P. 65, a temporary restraining 17 order and a preliminary injunction reezing the assets of each of the Defendants 18 and any entity afiliated with any of them, repatiating assets Defendants have 19 transferred outside of the United States, requiing accountings rom the 20 Defendants, prohibiting each of the Defendants rom destroying documents, and 21 granting expedited discovery. 22 IV 23 Order each of the Defendants to disgorge all ill-gotten gains rom their 24 illegal conduct, together with prejudgment interest thereon. 25 V. 26 Order each of the Defendants to pay civil penalties under Section 20(d) of 27 the Secuities Act, 15 U.S.C. § 77t(d), and Section 21(d)(3) of the Exchange Act, 28 15 U.S.C. §78u(d)(3). 9 Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=6bb451e9-9d44-41ae-991f-2d565bb1bba8123456 789 10 11 12 13 14 16 17 20 21 22 23 24 25 26 27 28 Retain jurisdictionofthis action in accordance with the principles of equity and the Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that may be entered, or to entertain any suitable application or motion for additional reliefwithin the jurisdiction of this Court. VII. Grant such otherand further relief as this Court may determine to be just and necessary. DATED: March?3, 2009 Gregory_Glynn Finola H~ .Manvelian Jessica R. Puathasnanon Bernard B. Smyth III Attorneys for Plaintiff Securities and Exchange Commission 1 VI. 2 Retain jurisdiction of this action in accordance with the principles of equity 3 and the Federal Rules of Civil Procedure in order to implement and carry out the 4 terms of all orders and decrees that may be entered, or to entertain any suitable 5 application or motion for additional relief within the jurisdiction of this Court. 7 Grant such other and further relief as this Court may determine to be just and 8 necessary. 9 10 DATED: March23, 2009 AM Gregory Glynn 11 Finola H. Manvelian Jessica R. 12 BPeuantahrads Bn.a Snomnyth III Attoneys for Plaintiff 13 Secuities and Exchange Commission 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=6bb451e9-9d44-41ae-991f-2d565bb1bba8
Download PDF [3611KB]