Hedge Fund Focus

While the press release below does not deal specifically with hedge funds, it does deal with a securities fraud which was caught by the SEC.  It seems that the SEC is keen about highlighting all of its anti-fraud actions in like of the Madoff and other notorious hedge fund scandals.  We will continue to update you on this and other hedge fund stories.

The release below can be found here.

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Temporary Restraining Order Entered in Multi-Million Dollar Offering Fraud and Ponzi Scheme in Western New York

The Commission announced today that the Honorable William M. Skretny, United States District Judge for the Western District of New York, entered a decision and order, on Jan. 8, 2009, temporarily restraining defendants Gen-See Capital Corporation a/k/a Gen Unlimited and its owner and president, Richard S. Piccoli, from continuing to engage in a fraudulent offering of securities. The court also froze the defendants’ assets and prohibited the defendants from destroying documents.

The SEC’s complaint, filed in federal court in Buffalo, New York, alleges that Gen-See and Piccoli orchestrated a Ponzi scheme and affinity fraud targeting clergy, Catholic parishioners, and senior citizens. The complaint further alleges that the defendants have 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. In November 2008 alone, the defendants raised over $500,000. The complaint further alleges that the defendants relied heavily on advertisements in newsletters published by churches and dioceses, and told investors that their money was invested in “high quality” residential mortgages that the defendants were able to purchase at a discount. In addition, the complaint alleges 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 of securities to the public was not registered with the Commission.

The SEC’s complaint alleges that the defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

In addition to the emergency relief sought, the Commission also seeks preliminary and permanent injunctive relief and civil money penalties against the defendants, as well as disgorgement by the defendants of their ill-gotten gains plus prejudgment interest. [SEC v. Gen-See Capital Corp. and Richard S. Piccoli, Civil Action No. 09 Civ. 0014 (WMS) (W.D. N.Y.)] (LR-20849)