Securities and Exchange Commission
Litigation Release No. 18077 / April 9, 2003
Court Enters Final Judgments Against
Defendants in Mini Tender Offer Case
, United States District Court for the Eastern District of Pennsylvania,
Civil Action No. 00 CV 5928
The Securities and Exchange Commission today announced that the
Honorable Timothy J. Savage, United States District Judge for the
Eastern District of Pennsylvania, has entered final judgments against
defendants Jeffery L. Leach, his brother, Hubert A. Leach, both of
whom are residents of Philadelphia, Pennsylvania, and LMC Assets
Corp., in a case in which the SEC alleged fraud in connection with
three mini tender offers. Under the terms of the final judgments, each
defendant is enjoined from violating Sections 10(b) and 14(e) of the
Securities Exchange Act of 1934, and Rules 10b-5 and 14e-1 thereunder.
The final judgments also order the defendants, jointly and severally,
to pay disgorgement and prejudgment interest of $6,017,553. In
addition, the Court imposed civil penalties of $330,000 against
Jeffery Leach, $330,000 against Hubert Leach, and $1,650,000 against
LMC. The defendants consented to the entry of the final judgments
without admitting or denying any of the allegations in the
Commission's Complaint.
The Commission's Complaint, filed November 21, 2000, alleged that
Jeffery and Hubert Leach, president and former vice-president of LMC,
respectively, made substantial unlawful profits and caused investors
to suffer millions of dollars in losses, by making fraudulent mini
tender offers for shares of Fleming Companies, Inc., Fruit of the
Loom, Ltd., and Mattel, Inc. Mini tender offers are offers for less
than five percent of a class of securities registered with the
Commission. The fraudulent offers were made through two shell
corporations that Jeffery Leach created and controlled - LMC and
Carnegie Investment Management, Ltd., a Cayman Islands company that
filed a petition for bankruptcy in March 2000.
The Complaint alleged that all three tender offers were fraudulent for
several reasons, including
* The offering documents contained false statements and omitted
material information about the offeror's intent in making the
offer, including its ability to pay for the tendered shares.
* The defendants made numerous false and misleading statements
outside of the offering documents. In particular, they falsely
promised to tendering shareholders that they would be paid for
SNIPPETS:
Securities and Exchange Commission
Court Enters Final Judgments Against
Defendants in Mini Tender Offer Case
, United States District Court for the Eastern District of Pennsylvania, Civil Action No. 00
The Securities and Exchange Commission today announced that the Honorable Timothy J. Savage,
In addition, the Court imposed civil penalties of $330,000 against Jeffery Leach, $330,000
The defendants consented to the entry of the final judgments without admitting or denying any
The Commission's Complaint, filed November 21, 2000, alleged that Jeffery and Hubert Leach,
The fraudulent offers were made through two shell corporations that Jeffery Leach created and
The Complaint alleged that all three tender offers were fraudulent for several reasons,
In particular, they falsely promised to tendering shareholders that they would be paid for
* The defendants structured the offers without the use of any escrow account or independent
* The defendants engaged in other practices that are specifically unlawful in connection with
For example, the defendants unlawfully amended the Mattel offer when they changed the
The defendants also unilaterally and illegally amended the Fruit of the Loom offer five weeks
The entry of the foregoing final judgments concludes the Commission's enforcement action
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