2006-10-04 sec-litreleases litigation_release 66 KB 3,467 chars

SEC v. Eric B. Walsh; and John P. Abresch, No. LR-19859, Southern District of Florida (Oct. 4, 2006) — Press Release

raw: Eric Walsh, John Abresch et al.

Eric Walsh, John Abresch et al., No. LR-19859 (Oct. 4, 2006)

Caption: SEC v. Eric B. Walsh, et al.

summary

John P. Abresch and Eric B. Walsh, former principals of Discovery Capital, pleaded guilty to wire and securities fraud for operating a boiler room scheme that defrauded investors of $2.7 million, leading to Abresch’s 37-month prison sentence and $2.3 million restitution order.

paragraph

John P. Abresch and Eric B. Walsh, former principals of Discovery Capital, Inc., pleaded guilty to wire fraud (18 U.S.C. § 1343) and securities fraud (15 U.S.C. §§ 78j(b)) for orchestrating a fraudulent boiler room operation that raised approximately $2.7 million from U.S. and European investors through misrepresentations about the company’s growth, affiliations, and investment safety. Abresch was sentenced in September 2006 to 37 months in federal prison and ordered to pay $2.3 million in criminal restitution, after previously being enjoined from securities law violations and ordered to disgorge $195,000 (waiving the remainder of a $500,000 disgorgement). The SEC had halted the scheme in March 2002 with an emergency action, appointed a receiver, revoked Discovery Capital’s registration in March 2003, and barred Abresch from the securities industry in April 2003.

narrative

John P. Abresch and Eric B. Walsh, former principals of Discovery Capital, Inc., a Coral Springs-based broker-dealer formerly registered with the SEC, pleaded guilty to wire fraud and securities fraud for operating a fraudulent boiler room scheme that raised approximately $2.7 million from investors in the U.S. and Europe between June 2001 and March 2002. They used high-pressure sales tactics and made false claims about Discovery Capital’s growth, affiliations with major brokerage firms, and the safety of investments to deceive investors. In March 2002, the SEC filed an emergency action, securing a temporary restraining order and asset freeze, and appointed Michael I. Goldberg as receiver to halt the ongoing fraud. By October 2002, Abresch and Discovery Capital were permanently enjoined from violating antifraud and registration provisions of federal securities laws, and Abresch was ordered to disgorge $500,000, though payment of $305,000 was waived based on his financial disclosures. In March 2003, the SEC revoked Discovery Capital’s registration, and in April 2003, it barred Abresch from association with any broker or dealer. Abresch was sentenced in September 2006 to 37 months in federal prison and ordered to pay $2.3 million in criminal restitution; Walsh also pleaded guilty to related charges but sentencing details for him are not specified in the provided text.

Enriched metadata

Scheme: boiler-room (100%)
Court: Southern District of Florida
Outcome: convicted
Disgorgement: $195,000
Restitution: $2,300,000
Victim loss: $2,700,000
Entity: Discovery Capital, Inc.

Classified boiler-room(confidence 100%). EDGAR detection: forms Form D· recall 50% / precision 4%. detection rule →

Extracted insights

Dollar amounts 5

$2.70M $2.7 million $1M–$10M
$2.30M $2.3 Million $1M–$10M
$2.30M $2.3 million $1M–$10M
$500K $500,000 $100K–$1M
$195K $195,000 $100K–$1M

Entities 10

person Eric Walsh ×2
organization Discovery Capital, Inc.
person john abresch
person John P. Abresch
person k. michael moore
person Michael I. Goldberg
agency Securities and Exchange Commission
organization United States District Court For The Southern District Of Florida
organization United States Of America
organization United States Securities And Exchange Commission

Triples 4

Eric Walsh was sentenced to 37 months in prison and ordered to pay $2.3 million in restitution
John Abresch was sentenced to 37 months in prison and ordered to pay $2.3 million in restitution
Eric Walsh and John Abresch raised millions from investors in a fraudulent securities offering
U.S. Securities and Exchange Commission announced that John P. Abresch was sentenced on September 25, 2006

View original SEC litigation releasesec.gov

Extracted body text (3,467c)

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 19859 / October 4, 2006 United States Of America v. Eric Walsh, John Abresch et al., United States District Court for the Southern District of Florida, Crim. No. 1:06cr20071-002-Moore Former Principal of Coral Springs, Florida Broker-Dealer Which Raised Millions From Investors in a Fraudulent Securities Offering Sentenced to 37 Months in Prison and Ordered to Pay $2.3 Million in Restitution The Securities and Exchange Commission (Commission) announced today that on September 25, 2006, John P. Abresch was sentenced by the Honorable K. Michael Moore, United States District Court Judge for the Southern District of Florida, to a federal prison sentence of 37 months and ordered to pay criminal restitution in the amount of $2.3 million. Both Abresch and Eric B. Walsh, former principals of Discovery Capital, Inc., a Coral Springs broker-dealer formerly registered with the Commission, were convicted after pleading guilty to violations of the federal securities laws in connection with their role in a "boiler room" operation that fraudulently induced investors in the U.S. and Europe to invest millions. In connection with the fraudulent Discovery Capital offering, Abresch was convicted of wire fraud (18 U.S.C. § 1343) and securities fraud (15 U.S.C. §§ 78j(b)). In March 2002, the Commission brought an emergency action against Walsh and Abresch, charging them with violations of the antifraud and registration violations of the federal securities laws in connection with Discovery Capital's fraudulent securities offering. In that action, the United States District Court for the Southern District of Florida issued a temporary restraining order and an asset freeze to halt the on-going offering of securities by Discovery Capital. The District Court also appointed a receiver, Michael I. Goldberg, over Discovery Capital. The Commission's Complaint alleged that from at least June 2001 through the filing of the action, Discovery Capital raised approximately $2.7 million through the use of a network of primarily unlicensed sales agents using high pressure sales tactics and making misrepresentations about, among other things, Discovery Capital's growth, its affiliations with well-known brokerage firms and other institutions, and the safety of the investments. In October 2002, by consent, the District Court permanently enjoined Abresch from violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 thereunder, and enjoined Discovery Capital from further violations of Section 17(a) of the Securities Act, Sections 10(b), 15(c) and 17(a) of the Exchange Act, and Rules 10b-5, 15c1-2, 15c3-1, 17a-3, 17a-4, 17a-5, and 17a-11 thereunder. In October 2002, the Court further ordered Abresch to disgorge over $500,000, but waived payment of all but $195,000 and did not impose a civil money penalty based on Abresch's sworn financial statement and other information submitted to the Commission. Subsequently, in April 2003, the Commission barred Abresch from association with a broker or dealer, and in March 2003, the Commission revoked the registration of Discovery Capital. For further information, see Litigation Release Nos. 17420 (March 19, 2002), 17813 (October 29, 2002), 17812 (October 29, 2002), 17914 (January 7, 2003), 19610 (March 16, 2006), and 19804 (August 16, 2006).

OCR text (3,467c · plain-text · 99% conf)