SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17959 / JANUARY 31, 2003
Former Investment Adviser Sears Criminally Indicted for Securities
Fraud
The Securities and Exchange Commission ("Commission") announced today
that on January 23, 2003, Robert C. Sears ("Sears") of Northampton,
Massachusetts and Block Island, Rhode Island was criminally indicted
by the U.S. Attorney for the District of Massachusetts for wire fraud.
The indictment alleges that from February 1, 2000 to September 15,
2000, Sears, an unregistered investment adviser, misappropriated more
than $1.3 million of his clients' funds by causing unauthorized wire
transfers from his clients' accounts at several brokerage firms. To
accomplish the transfers, Sears either forged his clients' signatures
on letters directing the brokerage firms to transfer funds or
fraudulently induced clients to transfer funds to the bank account of
a corporation, Last Minute Concessions, Inc. ("Last Minute"), of which
Sears was the president and 50% owner. To generate the transferred
cash, Sears forged client signatures on margin agreements and obtained
unauthorized margin loans in client accounts. Last Minute used the
money to buy a controlling interest in Cold Spring Golf, an entity
developing a golf course near Belchertown, Massachusetts. Last Minute
also purchased stock in Cold Spring Development, which was to build an
adjoining condominium community. The indictment further alleges that
when Sears' clients eventually learned of the transfers and began to
question Sears, he provided varying false explanations and failed to
disclose material facts, including his own financial interest in Last
Minute and Last Minutes' controlling interest in Cold Spring Golf. If
convicted on the current criminal charges, Sears faces up to five
years imprisonment and a $250,000 fine.
On September 26, 2000, the Commission filed a civil complaint in
connection with the scheme described above. The Commission's complaint
charged that Sears' conduct violated the antifraud provisions of the
Securities Act of 1933 (Section 17(a)), the Securities Exchange Act of
1934 (Section 10(b) and Rule 10b-5 thereunder), and the Investment
Advisers Act of 1940 (Sections 206(1) and 206(2)). On September 10,
2002, the United States District Court for the District of
Massachusetts entered a default judgment against Sears enjoining him
from further violations of the antifraud provisions cited above and
ordering him to pay disgorgement and prejudgment interest of over $2.5
million and a penalty of $500,000.
The Commission also obtained a default judgment against Sears on
January 13, 2003 in an administrative proceeding before an
SNIPPETS:
Former Investment Adviser Sears Criminally Indicted for Securities Fraud
The Securities and Exchange Commission announced today that on January 23, 2003, Robert C.
The indictment alleges that from February 1, 2000 to September 15, 2000, Sears, an
To accomplish the transfers, Sears either forged his clients' signatures on letters directing
Sears forged client signatures on margin agreements and obtained unauthorized margin loans in
Last Minute used the money to buy a controlling interest in Cold Spring Golf, an entity
The indictment further alleges that when Sears' clients eventually learned of the transfers
If convicted on the current criminal charges, Sears faces up to five years imprisonment and a
On September 26, 2000, the Commission filed a civil complaint in connection with the scheme
The Commission's complaint charged that Sears' conduct violated the antifraud provisions of
On September 10, 2002, the United States District Court for the District of Massachusetts
The Commission also obtained a default judgment against Sears on January 13, 2003 in an
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