SEC CHARGES LOS ANGELES-BASED PERPETRATOR FOR MUNICIPAL BOND FRAUD SCHEME

April 17, 2012
FROM:  SEC
The Securities and Exchange Commission today announced that it has obtained an emergency court order to freeze the assets of a Los Angeles man orchestrating a securities fraud by falsely presenting himself to investors as a specialist in municipal bond investments.

The SEC alleges that Michael Anthony Gonzalez raised approximately $1 million since February 2010 by telling investors he would invest their money in specific tax-exempt municipal bonds insured by the Securities Investor Protection Corporation (SIPC) . In reality, Gonzalez never purchased the bonds and instead deposited investor money into his own bank account for personal use. He later attempted to conceal the scheme by providing investors with phony confirmation statements.

According to the SEC’s complaint filed in the United States District Court for the Central District of California, Gonzalez falsely told investors that he was associated with New York-based broker-dealer May Capital Group in order to portray himself as a legitimate money manager. Gonzalez had no dealings with May Capital, and through his false representations and fake confirmations he succeeded in giving investors the false impression that their investments were insured and safe. Gonzalez also provided investors with phony trade confirmations that identified securities that were either not purchased or non-existent.

The Honorable S. James Otero, United States District Judge, granted the SEC’s request for a temporary restraining order against Gonzalez and issued orders freezing his assets, requiring accountings, prohibiting the destruction of documents, and granting expedited discovery .  The court will hold a hearing on the SEC’s motion for a preliminary injunction on May 25, 2012.

The SEC’s complaint charges Gonzalez with violating the antifraud provisions, Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the registration provisions of Section 15(a) of the Exchange Act . In addition to the emergency relief, the SEC’s complaint seeks preliminary and permanent injunctions, disgorgement, prejudgment interest, and financial penalties against Gonzalez.

SEC ALLEGES SIPC HAS FAILED TO START LIQUIDATION PROCEEDINGS WITH STANFORD GROUP

The following excerpt is from the SEC website:

December 15, 2011
“On December 12, 2011, the Securities and Exchange Commission filed an application with the federal district court in the District of Columbia to compel the Securities Investor Protection Corporation (SIPC) to file an application to begin a liquidation proceeding with regard to Stanford Group Company (SGC), a broker-dealer registered with the Commission and a SIPC-member brokerage firm.
In February 2009, the Commission brought a civil enforcement action against Robert Allen Stanford, SGC, and others, alleging that they operated a multi-billion dollar Ponzi scheme. As a result of that enforcement action, a federal district court in Texas ordered that SGC be placed into receivership.
On June 15, 2011, the Commission directed SIPC to take steps to initiate a liquidation proceeding with regard to SGC because there were customers in need of the protections of the Securities Investor Protection Act of 1970 (SIPA). Among other things, SIPA provides for coverage of up to $500,000 to customers of a defunct brokerage firm in the event that funds available at the firm are insufficient to satisfy claims covered by the statute. This coverage is provided from a fund maintained by SIPC.
Despite the Commission's directive, SIPC has failed to take steps to initiate a liquidation proceeding as to SGC.”