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1
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COMPLAINT
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EXTRACTED KEY WORDS
WATCH HILL RMO DEFENDANTS HERULA SECURITIES INVESTORS RELIEF DEFENDANT EXCHANGE CAPALBO COMMISSION INVESTMENT COMPLAINT REPRESENTATIONS ASSETS ACCOUNT CALIFORNIA MERRILL LYNCH EXCHANGE ACT INVESTOR FUNDS CAPITAL MANAGEMENT LLC HILL CAPITAL MANAGEMENT MAKING FALSE PRIME CLAUDE LEFEBVRE DISBURSEMENTS VIOLATIONS FINANCIAL INSTITUTION INSTRUMENTS EQUITY RELIEF PLAINTIFF SECURITIES PARAGRAPHS |
Juan Marcel Marcelino, District Administrator
Martin F. Healey (Mass. Bar No. 227550)
David Bergers
John T. Dugan
Bradford E. Ali
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
73 Tremont Street, Suite 600
Boston, MA 02108
(617) 424-5900 ext. 204 (Healey)
(617) 424-5940 fax
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v. :
:
CLAUDE LEFEBVRE, DENNIS S. HERULA, :
RMO ASSETS MANAGEMENT SA, and, :
WATCH HILL CAPITAL MANAGEMENT LLC, : Case No.
:
Defendants, :
:
and, :
:
MARY LEE CAPALBO aka
MARY LEE CAPALBO HERULA,
Relief Defendant.
COMPLAINT
Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint,
alleges the following against defendants Claude Lefebvre, ("Lefebvre"), Dennis S. Herula
("Herula), RMO Assets Management SA ("RMO") and Watch Hill Capital Management
LLC ("Watch Hill") and against relief defendant Mary Lee Capalbo (a/k/a Mary Lee
Herula) ("Capalbo"), named solely for purposes of equity relief.
SUMMARY
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2
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SEC LITIGATION RELEASE 17652
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EXTRACTED KEY WORDS
INVESTOR CAPALBO LEFEBVRE ASSET COMMISSION DEFENDANTS ASSET FREEZE MANAGEMENT PRIME BANK ALLEGES COMPLAINT LITIGATION SECURITIES PRIOR ACTION VIOLATIONS SCHEME TEMPORARY RESTRAINING INVESTOR FUNDS RHODE ISLAND FRAUDULENT BROKER RELIEF DEFENDANT PRELIMINARY INJUNCTION SECURITIES LAWS RMO ASSETS MANAGEMENT FEDERAL DISTRICT COURT PURPORTED BOND TRADER EXCHANGE EXCHANGE ACT |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Rel. No. 17652 / August 2, 2002
Commission Obtains Temporary Restraining Order and Asset
Freeze Against Purported Bond Trader Claude Lefebvre, Former Broker
Dennis Herula, and Others in Connection with Fraudulent Offering
Scheme
The Commission announced today that it has obtained temporary
restraining orders and asset freezes in a civil fraud action filed
against Claude Lefebvre, a purported bond trader, Dennis Herula, a
former Rhode Island broker, and others. The Commission's complaint,
filed July 31 in San Francisco federal district court, alleges that
Lefebvre, Herula and others participated in a fraudulent scheme that
raised at least $40 million from investors within the past month. One
of the investors is an entity owned or controlled by members of the
Coors family, founders of the Adolph Coors Company. The court's order,
issued August 1, froze at least $36 million held in various brokerage
accounts controlled by the defendants.
The Commission alleges in its complaint that Lefebvre falsely promised
investors exorbitant returns, such as a 100% return per week, through
a fraudulent prime bank trading program that purportedly invested in
bank or other financial institution instruments rated AA or better.
Lefebvre also falsely claimed that he was federally licensed to trade
such instruments. According to the Commission's complaint, these
representations were false because prime bank trading programs are
wholly fictitious. The Commission's complaint alleges that Lefebvre
acted through two entities owned or controlled by him and/or Herula
RMO Assets Management and Watch Hill Capital Management -- and that
Herula aided and abetted Lefebvre's violations of the federal
securities laws. The complaint further alleges that, within the past
several weeks, Lefebvre, Herula, and Herula's wife, Rhode Island
attorney Mary Lee Capalbo, spent at least $4 million in investor funds
on luxury items such as cars, jewelry, and large hotel bills. They
also used the money to pay personal expenses, such as doctor's bills
and Capalbo's Rhode Island bar association fees.
Herula and Capalbo are defendants in a prior action filed by the
Commission in Rhode Island federal district court on April 1, 2002. In
that case, which involved a separate prime bank investment scheme, the
court entered preliminary injunctions against Herula, Capalbo and
others, restraining them from violating the antifraud provisions of
the securities laws or accepting investor funds. The Commission
alleges that Herula and Capalbo engaged in the activity involving the
new fraudulent scheme at a time when they were already subject to the
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