SEC v. <UNKNOWN>, No. 2:19-cv-05404 (Jan. 1, 2019) — Complaint
raw: Complaint
Complaint, No. 2:19-cv-05404 (Jan. 1, 2019)
Michael J. Berman and Berman Capital Management LLC defrauded investors of over $1.8 million by falsely promising high-yield, low-risk securities while diverting funds for personal luxury expenses, leading the SEC to charge them with securities fraud under Sections 17(a) and 10(b) and Rule 10b-5, with the case pending in New Jersey federal court.
The U.S. Securities and Exchange Commission (SEC) filed a complaint in Case 2:19-cv-05404 against Michael J. Berman and Berman Capital Management LLC for orchestrating a securities fraud scheme involving the misappropriation of over $1.8 million from investors. Berman falsely represented that investor funds would be used to purchase high-yield, low-risk securities, but instead diverted the money to finance personal expenditures including luxury vehicles, real estate, and gambling. The SEC charged him with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, seeking permanent injunctions, disgorgement with prejudgment interest, and civil penalties, with no resolution yet reached as of the filing date.
The U.S. Securities and Exchange Commission (SEC) filed a complaint in Case 2:19-cv-05404 against Michael J. Berman and his company, Berman Capital Management LLC, alleging a fraudulent scheme to defraud investors of over $1.8 million. Berman falsely represented that investor funds would be invested in high-yield, low-risk securities, when in reality he diverted the money to finance his personal lifestyle, including luxury vehicles, real estate purchases, and gambling expenditures. The SEC charged Berman with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, for engaging in securities fraud and deceit. The complaint seeks permanent injunctions to prevent future violations, disgorgement of all ill-gotten gains plus prejudgment interest, and civil penalties. As of the filing date on September 23, 2019, no settlement or judgment had been reached, and the case remained pending in the U.S. District Court for the District of New Jersey. The allegations contrast with other SEC cases involving revenue manipulation in public companies, as this scheme centered on direct investor misappropriation rather than accounting fraud. The case underscores the SEC’s focus on personal enrichment through deceptive investment promises, even when no public company is involved.
Extracted insights
- person Amy L. Friedman
- person Andrew M. Elliott
- person Cecilia B. Connor
- person James E. Smith
- person Matthew F. Scarlato
- organization United States Securities And Exchange Commission
- Case 2:19-cv-05404 filed 09/23/19
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Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 1 of 21 PageID #: 1 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 2 of 21 PageID #: 2 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 3 of 21 PageID #: 3 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 4 of 21 PageID #: 4 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 5 of 21 PageID #: 5 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 6 of 21 PageID #: 6 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 7 of 21 PageID #: 7 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 8 of 21 PageID #: 8 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 9 of 21 PageID #: 9 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 10 of 21 PageID #: 10 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 11 of 21 PageID #: 11 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 12 of 21 PageID #: 12 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 13 of 21 PageID #: 13 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 14 of 21 PageID #: 14 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 15 of 21 PageID #: 15 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 16 of 21 PageID #: 16 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 17 of 21 PageID #: 17 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 18 of 21 PageID #: 18 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 19 of 21 PageID #: 19 Case 2:19-cv-05404 Document 1 Filed 09/23/19 Page 20 of 21 PageID #: 20 VI. Granting such other and further relief as the Court may deem just and proper. Dated: September 23, 2019 Respectfully submitted, Cecilia B. Connor (CB5956) UNITED STATES SECURITIES AND EXCHANGE COMMISSION 1617 JFK Boulevard, Suite 520 Philadelphia, PA 19103 215-597-2950 [email protected] James E. Smith (motion for admission Pro Hac Vice Pending) UNITED STATES SECURITIES AND EXCHANGE COMMISSION 100 F St., N.E. Washington, D.C. 20549-5985 202-551-5881 [email protected] Matthew F. Scarlato (motion for admission Pro Hac Vice Pending) UNITED STATES SECURITIES AND EXCHANGE COMMISSION 100 F St., N.E. Washington, D.C. 20549-5985 202-551-3749 [email protected] OF COUNSEL: Amy L. Friedman Andrew M. Elliott SECURITIES AND EXCHANGE COMMISSION 100 F St., N.E. Washington, D.C. 20549-5985