International Law

SEC Stops Catholic Affinity Fraud

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From the SEC Press Release about the Gen-See ponzi scheme.

On January 28, 2009, the Honorable William M. Skretny, United States District Judge for the Western District of New York, entered an order granting the Securities and Exchange Commission's motion for preliminary injunction and other relief against defendants, Gen-See Capital Corporation a/k/a Gen Unlimited ("Gen-See") and its owner and president, Richard S. Piccoli.

The court's order continues in place the interim relief initially ordered by the court on January 8, 2009, when the court granted the Commission's application for a temporary restraining order, froze the defendants' assets, and prohibited the defendants from destroying, altering or concealing documents.

The court's January 28, 2009 order also: (a) preliminarily enjoins the defendants from selling any securities whatsoever; (b) preliminarily enjoins the defendants from violating the securities laws, including, but not limited to, Sections 5(a) and 5(c) of the Securities Act of 1933 ("Securities Act"), Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), and Exchange Act Rule 10b-5; (c) directs the defendants to provide verified accountings; and (d) permits the Commission to seek expedited discovery regarding the defendants' assets.

The defendants filed no opposition to the Commission's motion and consented to the relief.

The Commission's complaint, filed on January 8, 2009, alleges that the defendants raised millions of dollars from investors by promising steady, "guaranteed" returns, ranging from 7.1% to 8.3% per annum, and no fees or commissions, and, in November 2008 alone, the defendants raised over $500,000 from investors.

The complaint further alleges that the defendants relied heavily on advertisements in newsletters published by churches and dioceses; the defendants told investors that their money was invested in "high quality" residential mortgages that the defendants were able to purchase at a discount; and that the defendants did not invest the funds as promised, but instead used new investor funds to make payments to earlier investors.

In addition, the complaint alleges that Gen-See's offering and sale of securities to the public was not registered with the Commission.

The litigation is pending.

See also Litigation Release Nos. 20848 (January 8, 2009) and 20849(January 9, 2009).

Full post as published by Misleading Advertising Law on February 04, 2009 (boomark / email).