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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 15085 / September 27, 1996
SECURITIES & EXCHANGE COMMISSION v. CNC TRADING COMPANY, INC., et
al. (United States District Court for the District of New Jersey,
Civil Action No. 96-4620)
On September 24, 1996, the Securities and Exchange
Commission ("Commission") filed a Complaint in the U.S. District
Court for the District of New Jersey, against defendants CNC
Trading Company, Inc. ("CNC"), Charles N. Cugliari ("Cugliari"),
Cindy J. Myers ("Myers"), Frank R. Sommerer ("Sommerer"), and
Marvin Sherman ("Sherman"), and relief defendant Oscar R. Sierra
("Sierra"). According to the Commission's Complaint, Cugliari
perpetrated a fraudulent scheme through CNC, a purported food
brokerage formerly based in Marlton, New Jersey, which Cugliari
owned and controlled. Beginning in 1985 and continuing until
February 1995, Cugliari directed the fraudulent sale of
approximately $70 million of CNC securities in the form of
investment contracts to over 2,000 investors. Cugliari, Myers,
Sommerer, Sherman and others under Cugliari's direction,
solicited investors by representing that CNC would use their
funds to purchase food products such as meat or poultry, and then
resell that product to a food distributor or retailer. They
further represented to investors that, through these purported
transactions, CNC would earn profits that would yield investors
returns of 3 1/2 percent monthly or 42 percent annually.
The Complaint alleges that, contrary to these
representations, Cugliari and CNC did not purchase and resell
food products with investor money. Instead, Cugliari engaged in
a Ponzi scheme whereby he used investor funds to pay the promised
returns to other investors. Cugliari also used investor funds to
pay himself an annual salary of $500,000 and to support a lavish
lifestyle, including frequent gambling trips to Atlantic City.
Cugliari also paid Myers, Sommerer and Sherman substantial sales
commissions using investor funds. In 1994, Sommerer received
commissions of approximately $3.5 million, Myers received
commissions of approximately $300,000, and Sherman received
commissions of approximately $200,000. In addition, the
Complaint alleges that Sierra, although not involved in the
fraudulent scheme, received approximately $52,000 in illegally
obtained CNC investor proceeds.
The Complaint also alleges that, in furtherance of the
SNIPPETS:
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
SECURITIES & EXCHANGE COMMISSION v. CNC TRADING COMPANY, INC., et al. (United States District
According to the Commission's Complaint, Cugliari perpetrated a fraudulent scheme through
Beginning in 1985 and continuing until February 1995, Cugliari directed the fraudulent sale
Cugliari, Myers, Sommerer, Sherman and others under Cugliari's direction, solicited investors
They further represented to investors that, through these purported transactions, CNC would
Cugliari also used investor funds to pay himself an annual salary of $500,000 and to support
Sommerer and Sherman substantial sales commissions using investor funds.
In 1994, Sommerer received commissions of approximately $3.5 million, Myers received
In addition, the Complaint alleges that Sierra, although not involved in the fraudulent
The Complaint also alleges that, in furtherance of the scheme, Cugliari, Myers, Sommerer and
The Complaint also charges Cugliari, Myers, Sommerer, and Sherman with violations of Section
The Complaint seeks injunctive relief, disgorgement together with prejudgment interest, and
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