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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 48288 / August 5, 2003

ADMINISTRATIVE PROCEEDING NO. 3-11205

IN THE MATTER OF RICHARD P. CALLIPARI AND THOMAS J. CONNOLLY

The Commission announced today that it has instituted administrative proceedings against Richard P. Callipari of Washingtonville, New York and Thomas J. Connolly of Plymouth, Massachusetts.

The Order Instituting Proceedings alleges that on April 25, 2001, a grand jury in Boston indicted Connolly for conspiracy to commit wire fraud. On May 10, 2002, Connolly pleaded guilty. Connolly is free on bond awaiting sentencing. On July 30, 2002, a grand jury in Providence indicted Callipari for conspiring with Connolly to defraud his employer Fidelity Investments, ten counts of wire fraud, and corruptly endeavoring to obstruct and impede a Commission investigation by means of false, misleading, evasive, and deceptive testimony.

Among other things, the indictments against Callipari and Connolly charged that Callipari and Connolly devised a scheme to free-ride in options through an account at a Fidelity subsidiary that Connolly improperly opened in the name of Callipari's employer. Between July and early September 1997, Callipari and Connolly's illegal scheme resulted in profits of $500,000. In mid-September, however, the trading turned negative, resulting in about $2.39 million in losses. To avoid incurring liability for the losses, Callipari told traders at the Chicago Board of Options Exchange that he had not authorized the trades. As a result, the $2.39 million loss was charged to Fidelity. In February 1998, staff of the Boston District Office of the Securities and Exchange Commission took Callipari's testimony in connection with its formal investigation of the illegal scheme. Callipari falsely testified that he had never authorized the option trades in the Fidelity account.

On February 6, 2003, a federal jury convicted Callipari on all counts. On April 28, 2003, U.S. District Court Judge Mary Lisi sentenced Callipari to 30 months in prison, and ordered him to pay a $1,200 special assessment and a $7,500 fine.

A hearing will be held before an administrative law judge to determine what, if any, remedial actions against the Respondents are appropriate and in the public interest.

 

http://www.sec.gov/litigation/admin/34-48288.htm


Modified: 08/06/2003