Securities Exchange Act of 1934
COMMISSION ISSUES ORDER INSTITUTING PROCEEDINGS AGAINST JOSEPH P. GALLUZZI
The Commission announced today that it issued an Order Instituting Public Administrative Proceedings against Joseph P. Galluzzi to determine what remedial action, if any, should be taken against him based upon the entry of a final judgment in SEC v. Galluzzi, Civ. No. 97-96 (D.N.J. October 20, 1999) ("injunctive action") and his criminal conviction in United States v. Joseph P. Galluzzi, Crim. No. 96-640 (WHW)(D.N.J.), for numerous counts of mail fraud, wire fraud, and public corruption.
The complaint alleged that between October 1986 and December 1993, Galluzzi received more than $250,000 in undisclosed kickbacks from First Fidelity Securities Group ("FFSG") and A.G. Edwards & Sons, Inc. ("AGE"). FFSG and AGE paid Galluzzi these kickbacks in connection with their selection as lead underwriter for issuances of municipal securities by Essex County, New Jersey, the Essex County Improvement Authority ("ECIA") and the Township of Irvington, New Jersey. FFSG paid Galluzzi at least $176,296.16 in kickbacks between April 1987 and August 1992 relating to its selection as lead underwriter for Essex County's March 1987, January 1989 and June 1989 bond issues, and for Irvington's 1991 fiscal year adjustment bond anticipation notes and Irvington's 1992 fiscal year adjustment bonds. Pursuant to a sham finder's agreement between Galluzzi and AGE, between March 1991 and December 1993, AGE paid Galluzzi at least $82,085.82 in kickbacks relating to AGE's selection as lead underwriter on the ECIA's August 1990 $65 million bond issue.
While he was accepting the kickbacks Galluzzi served as Treasurer to Essex County and as a financial consultant to Irvington, ECIA and the Essex County Board of Chosen Freeholders.
The final judgment in the injunctive action, which was entered on October 20, 1999, after the court granted the Commission's motion for summary judgment, permanently enjoined Galluzzi from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. On September 10, 1998, in connection with his criminal conviction, Galluzzi was sentenced to 90 months in prison and ordered to pay restitution of $350,000.
A hearing will be scheduled to determine whether the allegations in the Order are true and what, if any, remedial sanctions against Galluzzi are appropriate.