Hedge Fund Focus

Court Orders Disgorgement and Prejudgment Interest Against Defendant Michael Lauer

On May 19, 2009, the U.S. District Court of the Southern District of Florida entered an order requiring Lauer to disgorge all money he ultimately received, based on the fraudulent conduct he demonstrated in his hedge fund scheme.

The following SEC release reprinted in full, can be found here. For information on earlier actions in this case, please see the following related SEC releases:

• Federal Court Issues Emergency Order Freezing Assets of Purported Billion Dollar Hedge Fund Group; SEC Alleges Massive Overvaluation and Manipulation Scheme
• Federal Court Issues Preliminary Injunction Order Against Michael Lauer, Lancer Management Group, LLC, and Lancer Management Group II, LLC
• SEC Files Contempt Motion Against Michael Lauer
• SEC Files Application For an Order to Show Cause Why Michael Lauer Should Not Be Held In Contempt For Violating the Court’s Dec 3rd, 2004 Order
• SEC Files Contempt Action Against Michael Lauer for Violating Two Court Orders Requiring Him to Appear for His Deposition
• Recommendation By Chief United States Magistrate Judge to Hold Michael Lauer in Contempt for Failing to Take Part in the Discovery Process and Repeatedly Violating Court Orders
• Michael Lauer Held In Contempt for Violating Asset Freeze Order, Acting in Bad Faith by Failing to Take Part in the Discovery Process and Repeatedly Violating Court Orders
• Michael Lauer Is Precluded From Testifying at Trial on His Own Behalf for Violating Asset Freeze Order, Acting in Bad Faith by Failing to Take Part in the Discovery Process and Repeatedly Violating Court Orders
• Michael Lauer Indicted on Conspiracy and Wire Fraud Charges
• Federal Court Grants Summary Judgment and Enters Permanent Injunction Against Michael Lauer in Major Hedge Fund Fraud Case

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Court Orders Disgorgement and Prejudgment Interest Against Defendant Michael Lauer

The Securities and Exchange Commission announced that on May 7, 2008, the United States District Court for the Southern District of Florida entered an order setting the disgorgement and prejudgment interest amounts against Defendant Michael Lauer. After an evidentiary hearing on Dec. 12, 2008, the Court ordered Lauer to disgorge all money he ultimately received, based on the fraudulent conduct he demonstrated in his hedge fund scheme. Specifically, the Court noted, to “hold otherwise would permit Defendant to profit from his wrongful conduct”. [DE 2260 at p. 2] Accordingly, the Court ordered Lauer to pay $43,688,249.00 in disgorgement and $18,908,558.74 in prejudgment interest, for a total of $62,596,807.74. The Court also gave the Commission 30 days to recommend a specific civil money penalty.

Previously, on Sept. 23, 2008, the Court granted the Commission’s motion for summary judgment against Lauer which permanently enjoined him from further violations of Sections 17(a)(1), (2) and (3) of the Securities Act of 1933; Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (Exchange Act), both individually and as a control person pursuant to Section 20(a) of the Exchange Act; and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. [SEC v. Michael Lauer, et al., Case No. 03-80612-CIV-MARRA/JOHNSON (S.D. Fla.)] (LR-21046)

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