Three men and their claims aggregation firm have been charged with orchestrating a fraud scheme that involved the theft of at least $40 million from about 400 distribution funds, according to AdvisorNews.
The Securities and Exchange Commission detailed the charges in a complaint filed in federal court in Pennsylvania. The enforcement action names Joseph Cammarata, Erik Cohen, and David Punturieri, who controlled AlphaPlus Portfolio Recovery Corp. and Alpha Plus Recovery LLC. The men and their firm are accused of defrauding distribution funds that were created to return money to securities fraud victims. According to the SEC, “AlphaPlus engaged in a serial scheme to fraudulently obtain money by submitting false claims to settlement fund administrators — purporting to represent clients who had traded the securities that were the subjects of the underlying settlements.”
In reality, authorities said, the ‘clients’ were entities controlled by the defendants and had not bought the securities in question. The complaint alleges that the three attempted to legitimize their fake claims by concocting false trading documents and using stolen broker-dealer letterhead to show trades. Cammarata, Cohen and Punturieri allegedly used the funds they had stolen to pay for a variety of personal expenses, including home renovations, luxury cars, jewelry and real estate.
Scott A. Thompson, associate regional director of the SEC’s Philadelphia Regional Office, said that “AlphaPlus and its principals engaged in a brazen fraud, deceiving fund administrators to line their pockets with ill-gotten gains.”
AlphaPlus, Cammarata, Cohen, and Punturieri were charged with violating the anti-fraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC obtained emergency relief from the court, which granted the commission’s request for an asset freeze and temporary restraining order. The SEC is seeking disgorgement of the defendants’ ill-gotten gains along with prejudgment interest and civil penalties.
The three men are also facing criminal charges filed by the U.S. Attorney’s Office for the Eastern District of Pennsylvania.
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