SEC v. Michael R. Balboa; and Gilles T. De Charsonville, Southern District of New York (Dec. 1, 2011) — Complaint
raw: SEC v. MICHAEL R. BALBOA and
SEC v. MICHAEL R. BALBOA and (Dec. 1, 2011)
summary
Michael R. Balboa and Gilles T. De Charsonville orchestrated a $163 million fraud by fabricating fake market quotes for illiquid Nigerian and Uruguayan warrants to inflate the Millennium Global Emerging Credit Fund’s NAV, deceiving auditors, investors, and valuation agents to secure $410 million in new investments, block $230 million in redemptions, and collect $19.1 million in illegitimate fees, with Balboa personally profiting $6.5 million and De Charsonville $443,000, leading to SEC charges under securities and advisers laws.
paragraph
The SEC charged Michael R. Balboa and Gilles T. De Charsonville with defrauding investors by inflating the net asset value (NAV) of the Millennium Global Emerging Credit Fund by approximately $163 million between January and October 2008 through fabricated market quotes for illiquid Nigerian and Uruguayan warrants. Balboa, the fund’s portfolio manager, directed De Charsonville—a purported independent broker—to provide false valuations to GlobeOp and Deloitte, concealing the scheme from investors, auditors, and regulators, which enabled $410 million in new investments, $230 million in avoided redemptions, and $19.1 million in fraudulent management and performance fees. Balboa personally received $6.5 million, De Charsonville $443,000, and both face charges under Sections 10(b), 17(a), and 206(1)-(4) of federal securities laws, along with FINRA Rule 5210, with the SEC seeking disgorgement, civil penalties, and permanent injunctions.
narrative
Michael R. Balboa, portfolio manager of the now-defunct Millennium Global Emerging Credit Fund, and Gilles T. De Charsonville, a purportedly independent broker, orchestrated a sophisticated fraud between January and October 2008 to inflate the fund’s net asset value by approximately $163 million by fabricating false market quotes for two illiquid securities—Nigerian and Uruguayan warrants. Balboa dictated the inflated valuations and enlisted De Charsonville to relay them as legitimate counter-party quotes to the fund’s independent valuation agent, GlobeOp, and its auditor, Deloitte, who issued unqualified opinions based on the deceptive data. The scheme was deliberately concealed from investors, regulators, and the fund’s own offering materials, which falsely portrayed the valuations as independent and market-based. As a result, the fund attracted $410 million in new investments, deterred $230 million in redemptions, and collected $19.1 million in illegitimate management and performance fees, with Balboa personally receiving $6.5 million and De Charsonville $443,000. The SEC alleges violations of Sections 10(b), 17(a)(1)-(3), and 206(1)-(4) of the Exchange Act, Securities Act, and Advisers Act, as well as FINRA Rule 5210, and further holds Balboa liable for aiding and abetting violations by the fund’s adviser, Millennium Global Investments, Ltd. The Commission seeks permanent injunctions, disgorgement of all ill-gotten gains with prejudgment interest, civil penalties, and a jury trial to hold the defendants accountable for their deceptive conduct.
Classified investment-adviser-fraud(confidence 95%). EDGAR detection: forms ADV/ADV-E/ADV-W/Form D· recall 33% / precision 13%. detection rule →
Statutes
15 U.S.C. § 7Sj(b)15 U.S.C. § 7St(e)15 U.S.C. § 78u(f)15 U.S.C. § 77t(b)15U.S.C. § 78u(d)15 U.S.C. §80h15 U.S.C. § 80b-915 U.S.C. § 77t(d)15 U.S.C. § 77v(a)15 U.S.C. § 80b-1415 U.S.C. § 78aa28US.C. § 1391(d)15 U.S.C. § 78j(b)15 U.S.C. § 78t(e)15 U.S.C. § 77q(a)17 C.F.R. § 240.117 C.F.R. § 275.206(4)17 C.F.R. § 275.206Sections 17(a)(1), (2) and (3) of the Securities ActSections 17(a)(1), (2) and (3) of the Securities ActSections 17(a)(1), (2) and (3) of the Securities ActSections 17(a)(1), (2) and (3) of the Securities ActSection 20(d) of the Securities ActRule 10b-5(a)
Parties
Securities and Exchange CommissionMichael R. BalboaGilles T. De Charsonville
Keywords
ofthebalboafund'sfundcharsonvillewarrantsdirectly indirectlynigerian warrantssecuritiesglobeopadvisersbrokerofthe advisersuruguayan warrantsexchange
Extracted insights
Dollar amounts 31
- $15.00B $15 billion ≥$1B
- $1.00B $1 billion ≥$1B
- $844.30M $844.3 million $100M–$1B
- $844.00M $844 million $100M–$1B
- $800.00M $800 million $100M–$1B
- $410.00M $410 million $100M–$1B
- $230.00M $230 million $100M–$1B
- $200.00M $200 million $100M–$1B
- $163.00M $163 million $100M–$1B
- $157.00M $157 million $100M–$1B
- $100.00M $100 million $100M–$1B
- $6.50M $6.5 million $1M–$10M
Entities 5
- person George S. Canellos
- person Gilles T. De Charsonville
- person Michael R. Balboa
- company millennium global emerging credit fund
- agency Securities and Exchange Commission
Triples 13
- Michael R. Balboa enlisted Gilles T. De Charsonville and Broker A to provide phony mark-to-market quotes
- Michael R. Balboa directed Gilles T. De Charsonville and Broker A to mislead GlobeOp and Deloitte
- Millennium Global Emerging Credit Fund had reported assets of $844 million at October 16, 2008
- Michael R. Balboa caused Fund to overstate NAV by approximately $163 million by August 2008
- Michael R. Balboa attracted roughly $410 million in new investments between January 2008 and mid-October 2008
- Michael R. Balboa deterred close to $230 million in eligible redemptions
- Michael R. Balboa and Gilles T. De Charsonville violated Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5(a) and (c)
- Michael R. Balboa violated Sections 17(a)(1), (2) and (3) of the Securities Act of 1933
- Michael R. Balboa violated Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940
- Securities and Exchange Commission filed complaint against Michael R. Balboa and Gilles T. De Charsonville
- George S. Canellos is Counsel of Record for Securities and Exchange Commission
- Gilles T. De Charsonville provided phony mark-to-market quotes to GlobeOp and Deloitte
- Michael R. Balboa generated millions of dollars in illegitimate management and performance fees
Text layers
Extracted body text (55,645c)
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JUDGE CROTTY
Counsel of Record:
George s. Canellos
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
3 World Financial Center, Suite 400
New York, New York 10281-1022
III CW 8731
(212) 336-1023 (Brown)
E-mail: [email protected]
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------------------x
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v. No. _ _ _ _ ( )
MICHAEL R. BALBOA and ECFCASE
GILLES T. DE CHARSONVILLE,
COMPLAINT AND
JURY DEMAND
Defendants. .
------------------------------------------------------------------------x
Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against
Defendants Michael R. Balboa and Gilles T. De Charsonville (collectively, "Defendants"),
alleges as follows:
SUMMARY OF ALLEGATIONS
1. This case involves a fraudulent scheme to overvalue two illiquid and sizeable
- securities positions owned by the now defunct Millennium Global Emerging Credit Fund (the
"Fund"), a credit-focused, emerging market hedge fund whose reported assets were $844 million
at the time of its October 16, 2008 collapse. Between January and October 2008, the Fund's
portfolio manager, Michael Balboa, enlisted two purportedly independent brokers, Gilles
De Charsonville and another broker from a U.K.-based broker-dealer firm ("Broker A"), to
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provide phony mark-to-market quotes for two of the Fund's portfolio securities to the Fund's
independent valuation agent, GlobeOp Financial Services, Ltd. ("GlobeOp"), and outside
auditor, Deloitte & Touche (Bermuda), Ltd. ("Deloitte"), in order to inflate the Fund's reported
monthly returns and overall net asset value ("NAV").
2. Balboa and De Charsonvillehid their scheme from GlobeOp and Deloitte. At
Balboa's direction, De Charsonville and Broker A led GlobeOp and Deloitte to believe that the
marks were authentic counter-party quotes. In reality, the marks were dictated by Balboa.
3. Nor was the true source of the valuations disclosed to investors. Nowhere in any
of the marketing materials, monthly newsletters, offering memoranda, or the 2007 audited Fund
financial statements, did the Fund, Millennium Global Investments, Ltd., the Fund's Investment
Manager, or Balboa reveal that the valuations came directly from Balboa, and were not reflective
of legitimate and independent mark-to-market quotations.
4. As a result ofthis misconduct, Balboa, with the knowing and substantial
assistance of De Charsonville, caused the Fund to progressively overstate its NAV by
approximately $163 million by August 2008 and, in so doing, was able to generate millions of
dollars in illegitimate management and performance fees, and, between January 2008' and mid
October 2008, to attract roughly $410 million in new investments and deter close to $230 million
in eligible redemptions.
5. By engaging in the conduct set forth in this complaint, each of the Defendants,
directly or indirectly, singly or in concert, violated and are otherwise liable for violations ofthe
federal securities laws, as follows:
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(a) Each of the Defendants violated Section lOeb) ofthe Securities Exchange Act of
1934 ("Exchange Act"), 15 U.S.C. § 7Sj(b), and Exchange Act Rules IOb-5(a) and (c), 17 C.F.R.
§§ 240.lOb-5(a) and (c).
(b) Balboa also violated Sections 17(a)(1), (2) and (3) of the Securities Act of 1933
("Securities Act"), 15 U.S.C. §§ 77q(a)(I), (2) and (3), and Sections 206(1), 206(2) and 206(4)
of the Investment Advisers Act of 1940 ("Advisers Act"), 15 U.S.C. §§ SOb-6(1), SOb-6(2) and
SOb-6(4), and Advisers Act Rule 206(4)-S(a)(2), 17 C.F.R. § 27S.206(4)-S(a)(2). In addition,
Balboa is liable (i) under Section 20(e) ofthe Exchange Act, 15 U.S.C. § 7St(e), for aiding and
abetting the violations of Section 1O(b) of the Exchange Act, 15 U.S.C. § 7Sj(b), and Exchange
Act Rule 1Ob-5(b), 17 C.F.R. § 240.1 Ob-5(b), committed by the Fund and/or the adviser,
Millennium Global Investments, Ltd. ("MGIL"); and (ii) under Section 209(f) of the Advisers
Act, 15 U.S.C. § SOb-9(f), for aiding and abetting MGIL's violations of Sections 206(1), 206(2)
and 206(4) of the Advisers Act, 15 U.S.C. §§ SOb-6(1), SOb-6(2) and SOb-6(4), and Advisers Act
Rule 206(4)-S(a)(2), 17 C.F.R. § 275.206(4)-S(a)(2).
(c)· De Charsonville is also liable (i) under Section 20(e) of the Exchange Act,
15 U.S.C. § ?St(e), for aiding and abetting Balboa's violations of Section I,O(b) of the Securities
Act, 15 U.S.C. § 7Sj(b), and Exchange Act Rule 10b-5(a) and (c), 17 C.F.R. § 240.lOb-5(a)
and (c); (ii) under Section 209(f) of the Advisers Act, 15 U.S.C. § SOb-9(f), for aiding and
abetting Balboa's violations of Sections 206(1), 206(2) and 206(4) of the Advisers Act,
15 U.S.C. §§ SOb-6(1), SOb-6(2) and SOb-6(4), and Advisers Act Rule 206(4)-S(a)(2), 17 C.F.R.
§ 275.206(4)-S(a)(2); and (iii) pursuant to the authority conferred upon it by Section 21(f) of the
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Exchange Act, 15 U.S.C. § 78u(f), for violations of Financial Industry Regulatory Authority
("FINRA") Rule 5210.
6. Unless the Defendants are pennanently restrained and enjoined, they will again
engage in the acts, practices, transactions and courses of business set forth in this complaint and
in acts, practices, transactions and courses of business of similar type and object.
.JURISDICTION AND VENUE
7. The Commission brings this action pursuant to authority conferred by Section
20(b) of the Securities Act, 15 U.S.C. § 77t(b), Section 21(d) of the Exchange Act, 15U.S.C.
§ 78u(d), Section 21(f) of the Exchange Act, 15 U.S.C. § 78u(f), and Section 209(d) of the
Advisers Act, 15 U.S.C. §80h-:-9(d), seeking a final judgment: (a) restraining and pennanently
enjoining each ofthe Defendants from engaging in the acts, practices and courses of business
alleged against them herein; (b) ordering each of the Defendants to disgorge any ill-gotten gains
and to pay prejUdgment interest on those amounts; and (c) imposing civil money penalties on
each of the Defendants pursuant to Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d),
Section 209 of the Advisers Act, 15 U.S.C. § 80b-9, and, as to Balboa, Section 20(d) of the
Securities Act, 15 U.S.C. § 77t(d).
8. The Court has jurisdiction over this action pursuant to Section 22(a) of the
Securities Act, 15 U.S.C. § 77v(a), Sections 21(d), 21(e) and 27 of the Exchange Act, 15 U.S.C.
§§ 78u(d), 77u(e) and 78aa, an.d Section 214 ofthe Advisers Act, 15 U.S.C. § 80b-14.
Defendants, either directly or indirectly, have made use of the means or instrumentalities of
interstate commerce, of the mails, the facilities of national securities exchanges, andlor the
means or instruments of transportation or communication in interstate commerce in connection
with the acts, practices, and courses of business alleged herein. Among other things, Defendants
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directly or indirectly engaged in a fraudulent scheme to inflate artificially the value of the shares
of a Delaware limited partnership, i.e., the Fund's domestic fee<ler fund, which were being
offered and sold within the United States.
9. Venue lies in the Southern District of New York pursuant to Section 22(a) ofthe
Securities Act, 15 US.C. § 77v(a), Section 27 of the Exchange Act, 15 U.S.C. § 78aa, and
Section 214 of the Advisers Act," 15 US.c. § 80b-14, because certain of the acts, practices,
transactions and courses of business constituting violations of the federal securities laws
occurred within this district. For example, between January and October 2008, Balboa solicited
prospective investors, met with existing Fund investors and traded securities for the Fund during
visits to the Southern District of New York. In addition, venue is proper in this district as to
De Charsonville pursuant to 28US.C. § 1391(d) because of his alien status.
THE DEFENDANTS
10. Balboa, age 42, is a dual citizen of the United States and the United Kingdom
residing in Surrey, England. Between December 2006 and October 2008, Balboa was a
Managing Director ofMGIL, the Fund's investment adviser, and MGIL's designated portfolio
manager for the Fund. As the portfolio manager, Balboa was primarily responsible for the
management ofthe Fund, authored the first draft of the Fund's offering memorandum, drafted or
commented on the Fund's marketing materials, and directed their distribution to investors by the
Fund and MGIL, and was the final decision maker on the Fund's investments. Balboa is
currently the Co-Founder and Managing Partner of ARAM Global, an asset management
. consulting firm with offices· in New York, London and Singapore.
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11. De Charsonville, age 49, is a French citizen residing in Madrid, Spain. Since
July 2003, De Charsonville has been a partner and FINRA-registered foreign associate at BCP
Securities, LLC ("BCP"), an SEC-registered broker-dealer headquartered in Greenwich,
Connecticut with satellite offices in, among other places, Madrid.
OTHER RELEVANT ENTITIES
12. Millennium Global Emerging Credit Master Fund, Ltd. (the "Master Fund"),
Millennium Global Emerging Credit Fund, Ltd. (the "Offshore Feeder Fund") and
Millennium Global Emerging Credit Fund, L.P. (the "Domestic Feeder Fund") are a group of
unregistered funds, organized in a master-feeder structure, that were collectively referred to as
the "Millennium Global Emerging Credit Fund." During the relevant time period, the Domestic
Feeder Fund's General Partner was the MGIL-affiliate, Millennium Global Management, LLC, a
Delaware limited liability company based in Manhattan. The Fund, which was managed by
MGIL, Millennium Asset Management, Ltd. ("MAML"; together with MGIL, "Millennium")
and Balboa, reported assets of $844 million in August 2008 and had approximately 180
investors. On October 16, 2008, the Master Fund and Offshore Feeder Fund petitioned the
Supreme Court of Bermuda for voluntary liquidation and were placed under the control of three
court-appointed joint provisional liquidators. On September 19,2011, the U.S. Bankruptcy Court
for the Southern District ofNew York (Gropper, 1.) entered an order recognizing these Bermuda
liquidation proceedings as foreign main proceedings pursuant to Chapter 15 ofthe U.S. Bankruptcy
Code.
13. Millennium Global Investments, Ltd. is a privately-owned investment
management firm based in London, which had offices in New York and Miami throughout the
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relevant time period. Founded in 1994, MGIL purports to specialize in active currency overlay
and alternative investment strategies for institutional investors. MGIL is an investment adviser
registered with the Commission and National Futures Association ("NF A"), which, during the
relevant time period, managed approximately $15 billion in assets through a variety of funds.
Pursuant to a November 14,2006 Investment Management Agreement and a September 24,2007
Amendment Agreement, MGIL was the Investment Manager ofthe Fund. As Investment
Manager, MGIL was responsible for the Fund's investment decisions and valuations of its non
exchange traded securities holdings.
14. Millennium Asset Management, Ltd. is a privately-owned investment
management firm based in St. Peter Port, Guernsey. Founded in 1997 and an affiliate ofMGIL,
MAML provided certain services, such as reconciliation, NAV sign-off, back-office operations
and marketing services. MAML is registered with the NF A. Pursuant to aNovember 14, 2006
Investment Management Agreement and a September 24, 2007 Ainendment Agreement, MAML
was the Manager of the Fund, responsible for the Fund's administration.
15. GlobeOp Financial Services, Ltd. is a financial services firm co-headquartered
in London and New York that advertises itself as providing, among other things, independent
valuation services to pension funds, insurance companies, asset managers and hedge funds.
Pursuant to a December 2006 Valuation Agent Services Agreement with MGIL, GlobeOp was at
all times the Fund's independent valuation agent, responsible for providing independent
valuations of the Fund's holdings.
16. Deloitte & Touche (Bermuda), Ltd. is a member firm of the international public
accounting firm, Deloitte Touche Tohmatsu Ltd. From January 2008 through October2008,
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Deloitte was engaged as the Fund's independent auditor and, in this role, issued an unqualified
opinion on the Fund's 2007 year-end financials.
BACKGROUND
Balboa's Prior Employment and Hiring at Millennium
17. Prior to joining Millennium, Balboa worked for the fonner London-based
investment advisory finn, Rainbow Advisory Services, Ltd. ("Rainbow"), from 2003 to 2006.
Rainbow managed two emerging markets hedge funds and was owned and controlled by another
individual, who was its CEO and founder (the "CEO").
18. The CEO made the investment decisions for Rainbow's funds. Balboa's
responsibilities at Rainbow consisted of research, trade execution and marketing. Accordingly,
in the Rainbow funds' October 2005 due diligence questionnaire responses ("DDQ") for
prospective investors, which Balboa drafted and executed, Balboa identified the CEO as the
funds' "Chief Portfolio Manager" and described the CEO as solely responsible for the funds'
"portfolio management."
19. In or around September 2006, Balboa applied for a position at Millennium and, in
his application materials, described his role at Rainbow as "Fund Manager" where he
"[m]anaged over $200 million." Millennium ultimately hired Balboa to serve as a portfolio
manager for its newly-created fund, the Millennium Global Emerging Credit Fund. Shortly
afterwards, MGIL, at times at Balboa's direction, began distributing pitch-books to prospective
investors for the Fund that described Balboa's previous position at Rainbow as "Portfolio
Manager" and also highlighted the Rainbow funds' impressive monthly returns from 2003 to
2006. Balboa repeated these false and misleading statements, telling at least one potential
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investor of the Fund that he had been the "portfolio manager" at Rainbow and had been
responsible for its trading decisions.
Overview of the Fund
20. In September 2006, the Fund was organized for the purpose of investing primarily
in sovereign and corporate debt instruments from emerging markets. The Fund was initially run
through a single Bermuda-based entity, but in October 2007 evolved into a master-feeder
structure: the Bermuda-based fund was the master fund, with the Offshore Feeder Fund and the
Domestic Feeder Fund incorporated in Bermuda and Delaware, respectively. Millennium Global
Management, LLC, a Delaware limited liability company headquartered in Manhattan, was
named as the general partner of the Domestic Feeder Fund.
21. MGIL and MAML were at all times the appointed "Investment Manager" and
"Manager," respectively, for the Fund. Balboa, a managing director at MGIL, served at all times
as the Fund's portfolio manager and, as described in the Fund's offering memoranda, DDQs and
newsletters, the final decision-maker for the Fund's investment decisions. While the offering
memoranda and certain other marketing materials were distributed by and attributed to the Fund,
certain pitch-books distributed to prospective investors bore the imprint of and were distributed
byMGIL.
22. The Fund began operations in December 2006 and ultimately raised
approximately $800 million in investor capital primarily from institutional and fund-of-funds
investors throughout the world, including approximately $100 million from U.S. entities. As
part of the Fund's marketing efforts, Balboa met with, and offered shares in the Fund to,
prospective investors world-wide, including in Manhattan and Miami. In addition to solicitation
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meetings with Balboa in the U.S., the Fund's U.S. investors also: (a) received the Fund's offering
memoranda, Subscription Agreements and marketing materials in the U.S.; (b) made their
decision to invest in the U.S.; (c) executed their subscription agreements in the U.S.; and (d)
along with foreign investors, wired their subscription funds to the Fund's bank account in
Manhattan in order to consummate their purchases of Fund shares.
23. In addition to retaining a host of other well-known third-party providers to assist
with its operational needs, Balboa arranged for GlobeOp to serve as the Fund's independent
"valuation agent" In this capacity, GlobeOp was described in the Fund's offering memoranda as
being "responsible for the calculation of the [Fund's] Net Asset Value" and that, "[w]herever
practicable, [WOUld] use independent sources" for this purpose. In addition, the Fund's various
DDQs touted GlobeOp's role as the Fund's "independent valuation agent" and, to this end,
emphasized that "[t]here are no assets valued in house," that "[m]anager marks are not used to
price the portfolio," and that "GlobeOp values 100% of the [Fund's] portfolio." The Fund also
represented in its offering memoranda that its valuation methodology sought to establish "fair
value" for illiquid and non-exchange traded investments through such factors as cost price and
recent transaction prices, and that its financial statements would be reviewed on an annual basis
by its outside auditor, Deloitte. Although Balboa drafted the first version of the Fund's offering
memorandum and reviewed and edited drafts of it and the Fund's DDQs -- which described
. GlobeOp's supposedly independent valuation methodology -- Balboa did not at any time correct
or amend these disclosures to reveal the true nature of his role in supplying valuations for certain
of the Fund's portfolio holdings.
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24. At or near the end of every month, GlobeOp would determine the month-end
valuations for each of the Fund's securities holdings, and use them to calculate the Fund's.
month:...end total NAV, NAV per share and monthly performance, all of which were then
communicated to investors in the Fund's monthly newsletters and used to compute Millennium's
asset-based and performance-based management fees. Although Balboa reviewed these
newsletters and drafted the "Commentary" sections of each, at no time did he correct or amend
the newsletters to disclose that the NAV's were inflated by the bogus valuations he secretly
supplied to GlobeOp through De Charsonville and Broker A.
25. The GlobeOp valuations allowed the Fund to report in its monthly newsletters and
pitch-books that it had achieved positive returns in 19 out of 21 months between December 2006
and August 2008, over 25% annualized returns and, in August 2008, that its NAV had reached
$844.3 million. Balboa also touted the Fund's monthly performance and NAV figures orally on
investor conference calls and in meetings with investors and prospective investors.
26. In addition to the Fund's final month-end valuations generated by GlobeOp,
Balboa would provide Millennium with his mid-month and month-end performance projections
for the Fund, incorporating the fabricated marks which Millennium would pass on bye-mail to
the Fund's investors.
27. The Fund paid management and performance fees to Millennium that were based
on GlobeOp's monthly NAV calculations. The management fee was 0.l67% (2% annual) of the
Fund's month-end overall NAV and paid monthly; the performance fee was 20% of any NAV
per share price appreciation, on a high-water mark basis, that was determined and paid each
quarter. From December 2006 to September 2008, Millennium received approximately $19.1
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million in management and perfonnance fees from the Fund. Over this same time-period, as
compensation for the investment advice he provided to the Fund, and in recognition of the
purported returns he was producing and the growth of assets under management, Balboa received
from Millennium a 40% share of the fees it collected from the Fund (minus certain expenses),
which amounted to roughly $6.5 million in total.
THE DEFENDANTS' FRAUDULENT SCHEME
The Nigerian and Uruguayan Warrants
28. Among the Fund's many sovereign debt holdings were Nigerian payment
adjustment warrants and Uruguayan value recovery rights (together, the "Warrants"). These
Warrants, which were created as part of the "Brady Bond" restructuring of emerging market
bank loans in the early 1990s, were illiquid and traded on an over-the-counter basis. The Fund
purchased 23,500 of the Nigerian Warrants between January and March 2007 for an average
price of$244per warrant and a total price of$5.7 million; it purchased 9.5 million ofthe
Uruguayan Warrants in March 2007 at a price of$0.016 per warrant for a total cost of
$152,000.
29. Between December 2007 and September 2008, the Nigerian Warrants never
traded above $237. As for the Uruguayan Warrants, there were no trades or published quotes
for this security during this same time period. Moreover, because the payment rights for the
Uruguayan Warrants are contingent upon a commodities index reaching a strike-price that has
never been met, these Warrants have never made a payment to investors and, as a result, have at
all times been virtually worthless.
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The Defendants' Manipulation of GlobeOp's Monthly Valuations
30. The Fund's offering memoranda, various DDQs and audited financials described
the valuation methodology and procedures GlobeOp would employ to produce its valuations and
to calculate the Fund's NAV. For the Fund's illiquid and non-exchange traded securities, such
as the Warrants, GlobeOp was to obtain mark-to-market quotes (i.e., marks) on a monthly basis
from outside brokers. The same materials also stated that, "whenever possible," GlobeOp would
use marks from more than one source for each non-exchange traded security for valuation
purposes. GlobeOp thus relied on the brokers to provide it with marks that reflected the brokers'
realistic views ofthe prices the securities would command in arms-length transactions between
market participants, based on their experience executing trades or making markets in those .
securities.
31. Balboa provided GlobeOp with the names of brokers who could purportedly
provide month-end marks for the Fund's illiquid holdings and identified De Charsonville and
Broker A as sources of marks for the Warrants. Balboa recommended De Charsonville and
Broker A even though he knew that neither one regularly traded or made markets in either of
these securities. Nonetheless, as a result of Balboa's referrals, GlobeOp subsequently sought and
obtained monthly marks for the Warrants from these two ostensibly independent brokers and
typically used their marks as the sole basis for the Fund's month-end valuations ofthese two
securities.
32. De Charsonville provided GlobeOp with purported month-end marks from at least
January 2008 to October 2008 for the Nigerian Warrants; he provided marks for the Uruguayan
Warrants for six months in 2008. Broker A purported to provide GlobeOp with marks from
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January 2008 through April 2008 for the Nigerian Warrants and in April and May 2008 for the
Uruguayan Warrants.
33. Of the 30 purportedly "independent" marks for the Warrants provided to GlobeOp
by De Charsonville and Broker A between January 2008 and October 2008, at least 17 of them
came directly from Balboa. On many of these occasions, the scheme was perpetrated in the
following sequence: (i) GlobeOp would e-mail De Charsonville or Broker A asking for the
marks for the Warrants (as well as other securities) for the preceding month; (ii) De Charsonville
or Broker A would then e-mail Balboa either requesting a price from him or asking about his
availability to "mark to market"; (iii) Balboa would either send a reply e-mail or call them with
his desired prices for the securities; and (iv) the two brokers would then reply to GlobeOp's e-
mail with the prices they had obtained from Balboa.
34. The following chart details the 17 occasions on which Balboa -- either by email or
by telephone -- conveyed to De Charsonville and/or Broker A the marks they were to provide
GlobeOp as purportedly independent market quotes. In each instance, and shortly after
receiving the marks from Balboa, De Charsonville and Broker A passed them on as their own to
GlobeOp.
DATE BROKER SECURITY PRICE
111112008 Broker A Nigerian Warrants $525
3/4/2008 Broker A Nigerian Warrants $515-525
51512008 De Charsonville Nigerian Warrants $1,300-1,500
5114/2008 De Charsonville Nigerian Warrants $1,300-1 ;500
6/312008 De Charsonville Nigerian Warrants $1,300-1,500
6/4/2008 De Charsonville Uruguayan Warrants $2.25-2.75
6/1612008 De Charsonville . Uruguayan Warrants $3.30-3.80
7/112008 De Charsonville Nigerian Warrants $1,300-1,500
14
--- page 15 ---
DATE BROKER SECURITY PRICE
7/1/2008 De Charsonville Uruguayan Warrants $3.50-3.90
7116/2008 De Charsonville Nigerian Warrants $2,240-2,440
8/612008 De Charsonville Nigerian Warrants $2,650-3,680
8118/2008 De Charsonville Uruguayan Warrants $9.25-9.75
91212008 De Charsonville Nigerian Warrants $2,750~3,200
9/212008 De Charsonville Uruguayan Warrants $8.50-9.50
9/16/2008 De Charsonville Nigerian Warrants $3,275-3,875
1011/2008 De Charsonville Nigerian Warrants $3,000-4,000
10/1/2008 De Charsonville Uruguayan Warrants $8.00-9.00
35. Neither De Charsonville nor Broker A ever disclosed to GlobeOp that the marks
they were providing were based solely on the numbers Balboa had given them. In addition to
passing on Balboa's phony marks, on at least three occasions, May 14,2008, July 16,2008 and
August 18,2008, De Charsonville provided GlobeOp with Balboa's scripted justifications for
some of the larger price increases for the Warrants. In doing so, De Charsonville did not tell
GlobeOp that he, himself, had no basis for providing the increased marks or that the increased
marks and the justifications had been supplied by Balboa. Moreover, on at least three other
occasions, June 16,2008, October 8,2008 and October 29,2008, De Charsonville affirmatively
misled GlobeOp about the basis for his marks, telling GlobeOp that they came from his "local
sources."
36. While Balboa knew that GlobeOp relied on De Charsonville and Broker A as
independept sources, he did not inform GlobeOp that he was the real source of the marks. As
part of the Fund's monthly valuation process, GlobeOp would run its asset valuations, and the
underlying marks it received, by Balboa for review and approval. As aresult, Balboa knew that
GlobeOp was using the fictitious marks provided by him through De Charsonville and Broker A
15
--- page 16 ---
to calculate the Fund's NAV, although he did not disclose to GlobeOp that the marks had
originated with him.
37. Nor did Balboa make any effort to tie the marks he supplied to real market prices.
In fact, on at least two occasions, he ignored what he knew about recent market activity in setting
the valuations he provided De Charsonville for GlobeOp. With respect to the Nigerian Warrants,
on September 1, 2008, Balboa learned from a broker at Exotix Ltd. that the broker had just sold
40,000 ofthe security at "around $215" and that he would sell Balboa any of Exotix's client's
remaining 45,000 holdings of the security at or around the same price. Balboa declined the offer,
but on the next day, he instructed De Charsonville over the phone to provide GlobeOp with a
mark of $2,750-3,200 forthe Nigerian Warrants -- a value 15 times greater than the price he had
just been quoted. Then, just two weeks later, and without seeing any higher quotes, on
September 16,2008, Balboa caused a further increase in the Fund's valuation ofthe Nigerian
Warrants by directing De Charsonville to provide a revised August 2008 month-end mark of
$3,275-3,875. GlobeOp's incorporation of that mark into its final August month-end NAV
calculation resulted in the Fund's recording of an additional $3.76 million in bogus profits.
38. Balboa also ignored the actual market value for the Uruguayan Warrants. On
September 12,2008, Balboa had the Fund purchase 48 million of Uruguayan Warrants at a price
of$0.035 a piece. The newly-acquired Uruguayan Warrants were called the "VRR-A"
Warrants; the Warrants already held by the Fund were denoted as the "VRR'-B" Warrants.
Because the new VRR-A Warrants bore the same terms and were part of the same issue as the
Fund's existing VRR-B Uruguayan Warrants, their fair market values should have been virtually
identical. Nevertheless, on October 1, 2008, Balboa instructed De Charsonville to provide
16
--- page 17 ---
GlobeOp with a September 2008 month-end mark of $8.50-9.50 for the VRR-B Uruguayan
Warrants, approximately 300 times greater than the purchase price he hadjust paid for the
virtually identical VRR-A Warrants a little more than two weeks earlier.
39. Between April and July 2008, when the Fund's valuations for the Warrants
collectively increased thirteen-fold by $157 million (while the rest ofthe Fund's portfolio
experienced close to $200 million in losses), Balboa used the Warrants' seeming appreciation to
conceal losses sustained in the Fund's other holdings. The following chart illustrates how
Balboa inflated the Warrants' valuation to avoid reporting losses or to pare down substantial
losses sustained by the Fund:
Month Change in Nigeria Change in Fund's Overall Fund's Actual
Warrants Uruguay Warrants Reported Growth Overall Growth
Valuation ($) Valuation ($) (without NIG or
UGYgains)
April +20,625,416 +23,750 -29,483,898 -50,109,314
2008 (-4.28%) 1-7.44%)
May 2008 0 +33,368,750 +7,190,196 -26,178,554
(+0.91%) J-3.51%)
June 2008 +22,442,500 +1,425,000 +1,389,809 -22,477.691
(+0.17%) (-3.04%)
July 2008 +25,262,500 +55,100,000 -25,923,985 -106,286,485
(-3.16%) (-14.53%)
40. Notably, during the same four-month time-period, either one or both of the
Warrants were among the Fund's top two monthly performers. However, Balboa never once
mentioned the astonishing performances of either security in the "Commentary" section he
authored for the Fund's newsletters for those months. Instead, in order to deflect investor
attention from the Warrants' suspect valuations, Balboa misleadingly identified other
investments as the Fund's "top performers" for April and June 2008, even though the Nigerian
17
--- page 18 ---
Warrants were actually the Fund's number one and two performers, respectively, for those two
months.
The Defendants' Manipulation of Deloitte's 2007 Year-End Audit
41. Balboa also had De Charsonville and Broker A pass on bogus 2007 year-end
marks for the Nigerian Warrants to the Fund's outside auditor, Deloitte, in connection withits
review of the Fund's 2007 year-end financials.!
42. Specifically, on or about April 11,2008, at Balboa's direction, De Charsonville
provided Deloitte with 2007 year-end marks of $370-470 for the Nigerian Warrants, even though
the highest trading price for that time was $235. On or about June 12,2008, at Balboa's
direction, Broker A provided Del6itte with 2007 year-end marks of $525 for the same securities.
43. Based on these two artificial marks, Deloitte proposed no adjustment to the
Fund's 2007 year-end valuation ofthe Nigerian Warrants, which was more than double the
securities' fair market value at the time, or 2007 year-end NAV. Deloitte later issued an
unqualified opinion on the Fund's 2007 year-end financials, which was distributed to the Fund's
prospective and current investors.
THE COLLAPSE OF THE FUND
44. On October 16,2008, in the wake of the credit crisis, the Fund's portfolio
.. suffered nearly $1 billion in losses and was forced to file "winding up" petitions with the
Supreme Court of Bermuda. The Fund was subsequently placed under the control of three court-
The Fund's overvaluation of the Fund's Uruguayan Warrants holdings did not begin until
May 2008 and so its inflated values were not reflected in the Fund's 2007 financial statements.
18
--- page 19 ---
appointed joint provisional liquidators (the "Liquidators"), who continue to oversee the
liquidation and distribution of the Fund's assets.
45. As oftoday, the Fund's investors have not had any of their invested funds
returned to them.
BALBOA'S COVER-UP SCHEME
46. Following the Fund's placement into liquidation proceedings in Bermuda, Balboa
launched a cover-up scheme in an attempt to prevent the Bermudian Liquidators from detecting
his overvaluations of the Warrants. In furtherance of this scheme, Balboa persuaded two
London-based brokers, both former coworkers -- "Broker B" and "Broker C" -- to falsely
represent to MGIL that they had traded either the Nigerian or Uruguayan Warrants in 2008 at
prices that were comparable to the Fund's recorded values for each of those securities.
47. In the case of the Nigerian Warrants, Balboa provided Broker B with a letter
containing a list of false pricing levels that reached as high as $3,725 and directed him to fax it to
MGIL on Broker B's firm letterhead as evidence of the prices Broker B's firm was quoting in
2008. Neither Broker B nor his firm had ever traded or made markets for the Nigerian Warrants.
48. Similarly, Balboa directed Broker C to send a series of e-mails to MGIL in which
he falsely represented that Broker C's firm had traded the Uruguayan Warrants on three
occasions between 2007 and 2008 at prices between $5.50 and $11 and inquiring if Millennium
would be willing to sell any of its holdings of this security to one of his clients. Balboa drafted
all of the Broker C's correspondence with MGIL, including the e-mail that contained the
purported historical trading prices for the security of Broker C's firm. Neither Broker C nor his
firm had ever traded or made markets for the Uruguayan Warrants.
19
--- page 20 ---
THE DEFENDANTS' GAINS FROM THE FRAUD
49. The Defendants profited from their fraudulent scheme. Balboa received
approximately $6.5 million in compensation from Millennium that was tied to the performance
and growth in assets under management of the Fund, both of which were substantially enhanced
by the Defendants' fraudulent overvaluation scheme.
50. Balboa also rewarded De Charsonville and Broker A for their participation in the
scheme through "kick-back" business from the Fund. As a result of Balboa having steered the
Fund's trading business their way, the Fund became a top client for both De Charsonville and
Broker A at their firms. In particular, De Charsonville personally made approximately $443,000
in trading commissions from the trades that they arranged for the Fund throughout its existence.
Moreover, in February 2008, shortly after Broker A began passing on Balboa's purported marks
to GlobeOp, Balboa purchased approximately $35,000 in goods from a furniture store owned by
Broker A.
FIRST CLAIM FOR RELIEF
Violations of Section lO(b) of the Exchange Act
and Rule lOb-5(a) and (c) Thereunder
(Balboa and De Charsonville)
51. The Commission repeats and realleges paragraphs 1· through 50 of its Complaint.
52. The Defendants, directly or indirectly, singly or in concert, by use of the means or
instrumentilities of interst~te~oIIlIIlerce or of the mails, or of the facilities of a national securities
exchange, in connection with the purchase or sale of securities, knowingly or recklessly, have:
(a) employed devices, schemes or artifices to defraud; and (b) engaged in acts, practices or
courses of business which operated or would have operated as a fraud or deceit upon purchasers
of securities and upon other persons.
20
--- page 21 ---
53. By reason ofthe foregoing, the Defendants, directly or indirectly, singly or in
concert, violated, are violating, and unless enjoined will again violate, Section 1O(b) of the
Exchange Act, 15 U.S.C. § 78j(b), and Rule IOb-5(a) and (c), 17 C.F.R. §§ 240.l0b-5(a) and (c),
thereunder.
SECOND CLAIM FOR RELIEF
Aiding and Abetting Balboa's Violations of Section lOeb)
of the Exchange Act and Rule lOb-Sea) and (c)
(De Charsonville)
54. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
55. By reason of the foregoing and pursuant to Section 20(e) of the Exchange Act,
15 U.S.C. § 78t(e), De Charsonville, directly or indirectly,aided and abetted Balboa's primary
violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule IOb-5(a) and (c),
17 C.F.R. §§ 240.10b-5(a) and (c), thereunder, because he knowingly provided substantial
assistance to Balboa's violations of Section 10(b) ofthe Exchange Act, 15 U.S.C. § 78j(b), and
Rule IOb-5(a) and (c), 17 C.F.R. §§ 240.10b-5(a) and (c), thereunder.
THIRD CLAIM FOR RELIEF
Aiding and Abetting the Fund's and/or MGIL's Violations of Section lOeb)
oftlie Exchange Act and Rule IOb-S(b) Thereunder.
(Balboa)
56. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
57. The Fund and/or MGIL, directly or indirectly, singly or in concert, by use of the
means or instrumentalities of interstate commerce or of the mails, or of the facilities of a national
securities exchange, in connection with the purchase or sale of securities, knowingly or
recklessl y, made untrue statements of material fact and omitted to state material facts necessary
in order to make the statements made, in the light of the circumstances under which they were
21
--- page 22 ---
made, not misleading.
58. By reason of the foregoing, and pursuant to Section 20(e) of the Exchange Act,
150.S.C. § 78t(e), Balboa, directly or indirectly, aided and abetted the Fund's and/or MGIL's
primary violations of Section IO(b) ofthe Exchange Act, 15 U.S.c.§ 78j(b), and Rule lOb-5(b),
17 C.F.R. § 240.1 Ob-5(b), thereunder, because he knowingly provided substantial assistance to
the Fund's and/or MGIL's violations of Section IO(b) of the Exchange Act, 15 U.S.C. § 78j(b),
and Rule lOb-5(b), 17 C.F.R. § 240. IOb-5(b), thereunder.
FOURTH CLAIM FOR RELIEF
Violations of Section 17(a)(I) ofthe Securities Act
(Balboa)
59. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
60. Balboa, directly or indirectly, by use ofthe means or instruments of transportation
or communication in interstate commerce and by use of the mails, in the offer or sale of
securities, knowingly or recklessly employed devices, schemes or artifices to defraud.
61. By reason of the foregoing, Balboa directly or indirectly violated, and, unless
enjoined, is reasonably likely to continue to violate, Section 17(a)(l) of the Securities Act,
.15 U.S.C. § 77q(a)(1).
FIFTH CLAIM FOR RELIEF
Violations of Section 17(a)(2) and (3) of the Securities Act
(Balboa)
62. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
63. Balboa, in the offer or sale of securities, by the use ofthe means or instruments of
transportation and communication in interstate commerce and by the use ofthe mails, directly or
indirectly, knowingly, recklessly or negligently, has obtained money or property by means of
22
--- page 23 ---
untrue statements of material fact or omissions to state material facts necessary in order to make
the statements made, in light of the circumstances under which they were made, not misleading;
or has engaged in transactions, practices or courses of business that have been operating as a
fraud or deceit upon purchasers of securities.
64. By reason of the foregoing, Balboa, directly or indirectly violated, and, unless
enjoined, is reasonably likely to continue to violate, Sections 17(a)(2) and (3) of the Securities
Act, 15 U.S.C. §§ 77q(a)(2) and (3).
SIXTH CLAIM FOR RELIEF
Violations of Section 206(1) and (2) of the Advisers Act (Balboa) and Aiding and
Abetting Violations of Section 206(1) and (2) of the Advisers Act (De Charsonville)
65. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
66. Balboa, while acting as an investment adviser, by use of the mails, and the means
and instrumentalities of interstate commerce, directly or indirectly, knowingly or recklessly: (a)
employed devices, schemes, or artifices to defraud his clients or prospective clients; and has (b)
engaged in transactions, practices, and courses of business which operated or would have
operated as a fraud or deceit upon clients or prospective clients.
67. By reason of the foregoing, Balboa directly or indirectly violated, and unless
enjoined is reasonably likely to continue to violate, Sections 206(1) and (2) of the Advisers Act,
15 U.S.C. §§ 80b-6(1), 80b-6(2).
68. By reason of the foregoing, De Charsonville, directly or indirectly, aided and
abetted Balboa's primary violations of Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§
80b-6(1), 80b-6(2), because he knowingly provided substantial assistance to Balboa's violations
of Sections 206(1) and (2) ofthe Advisers Act, 15 U.S.c. §§ 80b-6(1), 80b-6(2).
23
--- page 24 ---
SEVENTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Section 206(1) and (2) of the Advisers Act
(Balboa)
69. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
70. MGIL, while acting as an investment adviser, by use of the mails, and the means
and instrumentalities of interstate commerce, directly or indirectly, knowingly or recklessly: (a)
employed devices, schemes, or artifices to defraud its clients or prospective clients; and (b)
engaged in transactions, practices, and courses of business which operated or would have
operated as a fraud or deceit upon clients or prospective clients.
71. By reason of the foregoing, Balboa directly or indirectly, aided and abetted
MGIL's primary violations of Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b
6(1), 80b-6(2), because he knowingly provided substantial assistance to MGIL's violations of
Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b-6(1), 80b-6(2).
EIGHTH CLAIM FOR RELIEF
Violations of Section 206(4) and Rule 206(4)-8(a)(2) Thereunder of the
Advisers Act (Balboa) and Aiding and Abetting Violations of Section
206(4) and Rule 206(4)-8(a)(2) ofthe Advisers Act (De Charsonville)
72. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
73. . Balboa, while acting as an investment adviser to a pooled investment vehicle,
knowingly, recklessly or negligently engaged in acts, practices or courses of business which are
fraudulent, deceptive, or manipulative with respect to an investor or prospective investor in the
pooled investment vehicle.
74. By reason of the foregoing, Balboa directly or indirectly, violated and unless
enjoined is reasonably likely to continue to violate, Section 206(4) of the Advisers Act,
15 U.S.C. §§ 80b-6(4), and Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. § 275.206(4)-8(a)(2).
24
--- page 25 ---
75. By reason ofthe foregoing, De Charsonville directly or indirectly, aided and
abetted Balboa's primary violations of Section 206(4) of the Advisers Act, 15 U.S.c. §§ 80b
6(4), and Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. § 27S.206(4)-8(a)(2), because he
knowingly provided substantial assistance to Balboa's violations of Section 206(4) of the
Advisers Act, 15 U.S.C. §§ 80b-6(4), and Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. §
275.206(4)-8(a)(2).
NINTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Section 206(4) and
Rule 206(4)-8(a)(2) Thereunder ofthe Advisers Act
(Balboa)
76. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
77. MOIL, while acting as an investment adviser to a pooled investment vehicle,
knowingly, recklessly or negligently engaged in acts, practices or courses of business which are
fraudulent, deceptive, or manipulative with respect to an investor or prospective investor in the
pooled investment vehicle.
78. By reason of the foregoing, Balboa directly or indirectly, aided and abetted
MOIL's primary violations ofSectjon 206(4) of the Advisers Act, 15 U.S.c. §§ 80b-6(4), and
Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. § 275.206(4)-8(a)(2), because he knowingly
provided substantial assistance to MOIL's violations of Section 206(4) of the Advisers Act,
15 U.S.C. §§ 80b-6(4), and Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. § 275.206(4)-8(a)(2).
25
--- page 26 ---
TENTH CLAIM FOR RELIEF
Violation of FINRA Rule 5210 under Exchange Act § 21(f)
(De Charsonville)
79. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
80. Under FINRA Rule 5210, registered persons, including foreign associates, shall
not, among other things, "publish or circulate, or cause to be published or circulated, any ...
communication of any kind which ... purports to quote the bid price or asked price for any
security, unless such member believes that such quotation represents a bona fide bid for, or offer
of, such security."
81. By reason of the foregoing, De Charsonville knowingly, recklessly or negligently
violated FINRA Rule 5210 and, pursuant to Exchange Act § 21(f), 15 U.S.C. § 78u(f),
De Charsonville should be enjoined from violating such rule.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court enter a Final
Judgment:
I.
Permanently enjoining and restraining each of the Defendants, their agents, servants,
employees and attorneys and all persons in active concert or participation with them who receive
actual notice of the injunction by personal service or otherwise, and each of them, from violating,
directly or indirectly, Section lOeb) of the Exchan.ge Act, is U.S.C. § 78j(b), and Rule rob~5,
17 C.F.R. § 240.lOb-5, thereunder.
26
--- page 27 ---
II.
Permanently enjoining and restraining each of the Defendants, their agents, servants,
employees and attorneys and all persons in active concert or participation with them who receive
actual notice ofthe injunction by personal service or otherwise, and each ofthem, from, directly
or indirectly, aiding and abetting violations of Section 10(b) of the Exchange Act, 15 U.S.C.
§ 78j(b), and Rule lOb-5, 17 C.F.R. § 240.1 Ob-5, thereunder.
III.
Permanently enjoining and restraining Balboa, his agents, servants, employees and
attorneys and all persons in active concert or participation with them who receive actual notice of
the injunction by personal service or otherwise, and each of them, from violating, directly or
indirectly, Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a).
IV.
. Permanently enjoining and restraining Balboa, his agents, servants, employees and
attorneys and all persons in active concert or participation with them who receive actual notice of
the injunction by personal service or otherwise, and each of them, from violating, directly or
indirectly, Section 206(1), (2) and (4) ofthe Advisers Act, 15 U.S.C. §§ 80b-6(4), and Advisers
Act Rule 206(4)-8(a)(2), 17 C.F.R. § 275.206(4)-8(a)(2), thereunder.
V.
Permanently enjoining and restraining each ofthe Defendants, their agents, servants,
employees and attorneys and all persons in active concert or participation with them who receive
actual notice of the injunction by personal service or otherwise, and each of them, from, directly
or indirectly, aiding and abetting violations of Section 206(1), (2) and (4)ofthe Advisers Act, 15
27
--- page 28 ---
v.S.c. §§ 80b-6(4), and Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. § 275.206(4)-8(a)(2),
thereunder.
VI.
Pennanently enjoining and restraining De Charsonville, his agents, servants, employees
and attorneys and all persons in active concert or participation with them who receive actual
notice of the injunction by personal service or otherwise, and each of them, from violating,
directly or indirectly, FINRA Rule 5210.
VII.
Ordering each of the Defendants to disgorge all ill-gotten gains, including prejudgment
interest, resulting from the acts or courses of conduct alleged in this Complaint.
VIII.
Ordering each of the Defendants to pay civil money penalties pursuant to Section 20(d)
ofthe Securities Act, 15 U.S.c. § 77t(d), Section 21(d) ofthe Exchange Act, 15 U.S.c.
§ 78u(d)(3), and Section 209(e) of the Advisers Act, 15 V.S.C. §80b-9(e).
28
--- page 29 ---
IX.
Granting such other and further relief as the Court deems just and proper.
DEMAND FOR JURY TRIAL
Under Rule 38 of the Federal Rules of Civil Procedure, the Commission demands trial by
jury in this action of all issues so triable.
Dated: December 1, 2011
New York, New York
Respectfully submitted,
SE~S AND}~CHAN.ANGGEE CmOMMISSION
By·~L---
George S. Canellos .
Regional Director
New York Regional Office
3 World Financial Center, Room 400
New York, New York 10281
(212) 336-1023 (Brown)
E-mail: [email protected]
OfCounsel:
Bruce Karpati
Nancy A. Brown
William T. Conway III
29OCR text (55,645c · gpumon-ocr-api · 90% conf)
--- page 1 ---
JUDGE CROTTY
Counsel of Record:
George s. Canellos
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
3 World Financial Center, Suite 400
New York, New York 10281-1022
III CW 8731
(212) 336-1023 (Brown)
E-mail: [email protected]
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------------------x
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v. No. _ _ _ _ ( )
MICHAEL R. BALBOA and ECFCASE
GILLES T. DE CHARSONVILLE,
COMPLAINT AND
JURY DEMAND
Defendants. .
------------------------------------------------------------------------x
Plaintiff Securities and Exchange Commission ("Commission"), for its Complaint against
Defendants Michael R. Balboa and Gilles T. De Charsonville (collectively, "Defendants"),
alleges as follows:
SUMMARY OF ALLEGATIONS
1. This case involves a fraudulent scheme to overvalue two illiquid and sizeable
- securities positions owned by the now defunct Millennium Global Emerging Credit Fund (the
"Fund"), a credit-focused, emerging market hedge fund whose reported assets were $844 million
at the time of its October 16, 2008 collapse. Between January and October 2008, the Fund's
portfolio manager, Michael Balboa, enlisted two purportedly independent brokers, Gilles
De Charsonville and another broker from a U.K.-based broker-dealer firm ("Broker A"), to
--- page 2 ---
provide phony mark-to-market quotes for two of the Fund's portfolio securities to the Fund's
independent valuation agent, GlobeOp Financial Services, Ltd. ("GlobeOp"), and outside
auditor, Deloitte & Touche (Bermuda), Ltd. ("Deloitte"), in order to inflate the Fund's reported
monthly returns and overall net asset value ("NAV").
2. Balboa and De Charsonvillehid their scheme from GlobeOp and Deloitte. At
Balboa's direction, De Charsonville and Broker A led GlobeOp and Deloitte to believe that the
marks were authentic counter-party quotes. In reality, the marks were dictated by Balboa.
3. Nor was the true source of the valuations disclosed to investors. Nowhere in any
of the marketing materials, monthly newsletters, offering memoranda, or the 2007 audited Fund
financial statements, did the Fund, Millennium Global Investments, Ltd., the Fund's Investment
Manager, or Balboa reveal that the valuations came directly from Balboa, and were not reflective
of legitimate and independent mark-to-market quotations.
4. As a result ofthis misconduct, Balboa, with the knowing and substantial
assistance of De Charsonville, caused the Fund to progressively overstate its NAV by
approximately $163 million by August 2008 and, in so doing, was able to generate millions of
dollars in illegitimate management and performance fees, and, between January 2008' and mid
October 2008, to attract roughly $410 million in new investments and deter close to $230 million
in eligible redemptions.
5. By engaging in the conduct set forth in this complaint, each of the Defendants,
directly or indirectly, singly or in concert, violated and are otherwise liable for violations ofthe
federal securities laws, as follows:
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(a) Each of the Defendants violated Section lOeb) ofthe Securities Exchange Act of
1934 ("Exchange Act"), 15 U.S.C. § 7Sj(b), and Exchange Act Rules IOb-5(a) and (c), 17 C.F.R.
§§ 240.lOb-5(a) and (c).
(b) Balboa also violated Sections 17(a)(1), (2) and (3) of the Securities Act of 1933
("Securities Act"), 15 U.S.C. §§ 77q(a)(I), (2) and (3), and Sections 206(1), 206(2) and 206(4)
of the Investment Advisers Act of 1940 ("Advisers Act"), 15 U.S.C. §§ SOb-6(1), SOb-6(2) and
SOb-6(4), and Advisers Act Rule 206(4)-S(a)(2), 17 C.F.R. § 27S.206(4)-S(a)(2). In addition,
Balboa is liable (i) under Section 20(e) ofthe Exchange Act, 15 U.S.C. § 7St(e), for aiding and
abetting the violations of Section 1O(b) of the Exchange Act, 15 U.S.C. § 7Sj(b), and Exchange
Act Rule 1Ob-5(b), 17 C.F.R. § 240.1 Ob-5(b), committed by the Fund and/or the adviser,
Millennium Global Investments, Ltd. ("MGIL"); and (ii) under Section 209(f) of the Advisers
Act, 15 U.S.C. § SOb-9(f), for aiding and abetting MGIL's violations of Sections 206(1), 206(2)
and 206(4) of the Advisers Act, 15 U.S.C. §§ SOb-6(1), SOb-6(2) and SOb-6(4), and Advisers Act
Rule 206(4)-S(a)(2), 17 C.F.R. § 275.206(4)-S(a)(2).
(c)· De Charsonville is also liable (i) under Section 20(e) of the Exchange Act,
15 U.S.C. § ?St(e), for aiding and abetting Balboa's violations of Section I,O(b) of the Securities
Act, 15 U.S.C. § 7Sj(b), and Exchange Act Rule 10b-5(a) and (c), 17 C.F.R. § 240.lOb-5(a)
and (c); (ii) under Section 209(f) of the Advisers Act, 15 U.S.C. § SOb-9(f), for aiding and
abetting Balboa's violations of Sections 206(1), 206(2) and 206(4) of the Advisers Act,
15 U.S.C. §§ SOb-6(1), SOb-6(2) and SOb-6(4), and Advisers Act Rule 206(4)-S(a)(2), 17 C.F.R.
§ 275.206(4)-S(a)(2); and (iii) pursuant to the authority conferred upon it by Section 21(f) of the
3
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Exchange Act, 15 U.S.C. § 78u(f), for violations of Financial Industry Regulatory Authority
("FINRA") Rule 5210.
6. Unless the Defendants are pennanently restrained and enjoined, they will again
engage in the acts, practices, transactions and courses of business set forth in this complaint and
in acts, practices, transactions and courses of business of similar type and object.
.JURISDICTION AND VENUE
7. The Commission brings this action pursuant to authority conferred by Section
20(b) of the Securities Act, 15 U.S.C. § 77t(b), Section 21(d) of the Exchange Act, 15U.S.C.
§ 78u(d), Section 21(f) of the Exchange Act, 15 U.S.C. § 78u(f), and Section 209(d) of the
Advisers Act, 15 U.S.C. §80h-:-9(d), seeking a final judgment: (a) restraining and pennanently
enjoining each ofthe Defendants from engaging in the acts, practices and courses of business
alleged against them herein; (b) ordering each of the Defendants to disgorge any ill-gotten gains
and to pay prejUdgment interest on those amounts; and (c) imposing civil money penalties on
each of the Defendants pursuant to Section 21(d) of the Exchange Act, 15 U.S.C. § 78u(d),
Section 209 of the Advisers Act, 15 U.S.C. § 80b-9, and, as to Balboa, Section 20(d) of the
Securities Act, 15 U.S.C. § 77t(d).
8. The Court has jurisdiction over this action pursuant to Section 22(a) of the
Securities Act, 15 U.S.C. § 77v(a), Sections 21(d), 21(e) and 27 of the Exchange Act, 15 U.S.C.
§§ 78u(d), 77u(e) and 78aa, an.d Section 214 ofthe Advisers Act, 15 U.S.C. § 80b-14.
Defendants, either directly or indirectly, have made use of the means or instrumentalities of
interstate commerce, of the mails, the facilities of national securities exchanges, andlor the
means or instruments of transportation or communication in interstate commerce in connection
with the acts, practices, and courses of business alleged herein. Among other things, Defendants
4
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directly or indirectly engaged in a fraudulent scheme to inflate artificially the value of the shares
of a Delaware limited partnership, i.e., the Fund's domestic fee<ler fund, which were being
offered and sold within the United States.
9. Venue lies in the Southern District of New York pursuant to Section 22(a) ofthe
Securities Act, 15 US.C. § 77v(a), Section 27 of the Exchange Act, 15 U.S.C. § 78aa, and
Section 214 of the Advisers Act," 15 US.c. § 80b-14, because certain of the acts, practices,
transactions and courses of business constituting violations of the federal securities laws
occurred within this district. For example, between January and October 2008, Balboa solicited
prospective investors, met with existing Fund investors and traded securities for the Fund during
visits to the Southern District of New York. In addition, venue is proper in this district as to
De Charsonville pursuant to 28US.C. § 1391(d) because of his alien status.
THE DEFENDANTS
10. Balboa, age 42, is a dual citizen of the United States and the United Kingdom
residing in Surrey, England. Between December 2006 and October 2008, Balboa was a
Managing Director ofMGIL, the Fund's investment adviser, and MGIL's designated portfolio
manager for the Fund. As the portfolio manager, Balboa was primarily responsible for the
management ofthe Fund, authored the first draft of the Fund's offering memorandum, drafted or
commented on the Fund's marketing materials, and directed their distribution to investors by the
Fund and MGIL, and was the final decision maker on the Fund's investments. Balboa is
currently the Co-Founder and Managing Partner of ARAM Global, an asset management
. consulting firm with offices· in New York, London and Singapore.
5
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11. De Charsonville, age 49, is a French citizen residing in Madrid, Spain. Since
July 2003, De Charsonville has been a partner and FINRA-registered foreign associate at BCP
Securities, LLC ("BCP"), an SEC-registered broker-dealer headquartered in Greenwich,
Connecticut with satellite offices in, among other places, Madrid.
OTHER RELEVANT ENTITIES
12. Millennium Global Emerging Credit Master Fund, Ltd. (the "Master Fund"),
Millennium Global Emerging Credit Fund, Ltd. (the "Offshore Feeder Fund") and
Millennium Global Emerging Credit Fund, L.P. (the "Domestic Feeder Fund") are a group of
unregistered funds, organized in a master-feeder structure, that were collectively referred to as
the "Millennium Global Emerging Credit Fund." During the relevant time period, the Domestic
Feeder Fund's General Partner was the MGIL-affiliate, Millennium Global Management, LLC, a
Delaware limited liability company based in Manhattan. The Fund, which was managed by
MGIL, Millennium Asset Management, Ltd. ("MAML"; together with MGIL, "Millennium")
and Balboa, reported assets of $844 million in August 2008 and had approximately 180
investors. On October 16, 2008, the Master Fund and Offshore Feeder Fund petitioned the
Supreme Court of Bermuda for voluntary liquidation and were placed under the control of three
court-appointed joint provisional liquidators. On September 19,2011, the U.S. Bankruptcy Court
for the Southern District ofNew York (Gropper, 1.) entered an order recognizing these Bermuda
liquidation proceedings as foreign main proceedings pursuant to Chapter 15 ofthe U.S. Bankruptcy
Code.
13. Millennium Global Investments, Ltd. is a privately-owned investment
management firm based in London, which had offices in New York and Miami throughout the
6
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relevant time period. Founded in 1994, MGIL purports to specialize in active currency overlay
and alternative investment strategies for institutional investors. MGIL is an investment adviser
registered with the Commission and National Futures Association ("NF A"), which, during the
relevant time period, managed approximately $15 billion in assets through a variety of funds.
Pursuant to a November 14,2006 Investment Management Agreement and a September 24,2007
Amendment Agreement, MGIL was the Investment Manager ofthe Fund. As Investment
Manager, MGIL was responsible for the Fund's investment decisions and valuations of its non
exchange traded securities holdings.
14. Millennium Asset Management, Ltd. is a privately-owned investment
management firm based in St. Peter Port, Guernsey. Founded in 1997 and an affiliate ofMGIL,
MAML provided certain services, such as reconciliation, NAV sign-off, back-office operations
and marketing services. MAML is registered with the NF A. Pursuant to aNovember 14, 2006
Investment Management Agreement and a September 24, 2007 Ainendment Agreement, MAML
was the Manager of the Fund, responsible for the Fund's administration.
15. GlobeOp Financial Services, Ltd. is a financial services firm co-headquartered
in London and New York that advertises itself as providing, among other things, independent
valuation services to pension funds, insurance companies, asset managers and hedge funds.
Pursuant to a December 2006 Valuation Agent Services Agreement with MGIL, GlobeOp was at
all times the Fund's independent valuation agent, responsible for providing independent
valuations of the Fund's holdings.
16. Deloitte & Touche (Bermuda), Ltd. is a member firm of the international public
accounting firm, Deloitte Touche Tohmatsu Ltd. From January 2008 through October2008,
7
--- page 8 ---
Deloitte was engaged as the Fund's independent auditor and, in this role, issued an unqualified
opinion on the Fund's 2007 year-end financials.
BACKGROUND
Balboa's Prior Employment and Hiring at Millennium
17. Prior to joining Millennium, Balboa worked for the fonner London-based
investment advisory finn, Rainbow Advisory Services, Ltd. ("Rainbow"), from 2003 to 2006.
Rainbow managed two emerging markets hedge funds and was owned and controlled by another
individual, who was its CEO and founder (the "CEO").
18. The CEO made the investment decisions for Rainbow's funds. Balboa's
responsibilities at Rainbow consisted of research, trade execution and marketing. Accordingly,
in the Rainbow funds' October 2005 due diligence questionnaire responses ("DDQ") for
prospective investors, which Balboa drafted and executed, Balboa identified the CEO as the
funds' "Chief Portfolio Manager" and described the CEO as solely responsible for the funds'
"portfolio management."
19. In or around September 2006, Balboa applied for a position at Millennium and, in
his application materials, described his role at Rainbow as "Fund Manager" where he
"[m]anaged over $200 million." Millennium ultimately hired Balboa to serve as a portfolio
manager for its newly-created fund, the Millennium Global Emerging Credit Fund. Shortly
afterwards, MGIL, at times at Balboa's direction, began distributing pitch-books to prospective
investors for the Fund that described Balboa's previous position at Rainbow as "Portfolio
Manager" and also highlighted the Rainbow funds' impressive monthly returns from 2003 to
2006. Balboa repeated these false and misleading statements, telling at least one potential
8
--- page 9 ---
investor of the Fund that he had been the "portfolio manager" at Rainbow and had been
responsible for its trading decisions.
Overview of the Fund
20. In September 2006, the Fund was organized for the purpose of investing primarily
in sovereign and corporate debt instruments from emerging markets. The Fund was initially run
through a single Bermuda-based entity, but in October 2007 evolved into a master-feeder
structure: the Bermuda-based fund was the master fund, with the Offshore Feeder Fund and the
Domestic Feeder Fund incorporated in Bermuda and Delaware, respectively. Millennium Global
Management, LLC, a Delaware limited liability company headquartered in Manhattan, was
named as the general partner of the Domestic Feeder Fund.
21. MGIL and MAML were at all times the appointed "Investment Manager" and
"Manager," respectively, for the Fund. Balboa, a managing director at MGIL, served at all times
as the Fund's portfolio manager and, as described in the Fund's offering memoranda, DDQs and
newsletters, the final decision-maker for the Fund's investment decisions. While the offering
memoranda and certain other marketing materials were distributed by and attributed to the Fund,
certain pitch-books distributed to prospective investors bore the imprint of and were distributed
byMGIL.
22. The Fund began operations in December 2006 and ultimately raised
approximately $800 million in investor capital primarily from institutional and fund-of-funds
investors throughout the world, including approximately $100 million from U.S. entities. As
part of the Fund's marketing efforts, Balboa met with, and offered shares in the Fund to,
prospective investors world-wide, including in Manhattan and Miami. In addition to solicitation
9
--- page 10 ---
meetings with Balboa in the U.S., the Fund's U.S. investors also: (a) received the Fund's offering
memoranda, Subscription Agreements and marketing materials in the U.S.; (b) made their
decision to invest in the U.S.; (c) executed their subscription agreements in the U.S.; and (d)
along with foreign investors, wired their subscription funds to the Fund's bank account in
Manhattan in order to consummate their purchases of Fund shares.
23. In addition to retaining a host of other well-known third-party providers to assist
with its operational needs, Balboa arranged for GlobeOp to serve as the Fund's independent
"valuation agent" In this capacity, GlobeOp was described in the Fund's offering memoranda as
being "responsible for the calculation of the [Fund's] Net Asset Value" and that, "[w]herever
practicable, [WOUld] use independent sources" for this purpose. In addition, the Fund's various
DDQs touted GlobeOp's role as the Fund's "independent valuation agent" and, to this end,
emphasized that "[t]here are no assets valued in house," that "[m]anager marks are not used to
price the portfolio," and that "GlobeOp values 100% of the [Fund's] portfolio." The Fund also
represented in its offering memoranda that its valuation methodology sought to establish "fair
value" for illiquid and non-exchange traded investments through such factors as cost price and
recent transaction prices, and that its financial statements would be reviewed on an annual basis
by its outside auditor, Deloitte. Although Balboa drafted the first version of the Fund's offering
memorandum and reviewed and edited drafts of it and the Fund's DDQs -- which described
. GlobeOp's supposedly independent valuation methodology -- Balboa did not at any time correct
or amend these disclosures to reveal the true nature of his role in supplying valuations for certain
of the Fund's portfolio holdings.
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--- page 11 ---
24. At or near the end of every month, GlobeOp would determine the month-end
valuations for each of the Fund's securities holdings, and use them to calculate the Fund's.
month:...end total NAV, NAV per share and monthly performance, all of which were then
communicated to investors in the Fund's monthly newsletters and used to compute Millennium's
asset-based and performance-based management fees. Although Balboa reviewed these
newsletters and drafted the "Commentary" sections of each, at no time did he correct or amend
the newsletters to disclose that the NAV's were inflated by the bogus valuations he secretly
supplied to GlobeOp through De Charsonville and Broker A.
25. The GlobeOp valuations allowed the Fund to report in its monthly newsletters and
pitch-books that it had achieved positive returns in 19 out of 21 months between December 2006
and August 2008, over 25% annualized returns and, in August 2008, that its NAV had reached
$844.3 million. Balboa also touted the Fund's monthly performance and NAV figures orally on
investor conference calls and in meetings with investors and prospective investors.
26. In addition to the Fund's final month-end valuations generated by GlobeOp,
Balboa would provide Millennium with his mid-month and month-end performance projections
for the Fund, incorporating the fabricated marks which Millennium would pass on bye-mail to
the Fund's investors.
27. The Fund paid management and performance fees to Millennium that were based
on GlobeOp's monthly NAV calculations. The management fee was 0.l67% (2% annual) of the
Fund's month-end overall NAV and paid monthly; the performance fee was 20% of any NAV
per share price appreciation, on a high-water mark basis, that was determined and paid each
quarter. From December 2006 to September 2008, Millennium received approximately $19.1
11
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million in management and perfonnance fees from the Fund. Over this same time-period, as
compensation for the investment advice he provided to the Fund, and in recognition of the
purported returns he was producing and the growth of assets under management, Balboa received
from Millennium a 40% share of the fees it collected from the Fund (minus certain expenses),
which amounted to roughly $6.5 million in total.
THE DEFENDANTS' FRAUDULENT SCHEME
The Nigerian and Uruguayan Warrants
28. Among the Fund's many sovereign debt holdings were Nigerian payment
adjustment warrants and Uruguayan value recovery rights (together, the "Warrants"). These
Warrants, which were created as part of the "Brady Bond" restructuring of emerging market
bank loans in the early 1990s, were illiquid and traded on an over-the-counter basis. The Fund
purchased 23,500 of the Nigerian Warrants between January and March 2007 for an average
price of$244per warrant and a total price of$5.7 million; it purchased 9.5 million ofthe
Uruguayan Warrants in March 2007 at a price of$0.016 per warrant for a total cost of
$152,000.
29. Between December 2007 and September 2008, the Nigerian Warrants never
traded above $237. As for the Uruguayan Warrants, there were no trades or published quotes
for this security during this same time period. Moreover, because the payment rights for the
Uruguayan Warrants are contingent upon a commodities index reaching a strike-price that has
never been met, these Warrants have never made a payment to investors and, as a result, have at
all times been virtually worthless.
12
--- page 13 ---
The Defendants' Manipulation of GlobeOp's Monthly Valuations
30. The Fund's offering memoranda, various DDQs and audited financials described
the valuation methodology and procedures GlobeOp would employ to produce its valuations and
to calculate the Fund's NAV. For the Fund's illiquid and non-exchange traded securities, such
as the Warrants, GlobeOp was to obtain mark-to-market quotes (i.e., marks) on a monthly basis
from outside brokers. The same materials also stated that, "whenever possible," GlobeOp would
use marks from more than one source for each non-exchange traded security for valuation
purposes. GlobeOp thus relied on the brokers to provide it with marks that reflected the brokers'
realistic views ofthe prices the securities would command in arms-length transactions between
market participants, based on their experience executing trades or making markets in those .
securities.
31. Balboa provided GlobeOp with the names of brokers who could purportedly
provide month-end marks for the Fund's illiquid holdings and identified De Charsonville and
Broker A as sources of marks for the Warrants. Balboa recommended De Charsonville and
Broker A even though he knew that neither one regularly traded or made markets in either of
these securities. Nonetheless, as a result of Balboa's referrals, GlobeOp subsequently sought and
obtained monthly marks for the Warrants from these two ostensibly independent brokers and
typically used their marks as the sole basis for the Fund's month-end valuations ofthese two
securities.
32. De Charsonville provided GlobeOp with purported month-end marks from at least
January 2008 to October 2008 for the Nigerian Warrants; he provided marks for the Uruguayan
Warrants for six months in 2008. Broker A purported to provide GlobeOp with marks from
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--- page 14 ---
January 2008 through April 2008 for the Nigerian Warrants and in April and May 2008 for the
Uruguayan Warrants.
33. Of the 30 purportedly "independent" marks for the Warrants provided to GlobeOp
by De Charsonville and Broker A between January 2008 and October 2008, at least 17 of them
came directly from Balboa. On many of these occasions, the scheme was perpetrated in the
following sequence: (i) GlobeOp would e-mail De Charsonville or Broker A asking for the
marks for the Warrants (as well as other securities) for the preceding month; (ii) De Charsonville
or Broker A would then e-mail Balboa either requesting a price from him or asking about his
availability to "mark to market"; (iii) Balboa would either send a reply e-mail or call them with
his desired prices for the securities; and (iv) the two brokers would then reply to GlobeOp's e-
mail with the prices they had obtained from Balboa.
34. The following chart details the 17 occasions on which Balboa -- either by email or
by telephone -- conveyed to De Charsonville and/or Broker A the marks they were to provide
GlobeOp as purportedly independent market quotes. In each instance, and shortly after
receiving the marks from Balboa, De Charsonville and Broker A passed them on as their own to
GlobeOp.
DATE BROKER SECURITY PRICE
111112008 Broker A Nigerian Warrants $525
3/4/2008 Broker A Nigerian Warrants $515-525
51512008 De Charsonville Nigerian Warrants $1,300-1,500
5114/2008 De Charsonville Nigerian Warrants $1,300-1 ;500
6/312008 De Charsonville Nigerian Warrants $1,300-1,500
6/4/2008 De Charsonville Uruguayan Warrants $2.25-2.75
6/1612008 De Charsonville . Uruguayan Warrants $3.30-3.80
7/112008 De Charsonville Nigerian Warrants $1,300-1,500
14
--- page 15 ---
DATE BROKER SECURITY PRICE
7/1/2008 De Charsonville Uruguayan Warrants $3.50-3.90
7116/2008 De Charsonville Nigerian Warrants $2,240-2,440
8/612008 De Charsonville Nigerian Warrants $2,650-3,680
8118/2008 De Charsonville Uruguayan Warrants $9.25-9.75
91212008 De Charsonville Nigerian Warrants $2,750~3,200
9/212008 De Charsonville Uruguayan Warrants $8.50-9.50
9/16/2008 De Charsonville Nigerian Warrants $3,275-3,875
1011/2008 De Charsonville Nigerian Warrants $3,000-4,000
10/1/2008 De Charsonville Uruguayan Warrants $8.00-9.00
35. Neither De Charsonville nor Broker A ever disclosed to GlobeOp that the marks
they were providing were based solely on the numbers Balboa had given them. In addition to
passing on Balboa's phony marks, on at least three occasions, May 14,2008, July 16,2008 and
August 18,2008, De Charsonville provided GlobeOp with Balboa's scripted justifications for
some of the larger price increases for the Warrants. In doing so, De Charsonville did not tell
GlobeOp that he, himself, had no basis for providing the increased marks or that the increased
marks and the justifications had been supplied by Balboa. Moreover, on at least three other
occasions, June 16,2008, October 8,2008 and October 29,2008, De Charsonville affirmatively
misled GlobeOp about the basis for his marks, telling GlobeOp that they came from his "local
sources."
36. While Balboa knew that GlobeOp relied on De Charsonville and Broker A as
independept sources, he did not inform GlobeOp that he was the real source of the marks. As
part of the Fund's monthly valuation process, GlobeOp would run its asset valuations, and the
underlying marks it received, by Balboa for review and approval. As aresult, Balboa knew that
GlobeOp was using the fictitious marks provided by him through De Charsonville and Broker A
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--- page 16 ---
to calculate the Fund's NAV, although he did not disclose to GlobeOp that the marks had
originated with him.
37. Nor did Balboa make any effort to tie the marks he supplied to real market prices.
In fact, on at least two occasions, he ignored what he knew about recent market activity in setting
the valuations he provided De Charsonville for GlobeOp. With respect to the Nigerian Warrants,
on September 1, 2008, Balboa learned from a broker at Exotix Ltd. that the broker had just sold
40,000 ofthe security at "around $215" and that he would sell Balboa any of Exotix's client's
remaining 45,000 holdings of the security at or around the same price. Balboa declined the offer,
but on the next day, he instructed De Charsonville over the phone to provide GlobeOp with a
mark of $2,750-3,200 forthe Nigerian Warrants -- a value 15 times greater than the price he had
just been quoted. Then, just two weeks later, and without seeing any higher quotes, on
September 16,2008, Balboa caused a further increase in the Fund's valuation ofthe Nigerian
Warrants by directing De Charsonville to provide a revised August 2008 month-end mark of
$3,275-3,875. GlobeOp's incorporation of that mark into its final August month-end NAV
calculation resulted in the Fund's recording of an additional $3.76 million in bogus profits.
38. Balboa also ignored the actual market value for the Uruguayan Warrants. On
September 12,2008, Balboa had the Fund purchase 48 million of Uruguayan Warrants at a price
of$0.035 a piece. The newly-acquired Uruguayan Warrants were called the "VRR-A"
Warrants; the Warrants already held by the Fund were denoted as the "VRR'-B" Warrants.
Because the new VRR-A Warrants bore the same terms and were part of the same issue as the
Fund's existing VRR-B Uruguayan Warrants, their fair market values should have been virtually
identical. Nevertheless, on October 1, 2008, Balboa instructed De Charsonville to provide
16
--- page 17 ---
GlobeOp with a September 2008 month-end mark of $8.50-9.50 for the VRR-B Uruguayan
Warrants, approximately 300 times greater than the purchase price he hadjust paid for the
virtually identical VRR-A Warrants a little more than two weeks earlier.
39. Between April and July 2008, when the Fund's valuations for the Warrants
collectively increased thirteen-fold by $157 million (while the rest ofthe Fund's portfolio
experienced close to $200 million in losses), Balboa used the Warrants' seeming appreciation to
conceal losses sustained in the Fund's other holdings. The following chart illustrates how
Balboa inflated the Warrants' valuation to avoid reporting losses or to pare down substantial
losses sustained by the Fund:
Month Change in Nigeria Change in Fund's Overall Fund's Actual
Warrants Uruguay Warrants Reported Growth Overall Growth
Valuation ($) Valuation ($) (without NIG or
UGYgains)
April +20,625,416 +23,750 -29,483,898 -50,109,314
2008 (-4.28%) 1-7.44%)
May 2008 0 +33,368,750 +7,190,196 -26,178,554
(+0.91%) J-3.51%)
June 2008 +22,442,500 +1,425,000 +1,389,809 -22,477.691
(+0.17%) (-3.04%)
July 2008 +25,262,500 +55,100,000 -25,923,985 -106,286,485
(-3.16%) (-14.53%)
40. Notably, during the same four-month time-period, either one or both of the
Warrants were among the Fund's top two monthly performers. However, Balboa never once
mentioned the astonishing performances of either security in the "Commentary" section he
authored for the Fund's newsletters for those months. Instead, in order to deflect investor
attention from the Warrants' suspect valuations, Balboa misleadingly identified other
investments as the Fund's "top performers" for April and June 2008, even though the Nigerian
17
--- page 18 ---
Warrants were actually the Fund's number one and two performers, respectively, for those two
months.
The Defendants' Manipulation of Deloitte's 2007 Year-End Audit
41. Balboa also had De Charsonville and Broker A pass on bogus 2007 year-end
marks for the Nigerian Warrants to the Fund's outside auditor, Deloitte, in connection withits
review of the Fund's 2007 year-end financials.!
42. Specifically, on or about April 11,2008, at Balboa's direction, De Charsonville
provided Deloitte with 2007 year-end marks of $370-470 for the Nigerian Warrants, even though
the highest trading price for that time was $235. On or about June 12,2008, at Balboa's
direction, Broker A provided Del6itte with 2007 year-end marks of $525 for the same securities.
43. Based on these two artificial marks, Deloitte proposed no adjustment to the
Fund's 2007 year-end valuation ofthe Nigerian Warrants, which was more than double the
securities' fair market value at the time, or 2007 year-end NAV. Deloitte later issued an
unqualified opinion on the Fund's 2007 year-end financials, which was distributed to the Fund's
prospective and current investors.
THE COLLAPSE OF THE FUND
44. On October 16,2008, in the wake of the credit crisis, the Fund's portfolio
.. suffered nearly $1 billion in losses and was forced to file "winding up" petitions with the
Supreme Court of Bermuda. The Fund was subsequently placed under the control of three court-
The Fund's overvaluation of the Fund's Uruguayan Warrants holdings did not begin until
May 2008 and so its inflated values were not reflected in the Fund's 2007 financial statements.
18
--- page 19 ---
appointed joint provisional liquidators (the "Liquidators"), who continue to oversee the
liquidation and distribution of the Fund's assets.
45. As oftoday, the Fund's investors have not had any of their invested funds
returned to them.
BALBOA'S COVER-UP SCHEME
46. Following the Fund's placement into liquidation proceedings in Bermuda, Balboa
launched a cover-up scheme in an attempt to prevent the Bermudian Liquidators from detecting
his overvaluations of the Warrants. In furtherance of this scheme, Balboa persuaded two
London-based brokers, both former coworkers -- "Broker B" and "Broker C" -- to falsely
represent to MGIL that they had traded either the Nigerian or Uruguayan Warrants in 2008 at
prices that were comparable to the Fund's recorded values for each of those securities.
47. In the case of the Nigerian Warrants, Balboa provided Broker B with a letter
containing a list of false pricing levels that reached as high as $3,725 and directed him to fax it to
MGIL on Broker B's firm letterhead as evidence of the prices Broker B's firm was quoting in
2008. Neither Broker B nor his firm had ever traded or made markets for the Nigerian Warrants.
48. Similarly, Balboa directed Broker C to send a series of e-mails to MGIL in which
he falsely represented that Broker C's firm had traded the Uruguayan Warrants on three
occasions between 2007 and 2008 at prices between $5.50 and $11 and inquiring if Millennium
would be willing to sell any of its holdings of this security to one of his clients. Balboa drafted
all of the Broker C's correspondence with MGIL, including the e-mail that contained the
purported historical trading prices for the security of Broker C's firm. Neither Broker C nor his
firm had ever traded or made markets for the Uruguayan Warrants.
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--- page 20 ---
THE DEFENDANTS' GAINS FROM THE FRAUD
49. The Defendants profited from their fraudulent scheme. Balboa received
approximately $6.5 million in compensation from Millennium that was tied to the performance
and growth in assets under management of the Fund, both of which were substantially enhanced
by the Defendants' fraudulent overvaluation scheme.
50. Balboa also rewarded De Charsonville and Broker A for their participation in the
scheme through "kick-back" business from the Fund. As a result of Balboa having steered the
Fund's trading business their way, the Fund became a top client for both De Charsonville and
Broker A at their firms. In particular, De Charsonville personally made approximately $443,000
in trading commissions from the trades that they arranged for the Fund throughout its existence.
Moreover, in February 2008, shortly after Broker A began passing on Balboa's purported marks
to GlobeOp, Balboa purchased approximately $35,000 in goods from a furniture store owned by
Broker A.
FIRST CLAIM FOR RELIEF
Violations of Section lO(b) of the Exchange Act
and Rule lOb-5(a) and (c) Thereunder
(Balboa and De Charsonville)
51. The Commission repeats and realleges paragraphs 1· through 50 of its Complaint.
52. The Defendants, directly or indirectly, singly or in concert, by use of the means or
instrumentilities of interst~te~oIIlIIlerce or of the mails, or of the facilities of a national securities
exchange, in connection with the purchase or sale of securities, knowingly or recklessly, have:
(a) employed devices, schemes or artifices to defraud; and (b) engaged in acts, practices or
courses of business which operated or would have operated as a fraud or deceit upon purchasers
of securities and upon other persons.
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--- page 21 ---
53. By reason ofthe foregoing, the Defendants, directly or indirectly, singly or in
concert, violated, are violating, and unless enjoined will again violate, Section 1O(b) of the
Exchange Act, 15 U.S.C. § 78j(b), and Rule IOb-5(a) and (c), 17 C.F.R. §§ 240.l0b-5(a) and (c),
thereunder.
SECOND CLAIM FOR RELIEF
Aiding and Abetting Balboa's Violations of Section lOeb)
of the Exchange Act and Rule lOb-Sea) and (c)
(De Charsonville)
54. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
55. By reason of the foregoing and pursuant to Section 20(e) of the Exchange Act,
15 U.S.C. § 78t(e), De Charsonville, directly or indirectly,aided and abetted Balboa's primary
violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule IOb-5(a) and (c),
17 C.F.R. §§ 240.10b-5(a) and (c), thereunder, because he knowingly provided substantial
assistance to Balboa's violations of Section 10(b) ofthe Exchange Act, 15 U.S.C. § 78j(b), and
Rule IOb-5(a) and (c), 17 C.F.R. §§ 240.10b-5(a) and (c), thereunder.
THIRD CLAIM FOR RELIEF
Aiding and Abetting the Fund's and/or MGIL's Violations of Section lOeb)
oftlie Exchange Act and Rule IOb-S(b) Thereunder.
(Balboa)
56. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
57. The Fund and/or MGIL, directly or indirectly, singly or in concert, by use of the
means or instrumentalities of interstate commerce or of the mails, or of the facilities of a national
securities exchange, in connection with the purchase or sale of securities, knowingly or
recklessl y, made untrue statements of material fact and omitted to state material facts necessary
in order to make the statements made, in the light of the circumstances under which they were
21
--- page 22 ---
made, not misleading.
58. By reason of the foregoing, and pursuant to Section 20(e) of the Exchange Act,
150.S.C. § 78t(e), Balboa, directly or indirectly, aided and abetted the Fund's and/or MGIL's
primary violations of Section IO(b) ofthe Exchange Act, 15 U.S.c.§ 78j(b), and Rule lOb-5(b),
17 C.F.R. § 240.1 Ob-5(b), thereunder, because he knowingly provided substantial assistance to
the Fund's and/or MGIL's violations of Section IO(b) of the Exchange Act, 15 U.S.C. § 78j(b),
and Rule lOb-5(b), 17 C.F.R. § 240. IOb-5(b), thereunder.
FOURTH CLAIM FOR RELIEF
Violations of Section 17(a)(I) ofthe Securities Act
(Balboa)
59. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
60. Balboa, directly or indirectly, by use ofthe means or instruments of transportation
or communication in interstate commerce and by use of the mails, in the offer or sale of
securities, knowingly or recklessly employed devices, schemes or artifices to defraud.
61. By reason of the foregoing, Balboa directly or indirectly violated, and, unless
enjoined, is reasonably likely to continue to violate, Section 17(a)(l) of the Securities Act,
.15 U.S.C. § 77q(a)(1).
FIFTH CLAIM FOR RELIEF
Violations of Section 17(a)(2) and (3) of the Securities Act
(Balboa)
62. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
63. Balboa, in the offer or sale of securities, by the use ofthe means or instruments of
transportation and communication in interstate commerce and by the use ofthe mails, directly or
indirectly, knowingly, recklessly or negligently, has obtained money or property by means of
22
--- page 23 ---
untrue statements of material fact or omissions to state material facts necessary in order to make
the statements made, in light of the circumstances under which they were made, not misleading;
or has engaged in transactions, practices or courses of business that have been operating as a
fraud or deceit upon purchasers of securities.
64. By reason of the foregoing, Balboa, directly or indirectly violated, and, unless
enjoined, is reasonably likely to continue to violate, Sections 17(a)(2) and (3) of the Securities
Act, 15 U.S.C. §§ 77q(a)(2) and (3).
SIXTH CLAIM FOR RELIEF
Violations of Section 206(1) and (2) of the Advisers Act (Balboa) and Aiding and
Abetting Violations of Section 206(1) and (2) of the Advisers Act (De Charsonville)
65. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
66. Balboa, while acting as an investment adviser, by use of the mails, and the means
and instrumentalities of interstate commerce, directly or indirectly, knowingly or recklessly: (a)
employed devices, schemes, or artifices to defraud his clients or prospective clients; and has (b)
engaged in transactions, practices, and courses of business which operated or would have
operated as a fraud or deceit upon clients or prospective clients.
67. By reason of the foregoing, Balboa directly or indirectly violated, and unless
enjoined is reasonably likely to continue to violate, Sections 206(1) and (2) of the Advisers Act,
15 U.S.C. §§ 80b-6(1), 80b-6(2).
68. By reason of the foregoing, De Charsonville, directly or indirectly, aided and
abetted Balboa's primary violations of Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§
80b-6(1), 80b-6(2), because he knowingly provided substantial assistance to Balboa's violations
of Sections 206(1) and (2) ofthe Advisers Act, 15 U.S.c. §§ 80b-6(1), 80b-6(2).
23
--- page 24 ---
SEVENTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Section 206(1) and (2) of the Advisers Act
(Balboa)
69. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
70. MGIL, while acting as an investment adviser, by use of the mails, and the means
and instrumentalities of interstate commerce, directly or indirectly, knowingly or recklessly: (a)
employed devices, schemes, or artifices to defraud its clients or prospective clients; and (b)
engaged in transactions, practices, and courses of business which operated or would have
operated as a fraud or deceit upon clients or prospective clients.
71. By reason of the foregoing, Balboa directly or indirectly, aided and abetted
MGIL's primary violations of Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b
6(1), 80b-6(2), because he knowingly provided substantial assistance to MGIL's violations of
Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b-6(1), 80b-6(2).
EIGHTH CLAIM FOR RELIEF
Violations of Section 206(4) and Rule 206(4)-8(a)(2) Thereunder of the
Advisers Act (Balboa) and Aiding and Abetting Violations of Section
206(4) and Rule 206(4)-8(a)(2) ofthe Advisers Act (De Charsonville)
72. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
73. . Balboa, while acting as an investment adviser to a pooled investment vehicle,
knowingly, recklessly or negligently engaged in acts, practices or courses of business which are
fraudulent, deceptive, or manipulative with respect to an investor or prospective investor in the
pooled investment vehicle.
74. By reason of the foregoing, Balboa directly or indirectly, violated and unless
enjoined is reasonably likely to continue to violate, Section 206(4) of the Advisers Act,
15 U.S.C. §§ 80b-6(4), and Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. § 275.206(4)-8(a)(2).
24
--- page 25 ---
75. By reason ofthe foregoing, De Charsonville directly or indirectly, aided and
abetted Balboa's primary violations of Section 206(4) of the Advisers Act, 15 U.S.c. §§ 80b
6(4), and Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. § 27S.206(4)-8(a)(2), because he
knowingly provided substantial assistance to Balboa's violations of Section 206(4) of the
Advisers Act, 15 U.S.C. §§ 80b-6(4), and Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. §
275.206(4)-8(a)(2).
NINTH CLAIM FOR RELIEF
Aiding and Abetting Violations of Section 206(4) and
Rule 206(4)-8(a)(2) Thereunder ofthe Advisers Act
(Balboa)
76. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
77. MOIL, while acting as an investment adviser to a pooled investment vehicle,
knowingly, recklessly or negligently engaged in acts, practices or courses of business which are
fraudulent, deceptive, or manipulative with respect to an investor or prospective investor in the
pooled investment vehicle.
78. By reason of the foregoing, Balboa directly or indirectly, aided and abetted
MOIL's primary violations ofSectjon 206(4) of the Advisers Act, 15 U.S.c. §§ 80b-6(4), and
Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. § 275.206(4)-8(a)(2), because he knowingly
provided substantial assistance to MOIL's violations of Section 206(4) of the Advisers Act,
15 U.S.C. §§ 80b-6(4), and Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. § 275.206(4)-8(a)(2).
25
--- page 26 ---
TENTH CLAIM FOR RELIEF
Violation of FINRA Rule 5210 under Exchange Act § 21(f)
(De Charsonville)
79. The Commission repeats and realleges paragraphs 1 through 50 of its Complaint.
80. Under FINRA Rule 5210, registered persons, including foreign associates, shall
not, among other things, "publish or circulate, or cause to be published or circulated, any ...
communication of any kind which ... purports to quote the bid price or asked price for any
security, unless such member believes that such quotation represents a bona fide bid for, or offer
of, such security."
81. By reason of the foregoing, De Charsonville knowingly, recklessly or negligently
violated FINRA Rule 5210 and, pursuant to Exchange Act § 21(f), 15 U.S.C. § 78u(f),
De Charsonville should be enjoined from violating such rule.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court enter a Final
Judgment:
I.
Permanently enjoining and restraining each of the Defendants, their agents, servants,
employees and attorneys and all persons in active concert or participation with them who receive
actual notice of the injunction by personal service or otherwise, and each of them, from violating,
directly or indirectly, Section lOeb) of the Exchan.ge Act, is U.S.C. § 78j(b), and Rule rob~5,
17 C.F.R. § 240.lOb-5, thereunder.
26
--- page 27 ---
II.
Permanently enjoining and restraining each of the Defendants, their agents, servants,
employees and attorneys and all persons in active concert or participation with them who receive
actual notice ofthe injunction by personal service or otherwise, and each ofthem, from, directly
or indirectly, aiding and abetting violations of Section 10(b) of the Exchange Act, 15 U.S.C.
§ 78j(b), and Rule lOb-5, 17 C.F.R. § 240.1 Ob-5, thereunder.
III.
Permanently enjoining and restraining Balboa, his agents, servants, employees and
attorneys and all persons in active concert or participation with them who receive actual notice of
the injunction by personal service or otherwise, and each of them, from violating, directly or
indirectly, Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a).
IV.
. Permanently enjoining and restraining Balboa, his agents, servants, employees and
attorneys and all persons in active concert or participation with them who receive actual notice of
the injunction by personal service or otherwise, and each of them, from violating, directly or
indirectly, Section 206(1), (2) and (4) ofthe Advisers Act, 15 U.S.C. §§ 80b-6(4), and Advisers
Act Rule 206(4)-8(a)(2), 17 C.F.R. § 275.206(4)-8(a)(2), thereunder.
V.
Permanently enjoining and restraining each ofthe Defendants, their agents, servants,
employees and attorneys and all persons in active concert or participation with them who receive
actual notice of the injunction by personal service or otherwise, and each of them, from, directly
or indirectly, aiding and abetting violations of Section 206(1), (2) and (4)ofthe Advisers Act, 15
27
--- page 28 ---
v.S.c. §§ 80b-6(4), and Advisers Act Rule 206(4)-8(a)(2), 17 C.F.R. § 275.206(4)-8(a)(2),
thereunder.
VI.
Pennanently enjoining and restraining De Charsonville, his agents, servants, employees
and attorneys and all persons in active concert or participation with them who receive actual
notice of the injunction by personal service or otherwise, and each of them, from violating,
directly or indirectly, FINRA Rule 5210.
VII.
Ordering each of the Defendants to disgorge all ill-gotten gains, including prejudgment
interest, resulting from the acts or courses of conduct alleged in this Complaint.
VIII.
Ordering each of the Defendants to pay civil money penalties pursuant to Section 20(d)
ofthe Securities Act, 15 U.S.c. § 77t(d), Section 21(d) ofthe Exchange Act, 15 U.S.c.
§ 78u(d)(3), and Section 209(e) of the Advisers Act, 15 V.S.C. §80b-9(e).
28
--- page 29 ---
IX.
Granting such other and further relief as the Court deems just and proper.
DEMAND FOR JURY TRIAL
Under Rule 38 of the Federal Rules of Civil Procedure, the Commission demands trial by
jury in this action of all issues so triable.
Dated: December 1, 2011
New York, New York
Respectfully submitted,
SE~S AND}~CHAN.ANGGEE CmOMMISSION
By·~L---
George S. Canellos .
Regional Director
New York Regional Office
3 World Financial Center, Room 400
New York, New York 10281
(212) 336-1023 (Brown)
E-mail: [email protected]
OfCounsel:
Bruce Karpati
Nancy A. Brown
William T. Conway III
29