UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17626 / July 23, 2002
, 99 Civ. 5822 (NRB) (S.D.N.Y.)
U.S. DISTRICT COURT ISSUES ORDER IMPOSING FULL DISGORGEMENT, INTEREST
AND CIVIL PENALTY AGAINST DEFENDANT FOR CONCEALING ASSETS IN
SETTLEMENT NEGOTIATIONS
The Securities and Exchange Commission announced that on July 15, 2002
the Honorable Naomi Reice Buchwald, United States District Judge for
the Southern District of New York, issued an order imposing
disgorgement, prejudgment interest, and a civil penalty against a
defendant who had misled the Commission in earlier settlement
negotiations. After an evidentiary, hearing Judge Buchwald found that
when the defendant negotiated his settlement with the Commission he
concealed several material assets, including an option to buy a
million-dollar piece of property in the Bahamas, a 41-foot sloop, a
1956 Ford Thunderbird, several Harley Davidson motorcycles, and a
resort time-share. Based on these findings, Judge Buchwald imposed
full disgorgement of $797,530, prejudgment interest of $467,623.77,
and a civil penalty of $250,000.
The Commission originally sued the defendant, Robert E. Cohen of New
York, New York, in July 1999. The Commission charged Cohen with fraud
and evasion of the securities registration requirements for his part
in a scheme to sell large blocks of unregistered penny stock into the
United States from brokerage accounts purportedly held by foreign
nationals. The Commission charged that in fact the foreign nationals
were merely nominees, and that Cohen was the real principal in the
transactions.
After the Commission filed its suit, Cohen entered into settlement
negotiations with the Commission. As part of those negotiations, Cohen
submitted a sworn financial statement to the Commission in October
1999. That financial statement showed Cohen to be insolvent. In April
2000, the parties agreed to the entry of a Judgment against Cohen,
which permanently enjoined him from future violations. The Judgment
further waived payment of all but $30,000 of the sought-after
disgorgement and interest and did not impose a civil penalty, based on
Cohen's sworn financial statements. The Judgment included a clause
providing that if the Commission obtained information indicating that
Cohen's sworn financial statement was fraudulent, misleading,
inaccurate, or incomplete in any material respect, the Commission
could petition the Court for an Order imposing the full amount of
disgorgement originally sought against Cohen, together with
prejudgment interest and a civil penalty.
SNIPPETS:
U.S. DISTRICT COURT ISSUES ORDER IMPOSING FULL DISGORGEMENT, INTEREST AND CIVIL PENALTY
The Securities and Exchange Commission announced that on July 15, 2002 the Honorable Naomi
After an evidentiary, hearing Judge Buchwald found that when the defendant negotiated his
The Commission charged Cohen with fraud and evasion of the securities registration
After the Commission filed its suit, Cohen entered into settlement negotiations with the
Cohen submitted a sworn financial statement to the Commission in October 1999.
The Judgment further waived payment of all but $30,000 of the sought-after disgorgement and
The Judgment included a clause providing that if the Commission obtained information
In attempting to collect on the Judgment, the Commission discovered that Cohen was living in
undisclosed option to buy resort real estate in the Bahamas.
Cohen maintained, however, that his Bahamian accounts no longer held any funds and that he
At the conclusion of the hearing, the Court ordered Cohen to cooperate with the Commission in
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