ALLEGED SECURITIES FRAUDSTERS HELD ACCOUNTABLE: MAYBE?

Sometimes those who are found to have committed a crime don't go to prison. In the case below an alleged fraudster does not get much from the actions taken by the SEC however, he may get some prison time from a parallel case that was prosecuted by the U.S. Attorneys Office. Of course the SEC does not have the power to prosecute individuals in a way that leads to prison time like the U.S. Attorneys Office. Only civil penalties can come from the SEC. The following case is an excerpt from the SEC website:

"July 14, 2011
JUDGMENT OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST DEFENDANTS ROBERT C. BROWN, JR. AND TREBOR COMPANY AND ORDERS INSTITUTING ADMINISTRATIVE PROCEEDINGS, MAKING FINDINGS AND IMPOSING SANCTIONS AGAINST ROBERT C. BROWN, JR.
Securities and Exchange Commission v. Robert C. Brown, Jr., et al., Civil Action No. 3:08-cv-03517-EMC (N.D. Ca.)
The United States Securities and Exchange Commission (“Commission”) announced that on July 1, 2011, the Honorable Edward M. Chen, United States District Court Judge for the Northern District of California, entered judgments of permanent injunction against Defendants Robert C. Brown, Jr. and Trebor Company.

The final judgment against Brown and Trebor Company enjoins them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and Sections 206(1) and 206(2) of the Investment Advisers of 1940 (“Advisers Act”).

On July 23, 2008, the Commission filed its complaint against the Defendants alleging that they violated the anti-fraud provisions of the federal securities laws by, among other things, offering a variety of investment programs that falsely promised astronomical returns. One program promised, for example, to double investor money in eight months. The complaint also alleged that Brown raised more than $20 million. Instead of investing that money, however, Brown transferred millions of dollars to himself and spent the money on lavish personal expenses.

On April 6, 2010, Brown pleaded guilty to one count of wire fraud in a parallel criminal action brought by the United States Attorney’s Office for the Eastern District of California. Later this year, Brown will be sentenced to prison and ordered to pay restitution to the victims of his fraud.

In addition to the relief described above, Brown consented to the entry of an order, without admitting or denying any of the findings in the Order, except he admitted entry of the injunction and conviction, in a separate Commission administrative proceeding barring him permanently, pursuant to Section 203(f) of the Advisers Act, from associating with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical ratings organization."