U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission


Securities and Exchange Commission,

Plaintiff,   

v.

KOJI GOTO,

Defendant

and

SHALEEN CASSILY GOTO,

Relief Defendant.   


:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:

Civil Action No.

JURY TRIAL DEMANDED

COMPLAINT

Plaintiff Securities and Exchange Commission ("Commission") alleges:

PRELIMINARY STATEMENT

1. This is an enforcement action against Defendant Koji Goto ("Goto") for misappropriating approximately $5 million of investor funds in two fraudulent schemes. In one scheme, Goto made fraudulent misrepresentations -- both orally and in writing -- to obtain investments in a purported hedge fund. Instead of placing investor funds in the fund, however, Goto diverted the funds to bank accounts controlled by him for his own personal gain. In the second scheme, Goto made fraudulent misrepresentations to obtain investments in a purported hot dog stand vending business. Again, instead of investing the funds in the business, Goto diverted those funds to bank accounts controlled by him for his own personal gain.

2. In addition, Goto has -- and continued to -- fraudulently dissipate and conceal the proceeds of his fraud. For example, Goto has transferred at least $1.4 million of investor funds to a brokerage account in the name of his wife, Relief Defendant Shaleen Cassily ("Cassily"). In addition, on June 10, 2002, Goto and Cassily transferred their joint ownership interest in a Bedford, New Hampshire house worth millions of dollars by quitclaim deed to Cassily, as sole owner in her maiden name of Shaleen A. Cassily. Cassily has since placed the house on the market for sale.

3. By engaging in the acts and practices alleged in this Complaint, Defendant Goto violated the federal securities laws. Specifically, Defendant Goto, directly or indirectly, has engaged in acts, practices and courses of business that constitute violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. 77q(a)], Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5].

4. Unless enjoined, Goto is likely to commit such violations in the future. Accordingly, the Commission seeks: (i) entry of a permanent injunction prohibiting him from further violations of the relevant provisions of the federal securities laws; (ii) disgorgement of all ill-gotten gains, plus prejudgment interest thereon; (iii) the imposition of a civil monetary penalty due to the egregious nature of his violations. Further, unless the Court temporarily restrains the ongoing violations of the securities laws by Goto, freezes Goto's assets, and grants the other equitable relief sought by the Commission, there is a serious risk that the remaining investor funds will be dissipated, concealed, or transferred offshore.

5. Cassily has been unjustly enriched and has no right to funds Goto fraudulently diverted to her from the Epic and Coyote Dogs investors. Accordingly, the Commission seeks disgorgement of the unjust enrichment she received, plus prejudgment interest thereon. In addition, because of the danger that Cassily may conceal, encumber or dissipate funds or assets received as a result of Goto's fraudulent conduct, the Commission seeks entry of an asset freeze order against Cassily pending resolution of this action.

JURISDICTION

6. This Court has jurisdiction over this action pursuant to Sections 20 and 22 of the Securities Act [15 U.S.C. 77t and 77v] and Sections 21 and 27 of the Exchange Act [15 U.S.C. 78u and 78aa]. This Court further has supplemental jurisdiction over the claims against Relief Defendant Cassily pursuant 28 U.S.C. 1367(a). The acts and practices alleged in this Complaint occurred in this District.

7. Defendant Goto, directly and indirectly, made use of the means and instrumentalities of interstate commerce, of the mails, or of the facilities of a national securities exchange in connection with the acts, practices and courses of business alleged herein.

8. The Commission brings this action pursuant to the enforcement authority conferred upon it by Section 20 of the Securities Act [15 U.S.C. 77t] and Section 21 of the Exchange Act [15 U.S.C. 78u].

THE DEFENDANT AND RELIEF DEFENDANT

9. Defendant Koji Goto, age 33, resides at 22 Steeple View Lane, Bedford, New Hampshire. Goto is a Japanese citizen and permanent resident alien of the United States. From December 1994 until November 2001, Goto was employed in Concord, New Hampshire by subsidiaries of the John Hancock Financial Services Co. ("Hancock") and Hancock-related insurance agencies as both a registered representative and licensed insurance broker. In November 2001, Goto's employment with Hancock was terminated. Goto has operated business under many different names, including, but not limited to, Epic Capital Investments LLC, Epic Partners Group, and Coyote Dogs LLC (a New Hampshire limited liability company), J.H. Business Services LLC, Sigma Online North America LLC, 337 Amherst St. Nashua, Koji Goto Tele-Communications LLC, Q-Holdings LLC, Business Services/Koji Gota DBA, and Packet-Tel LLC.

10. Relief Defendant Shaleen Cassily, age 32, is the wife of Defendant Goto. Cassily also resides at 22 Steeple View Lane, Bedford, New Hampshire.

BACKGROUND

11. In early 2002, two former institutional sales professionals from Deutsche Banc Alex. Brown decided to form a hedge fund based in Boston, Massachusetts called, Epic Investment Partners, L.P. ("Epic"). To help raise money for the fledgling hedge fund, Epic's founders negotiated informal agreements with several people to act as "finders" on behalf of Epic. Finders were responsible for identifying prospective fund investors and then referring them to Epic's founders, but were not authorized to solicit investments, make marketing presentations, or accept, receive or otherwise handle funds intended for Epic.

12. In the summer of 2002, one of Epic's founders, who was a distant relative of Goto, asked Goto to become a finder for Epic. Goto had misrepresented to that Epic founder that he had previously worked in John Hancock's private client group and managed assets of between $250 million to $300 million. In fact, Goto never worked in John Hancock's private client group (or any similar group or affiliate) and was never authorized to be a member of any John Hancock registered investment adviser. Goto further misrepresented that he intended to invest between $6 million and $7 million of his own funds in Epic and would be able to help raise tens of millions of dollars in investments for Epic through his business contacts.

13. On October 1, 2002, the Epic hedge fund commenced operations. As of that date, Epic had raised approximately $3.2 million in investments from six investors, including Epic's founders. Neither Defendant Goto nor any of his purported business contacts invested in Epic. In fact, Epic did not receive any additional investments after October 1, 2003.

14. In or about August 2003, Epic's founders decided to close the fund because of insufficient assets under management. In addition, Epic produced negative investment returns during each quarter of its existence.

Goto's Misrepresentations to Investors

15. Between June 2002 and October 2003, Goto appeared to be soliciting investments for Epic. In reality, however, he engaged in a scheme to misappropriate millions of dollars from investors who believed they were placing money in a legitimate hedge fund. Goto's fraudulent misrepresentations to investors included:

  • that he had previously managed a portfolio of client assets totaling between $250 and $300 million while he was employed in the private client group at John Hancock;
     
  • that he would personally invest between $6 and $7 million in Epic;
     
  • that he was authorized to collect funds intended for investment in the Fund;
     
  • that investor monies deposited (by wire transfer or otherwise) into his Fleet Bank account in Bedford, New Hampshire would be invested in the Epic hedge fund;
     
  • that he had the authority to waive commissions and other fees for Fund investors;
     
  • that multiple investors had placed between $10 and $20 million into the fund;
     
  • that the fund was profitable; and
     
  • that he made investment decisions on behalf of the fund.
     
  • In fact, none of the representations are true. Nonetheless, based on these representations and others, at least 10 investors gave money to Goto to invest in Epic. Instead of investing the funds with Epic, Goto misappropriated those monies for his personal gain.

    Goto Misappropriated Funds from Investors 17. Between June 2002 and October 2003, Defendant Goto misappropriated investor funds in the following instances by secretly diverting monies intended for investment in Epic to bank accounts personally controlled by him, including an account at Fleet Bank in Bedford, New Hampshire.

    INVESTOR A

    18. In or about April 2002, Defendant Goto began discussions with Investor A, a resident of Manchester, New Hampshire, regarding investments. During those discussions, Goto falsely told Investor A that he provided financial advisory services to clients; that he had significant experience managing money for clients, including as a broker at John Hancock; that he was a partner with Epic, which he described as a Boston-based hedge fund that had produced returns of 80% per year in the past; and that he was involved in the purchase and sale of stocks in the Epic's portfolio.

    19. In or about July 2002, Goto gave Investor A copies of an Epic brochure and Epic's private placement memorandum ("PPM"), a document that governs the operation of the hedge fund. Shortly thereafter, Goto told Investor A that unless she invested in Epic on or before July 31, 2002, the hedge fund would be closed to new investors. Goto further told Investor A that Epic required a minimum investment of $1,000,000, but that he could combine Investor A's smaller investment with funds invested by others, including himself, his attorney, and/or his wife's family, to reach the minimum investment threshold of $1,000,000. Goto added that he would not charge any commissions because Investor A was a "family friend."

    20. Based upon Goto's representations, the PPM and the brochure, Investor A decided to invest $100,000 in Epic.

    21. On or about July 23, 2002, Defendant Goto faxed bank wiring instructions to Investor A. Two days later, believing that she was investing in Epic, Investor A wired $100,000 to the bank account identified in the wire instructions. In fact, the bank account identified in the wire instructions was controlled by Goto and was not affiliated with Epic in anyway. Goto misappropriated Investor A's investment for his own use and did not place the money in Epic.

    INVESTOR B

    22. In or about December 1999, Goto met Investor B, a resident of Weare, New Hampshire, at a holiday party hosted by Investor B's financial adviser.

    23. Beginning in or about July 2002, Defendant Goto had discussions with Investor B and his wife regarding Epic. Goto told Investor B that he was a principal of Epic and traded securities on Epic's behalf. Shortly thereafter, Goto gave Investor B a copy of Epic's PPM and brochure.

    24. In or about July 2002, Investor B and Goto again spoke about Epic by telephone. Among other things, Goto told Investor B that he was offering an opportunity to invest in Epic; that any investment made by him would be placed in Goto's personal account, thereby eliminating management fees and other costs; and that Goto would warn Investor B of any risk to his investment far enough in advance to enable Investor B to safely withdraw that principal.

    25. Based upon Goto's representations, the PPM and the brochure, Investor B decided to invest $100,000 in Epic.

    26. On or about July 31, 2002, Defendant Goto gave Investor B bank wiring instructions. That same day, believing he was investing in Epic, Investor B wired $100,000 to the bank account identified in the wire instructions. In fact, the bank account identified in the wire instructions was controlled by Goto and was not affiliated with Epic in anyway. Goto misappropriated Investor B's investment for his own use and did not place the money in Epic.

    27. In or about August 2002, Investor B and Goto further discussed Epic by telephone. During the call, Goto told Investor B that Epic was about to close to further investments and asked Investor B if he would like to invest any more money in Epic. Based upon Investor B's prior conversations with Goto, Goto's representations about Epic, and Investor B's review of the Epic PPM and brochure, he decided to invest an additional $150,000 in Epic.

    28. On or about August 26, 2002, believing he was investing additional funds in Epic, Investor B wired an additional $150,000 to the bank account identified in the wire instructions previously given to him from Goto for investment in Epic. In fact, the bank account identified in the wire instructions was controlled by Goto and was not affiliated with Epic in anyway. Goto misappropriated Investor B's additional investment for his own use and did not place the money in Epic.

    INVESTORS C AND D

    29. Investors C and D, the parents of Relief Defendant Cassily, are residents of York, Maine. In or about July 2002, Goto gave Investor C, his father-in-law, copies of Epic's PPM and brochure and told Investor C that he could invest money in Epic. At or near late July 2002, Goto further told Investor C that if he wanted to invest in Epic, he needed to do so quickly because the fund would be closed to new investors at the end of the week.

    30. Based upon the Defendant's representations, the PPM and the brochure, Investor C decided to invest $200,000 of Investor C and D's retirement savings in Epic.

    31. On or about late July 2002, Defendant Goto gave Investor C bank wiring instructions. Between August 1, 2003 and August 14, 2003, believing he was investing in Epic, Investor C wired $200,000 to the bank account identified in the wire instructions. In fact, the bank account identified in the wire instructions was controlled by Goto and was not affiliated with Epic in anyway. Goto misappropriated Investors C and D's investment for his own use and did not place the money in Epic.

    32. On or about November 12, 2003, Goto admitted in a conversation with Investor C that he had not invested Investors C and D's $200,000 in Epic.

    INVESTORS E, F, and G

    33. In or about the summer of 2002, a financial planner for Investor E, a resident of Bedford, New Hampshire, arranged a meeting between Goto, Investor E and Investor E's brothers, including Investors F and G, to discuss Epic. At that meeting, Goto provided copies of Epic's PPM and the brochure to Investors E, F and G and told them that he managed the fund in New Hampshire, while others, in Boston, conducted research. Goto further stated that Epic was an offshore hedge fund that required a minimum investment of $1 million. Goto told Investors E, F, and G, however, that because another investor had decided to invest $750,000, Investors E, F, and G could invest $250,000, which combined with $750,000 from the other investor would satisfy the minimum $1 million requirement. Goto further told Investors E, F, and G that if they invested through Goto, they would not have to pay the typical fees of the fund.

    34. Based upon the Defendant's representations, the PPM and the Brochure, Investors E, F, and G decided to invest a total of $250,000 in Epic. In late August 2002, Defendant Goto gave Investors E, F, and G bank wiring instructions. On or about August 30, 2003, believing he was investing in Epic on behalf of Investors E, F, and G, Investor F wired $250,000 to the bank account identified in the wire instructions. In fact, the bank account identified in the wire instructions was controlled by Goto and was not affiliated with Epic in anyway. Goto misappropriated Investors C and D's investment for his own use and did not place the money in Epic.

    INVESTORS H AND I

    35. In or about the spring of 2002, Investor H, of Manchester, New Hampshire, and his son, Investor I, of Bedford, New Hampshire, met with the Goto and Epic's founders in Boston to discuss a possible investment in Epic. At that time, Investor H declined to invest in the hedge fund.

    36. At or about the summer of 2002, Investor H had further conversations with the Goto about Epic. During those conversations, Goto purported to explain Epic's investment philosophy to Investor H claiming, for example, that Epic never invested more than 15% of its funds in any one asset and that if any asset in the portfolio increased in value by 20%, Epic would sell that asset. Goto further told Investor H that if he invested, his could not redeem his funds for one year. However, Goto also told Investor H that if a major problem arose, he could redeem his funds within one quarter (or three months). Goto further told Investor H that Goto was entitled to invest up to $10 million in Epic at no cost or fee.

    37. In addition, in or near September 2002, Goto told Investor H that he had raised nearly $10 million to invest in Epic and that the window of opportunity to invest was about to close.

    38. Based upon representations and documents received from Goto, Investor H decided to invest $1 million in Epic. On or about October 2, 2002, believing he was investing in Epic, Investor H gave the Defendant a check for $1 million made payable to "Epic Investment Capital." Goto deposited the $1 million check in a bank account controlled by Goto and not affiliated with Epic in anyway. Goto misappropriated Investor H's investment for his own use and did not place the money in Epic.

    39. On or about January 23, 2003, Investor H wrote a $2 million check to his son, Investor I, which Investor H understood was a loan to Investor I to be invested in Epic and other business enterprises in which Goto was involved. On or about January 23, 2003, Investor I gave the $2 million check to Goto and endorsed it by writing "Pay to the Order of Epic Investment Capital" on the back of the check. Goto deposited the $2 million check in a bank account controlled by Goto and not affiliated with Epic in anyway. Goto misappropriated Investor I's investment for his own use and did not place the money in Epic.

    INVESTOR J

    40. In or about early November 2002, Goto spoke to Investor J, a resident of Boca Raton, Florida, on the telephone after having been introduced to him by Investor I. During the conversation, Goto told Investor J that he made investment and trading decisions on behalf of Epic. Goto also verbally reviewed Epic's PPM and brochure with Investor J. In addition, Goto told Investor J that while Epic had only a small number of investors, some of those persons had invested as much as $10 to $20 million in the fund.

    41. Based upon the Defendant's representations, the PPM and the brochure, Investor J decided to invest $250,000 in Epic. On or about November 18, 2002, Defendant Goto faxed bank wiring instructions to Investor J. That same day, believing he was investing in Epic, Investor J instructed his assistant to wire $250,000 to the bank account identified in the wire instructions. In fact, the bank account identified in the wire instructions was controlled by Goto and was not affiliated with Epic in anyway. Goto misappropriated Investor J's investment for his own use and did not place the money in Epic.

    42. On or about January 1, 2003, Goto sent a purported account statement to Investor J that contained the logo "Epic Partners Group." The account statement purported to reflect an increase in the value of Investor J's investment from $250,000 to $281,025.36.

    43. In or about January and February 2003, Investor J and Goto discussed Epic on several occasions by telephone. During one of the calls, Investor J told Goto that he was impressed with Epic's performance based upon a January 1, 2003 account statement he had received from Goto. Goto asked Investor J if he wanted to invest more money in Epic. Shortly thereafter, Investor J spoke with Investors H and I regarding Epic, each of whom indicated that they were pleased with the fund's performance.

    44. Based upon the Defendant's representations about Epic, including the purported account statement, Epic's PPM and brochure, and Investors H and I's statements about their satisfaction with Epic, Investor J decided to invest an additional $500,000 in Epic.

    45. On or about February 19, 2003, believing he was investing in Epic, Investor J directed his assistant to wire $500,000 into to the bank account identified in Goto's wire instructions. Accordingly, Investor J's total investment increased to $750,000. In fact, the bank account identified in the wire instructions was controlled by Goto and was not affiliated with Epic in anyway. Goto misappropriated Investor J's investment for his own use and did not place the money in Epic.

    46. On or about April 1, 2003, Goto sent a purported account statement to Investor J that contained the logo "Epic Partners Group." The account statement purported to reflect an increase in the value of Investor J's investment from $750,000 to $828,303.36.

    47. Between February 2003 and May 2003, Investor J and the Defendant had periodic discussions about Epic by telephone. During those calls, Investor J expressed his enthusiasm, based on the account statements Goto had sent him, about Epic's performance. Once again, Goto solicited a further investment from Investor J. Investor J agreed to invest an additional $250,000.

    48. On or about May 28, 2003, believing he was investing in Epic, Investor J directed his assistant to wire $250,000 to the bank account identified on Goto's wire instructions. Accordingly, Investor J's total investment increased to $1 million. In fact, the bank account identified in the wire instructions was controlled by Goto and was not affiliated with Epic in anyway.

    Goto misappropriated Investor J's investment for his own use and did not place the money in Epic.

    Goto Used Misappropriated Investor Funds to Pay Personal and Other Expenses

    49. Between June 2002 and October 2003, Goto misappropriated a total of at least $4.8 million from investors who believed they were investing in Epic. In many instances, Goto used the misappropriated funds to pay for gambling, automobiles, and other personal expenditures, including:

    1. a. $100,000 used to pay the Bellagio Casino in Las Vegas;
       
    2. b. approximately $1.4 million transferred to a personal brokerage account at HarrisDirect in the name of Relief Defendant Shaleen Cassily;
       
    3. c. $34,157 used to pay Holloway Motor Cars;
       
    4. d. at least $8,000 used to pay Alfieri New England dba Maserati of New England;
       
    5. e. at least $32,000 used for personal debit card charges for restaurants, florists, animal hospital, liquor, pet stores, gasoline, rental cars, dental and health related expenses and other retail items;
       
    6. f. $60,000 transferred to Chen Yang Li Restaurant Holdings, an entity in which Goto had an ownership interest;
       
    7. g. $10,000 used to pay for advertising the Chen Yang Li Restaurants during Manchester Monarch's hockey games;
       
    8. h. cash withdrawals totaling over $700,000; and
       
    9. i. transfers to other Goto personal and business accounts totaling over $400,000.

    50. In addition, Goto used approximately $1.1 million of misappropriated funds to repay investors from previous investment schemes, including:

    1. On or about August 30, 2002, within four days of receiving $400,000 from investors who believed they were investing in Epic, Goto caused $400,000 to be wired to Investor K, a Florida resident who was not an investor in Epic, but who had previously invested money with Goto for purposes unrelated to Epic.
       
    2. b. On or about October 2, 2002, the same day that Goto received $1 million from Investor H intended for Epic, Goto caused $505,194.37 to be wired to Investor K, who was not an investor in Epic, but who had previously invested money with Goto for purposes unrelated to Epic.
       
    3. c. On or about January 24, 2003, one day after receiving $2 million intended to be invested in Epic, Goto caused $200,000 to be withdrawn and wired to Investor B for repayment of an investment in a previous scheme that concerned an internet business venture in the Republic of India.

    Goto Misrepresented Epic's Performance to Investors

    51. To conceal his misappropriation of investor funds, Goto made false statements to investors concerning Epic's purported performance in phony account statements created by Goto. For example:

    1. a. On or about October 1, 2002, Goto provided fictitious account statements to at least six investors. These account statements contained the logo "Epic Partners Group Boston, MA 02117." In these account statements, Goto fraudulently misrepresented that investors' respective investments in Epic had increased in value during the previous three months. In fact, none of the money Goto received from investors was invested in Epic.
       
    2. b. On or about January 1, 2003, Goto provided fictitious account statements to at least six investors. These account statements contained the logo "Epic Partners Group Boston, MA 02117." In these account statements, Goto fraudulently misrepresented that investors' respective investments in Epic had increased in value during the previous three months. In fact, none of the money Goto received from investors was invested in Epic.
       
    3. c. On or about April 1, 2003, Goto provided fictitious account statements to at least six investors. These account statements contained the logo "Epic Partners Group Boston, MA 02117." In these account statements, Goto fraudulently misrepresented that investors' respective investments in Epic had increased in value during the previous three months. In fact, none of the money Goto received from investors was invested in Epic.
       
    4. d. On or about July 1, 2003, Goto provided fictitious account statements to at least six investors. These account statements contained the logo "Epic Partners Group Boston, MA 02117." In these account statements, Goto fraudulently misrepresented that investors' respective investments in Epic had increased in value during the previous three months. In fact, none of the money Goto received from investors was invested in Epic.

    MISAPPROPRIATION OF COYOTE DOGS INVESTMENTS

    52. In or about the spring of 2003, one of Epic's founders discussed with Goto a possible business venture called, "Coyote Dogs," which would operate hot dog stands at home improvement stores. At or near that time, the Epic founder gave Goto a copy of the Coyote Dogs business plan. In or about August 2003, Coyote Dogs was organized as a Massachusetts limited liability company.

    53. Without the knowledge of the legitimate Coyote Dogs company, Goto created a business plan, copied extensively from Coyote Dogs's legitimate business plan and created securities offering documents for a purported New Hampshire limited liability company that Goto also called Coyote Dogs. In or about May 2003, Goto began soliciting equity investments in his Coyote Dogs entity -- again, without the knowledge of the legitimate Coyote Dogs company -- promising the investors profits from the success of the business.

    54. During the late spring of 2003, Goto made fraudulent misrepresentations to obtain at least three investments, totaling $375,000, in his bogus Coyote Dogs entity. Goto's fraudulent misrepresentations to investors included:

    • that he had an exclusive contract to manage hot dog vending stands at Home Depot stores throughout the United States;
       
    • that investors should expect a minimum return of 500% after two or three years;
       
    • that in a "worst case" scenario, any principal invested in Coyote Dogs would be returned to investors;
       
    • that monies invested through Goto into Coyote Dogs would be used to develop and grow a hot dog stand vending business;
       
    • that the Epic founder was both a partner in Goto's purported hot dog stand vending business and that the Epic partner had invested $500,000 in Goto's Coyote Dogs business; and
       
    • that Goto had invested $500,000 of his personal in his purported hot dog stand vending business.

    55. In fact, none of the representations are true. Nonetheless, based on these representations and others, at least five investors gave money to Goto in invest in Coyote Dogs. Instead of investing the funds with Coyote Dogs, Goto misappropriated those monies for his personal gain.

    INVESTORS E, F AND G

    56. At or near the spring of 2003, during one of his periodic conversations with the Defendant, Goto told Investor E that he had met someone who had developed a business plan to open a hot dog stand vending business. Goto offered Investor E a 10% equity interest in Coyote Dogs.

    57. Approximately one week later, Goto faxed a Limited Liability Agreement Among Coyote Dogs, LLC and Its Members ("Coyote Dogs Agreement") to Investor E. The Coyote Dogs Agreement falsely states, among other things, that one of the Epic founders owned 32.258% of Goto's Coyote Dogs entity. In fact, the Epic founder never invested in Goto's purported Coyote Dogs venture. Likewise, Goto never invested in the legitimate Coyote Dogs venture.

    58. Based upon Goto's representations and the Coyote Dogs Agreement, Investors E, F, and G agreed to invest in Coyote Dogs. In the Spring of 2003, Investors E, F, and G, believing they were investing in a legitimate business, provided Goto which checks totaling $150,000. In fact, Goto never invested the money in Coyote Dogs.

    INVESTOR B

    59. On or about May 2003, Goto told Investor B about an "investment opportunity" called Coyote Dogs in a telephone conversation. Goto misrepresented to Investor B that Coyote Dogs had an exclusive contract to manage hot dog stands in prefabricated buildings at Home Depot locations throughout the United States and that after two or three years, Investor B should expect a minimum return of 500% and that the return on investment could potentially go much higher. Goto also told Investor B that in a "worst case" scenario, Goto would return Investor B's Coyote Dogs investment principal. On or about May 28, 2003, Goto faxed to Investor B copies of the Coyote Dogs Agreement and bank wiring instructions.

    60. Based upon his conversations with Goto and his review of the Coyote Dogs Agreement, Investor B decided to invest $100,000 in Coyote Dogs. On or about June 4, 2003, believing he was investing in a legitimate business, Investor B wired $100,000 to the bank account identified in Goto's wire instructions. In fact, the bank account identified in the wire instructions was controlled by Goto. Goto misappropriated Investor B's investment for his own use and never invested Investor B's money in Coyote Dogs.

    INVESTOR H

    61. In or about May 2003, Goto had a conversation with Investor H in which Goto told Investor H that he planned to open hot dog vending stands at home improvement stores. Goto further stated that for a $125,000 investment, Investor H would have approximately an 8% ownership interest in Coyote Dogs.

    62. Based upon his conversations with Goto, Investor H decided to invest $125,000 in Goto's Coyote Dogs venture. On or about June 25, 2003, believing he was investing in a legitimate business, Investor H gave a $125,000 check to Goto for investment in Coyote Dogs. In fact, Goto misappropriated Investor H's investment for his own use and never invested Investor H's money in Coyote Dogs.

    GOTO'S TRANSFERS TO RELIEF DEFENDANT CASSILY

    63. Goto has transferred at least $1.4 million of investor funds to a brokerage account in the name of his wife, Relief Defendant Cassily. In addition, on June 10, 2002, Goto and Cassily transferred their joint ownership interest in a Bedford, New Hampshire house worth millions of dollars by quitclaim deed to Cassily, as sole owner in her maiden name of Shaleen A. Cassily. Cassily has since placed the house on the market for sale.

    REMEDIES

    64. The violations set forth in this Complaint involve fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement and such violations directly or indirectly resulted in substantial losses or created a significant risk of substantial losses to other persons.

    FIRST CLAIM

    (Securities Act 17 (a))

    65. The allegations set forth in Paragraphs 1-64 above are hereby realleged and incorporated by reference herein.

    66. Beginning in at least January 2002, Defendant Goto, directly or indirectly, acting intentionally, knowingly or recklessly, in the offer or sale of securities by use of the means or instruments of transportation or communication in interstate commerce or by use of the mails: (a) has employed, are employing, and are about to employ devices, schemes or artifices to defraud; (b) has obtained, are obtaining, and are about to obtain money or property by means of untrue statements of material fact or omissions to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) has engaged, are engaging, and are about to engage in transactions, practices or courses of business which operate as a fraud or deceit upon the purchasers of the securities.

    67. By reason of the foregoing transactions, acts, omissions, practices and course of business, Defendant Goto, knowingly or recklessly, directly or indirectly, violated, is violating, and unless enjoined, will continue to violate Section 17(a) of the Securities Act [15 U.S.C. 17q(a)].

    SECOND CLAIM

    (Exchange Act 10(b) and Rule 10b-5)

    68. The allegations set forth in Paragraphs 1-64 above are hereby realleged and incorporated by reference herein.

    69. Beginning in at least January 2002, Defendant Goto, directly or indirectly, acting intentionally, knowingly or recklessly, by use of the means or instrumentalities of interstate commerce or of the mails, in connection with the purchase or sale of securities: (a) has employed, are employing, and are about to employ devices, schemes or artifices to defraud; (b) has made, are making, and are about to make untrue statements of material fact or have omitted, are omitting, and are about to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) has engaged, are engaging, and are about to engage in acts, practices or courses of business which operate as a fraud or deceit upon certain persons.

    70. By reason of the foregoing transactions, acts, omissions, practices and course of business, Defendant Goto, knowingly or recklessly, directly or indirectly, violated, is violating, and unless enjoined will continue to violate Section 10(b) of the Exchange Act [15 U.S.C. 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5].

    THIRD CLAIM

    (Unjust Enrichment of Relief Defendant Cassily)

    71. The Commission repeats and incorporates by reference the allegations in paragraphs 1- 64 of the Complaint as if set forth fully herein.

    72. Cassily has no legitimate interest in, or right to, the funds received from Defendant Goto, which are currently being held by her, and therefore, in equity and good conscience, she should not be allowed to retain such funds.

    73. As a result, Cassily is liable for unjust enrichment and should be required to return her ill-gotten gains, with pre-judgment interest.

    NEED FOR EMERGENCY RELIEF

    74. This is an ongoing fraud as Goto continues to hold investors funds, and as recently as November 12, 2003, has been contacting investors in an attempt to obstruct the investigation into his conduct.

    46. Goto already has dissipated assets belonging to investors by transferring them to accounts maintained by his wife, Relief Defendant Shaleen Cassily.

    47. The emergency relief requested below is necessary in order to prevent further violations of the federal securities laws and further harm to investors, including further dissipation of investor assets.

    PRAYER FOR RELIEF

    WHEREFORE, the Commission respectfully requests that this Court:

    A. Enter a temporary restraining order which:

    1. Restrains Goto and each of his officers, agents, servants, employees, attorneys, and those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise, from directly or indirectly violating:

    a. Section 10(b) of the Exchange Act [15 U.S.C. 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]; and

    b. Section 17(a) of the Securities Act [15 U.S.C. 77q(a)].

    2. Requires Goto and each of his agents, servants, employees and attorneys (including, but not limited to, Epic Capital Investments LLC, Epic Partners Group, and Coyote Dogs LLC (a New Hampshire limited liability company), J.H. Business Services LLC, Sigma Online North America LLC, 337 Amherst St. Nashua, Koji Goto Tele-Communications LLC, Q-Holdings LLC, Business Services/Koji Gota DBA, Packet-Tel LLC) and those persons in active concert or participation with them who receive actual notice of the Order by personal service or otherwise, including by facsimile transmission, electronic mail or overnight delivery service, to hold and retain any and all funds and other assets held for the direct or indirect benefit, or under the direct or indirect control of Goto, in whatever form such funds and other assets may presently exist, shall prevent any withdrawal, sale, payment, transfer, dissipation, assignment, pledge, alienation, encumbrance, diminution in value or other disposal of any such funds and other assets, and shall not transfer, encumber, dissipate, incur charges or cash advances on any credit card, or otherwise dispose of any funds, property, or other assets of any kind, and shall freeze such funds and other assets pending further order of this Court;

    3. Requires Cassily and each of her agents, servants, employees and attorneys, and those persons in active concert or participation with them who receive actual notice of the Order by personal service or otherwise, including by facsimile transmission, electronic mail or overnight delivery service, to hold and retain all funds and other assets held for the direct or indirect benefit, or under the direct or indirect control of Cassily, in whatever form such funds and other assets may presently exist, shall prevent any withdrawal, sale, payment, transfer, dissipation, assignment, pledge, alienation, encumbrance, diminution in value or other disposal of any such funds and other assets, including but not limited to the real property located at 22 Steeple View Lane, Bedford, NH, and shall not transfer, encumber, dissipate, incur charges or cash advances on any credit card, or otherwise dispose of any funds, property, or other assets of any kind, including but not limited to the real property located at 22 Steeple View Lane, Bedford, NH, and shall freeze such funds and other assets pending further order of this Court

    4. Requires that all persons who hold or possess the direct or indirect proceeds of the misconduct described in the Complaint, in whatever form such funds or other assets may presently exist, who receive actual notice of this Order, by personal service or otherwise, including facsimile transmission or overnight delivery service, and each of them, hold and retain such funds and assets and shall prevent any withdrawal, sale, payment, transfer, dissipation, assignment, pledge, alienation, encumbrance, disposal, or diminution in value of any such funds or other assets, which are hereby frozen.

    5. Requires that Goto and Cassily, and each of their agents, servants, employees and attorneys, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, including facsimile transmissions or overnight delivery service, and each of them, shall, within five (5) days of receiving actual notice of this Order, take such steps as are necessary to repatriate and deposit into the registry of the Court in an interest bearing account, any and all funds or assets that were obtained directly or indirectly from investors that presently may be located outside of the United States.

    6. Requires that Goto and Cassily each submit in writing and serve upon the Commission, within three (3) business days following service of this Order upon them, an accounting identifying:

    1. a. the name, address, telephone number, amount of payment and date of payment, and present location of proceeds for each and every individual who made payments in connection with the misconduct described in the Complaint ;
       
    2. b. assets of every type and description with a value of at least one thousand dollars ($1,000) held for the direct or indirect benefit, or subject to the direct or indirect control, of Goto and Cassily, whether in the U.S. or elsewhere;
       
    3. c. all transfers of funds or other assets of one thousand dollars ($1,000) or more, including the names and locations of all persons, entities and accounts to and from which the transfers were made, the dates, amounts and purposes of the transfers and the identity and location of any assets derived from such funds; and
       
    4. d. all accounts maintained at any bank, broker-dealer or other financial institution in the U.S. or elsewhere for the direct or indirect benefit, or subject to the direct or indirect control of Goto and Cassily at any time since June 1, 2002.

    7. Requires that Goto and Cassily shall submit in writing to the Commission, within three (3) business days following service of the Order upon them, a list of all street and mailing addresses (including but not limited to postal box numbers), telephone or facsimile transmission numbers (including numbers of pagers and mobile telephones), electronic mail addresses, safety deposit boxes and storage facilities used by either or under either's direct or indirect control, at any time since June 1, 2002.

    8. Requires that Goto and Cassily and each of their officers, agents, servants, employees and attorneys and those persons in active concert or participation with them who receive actual notice of the Order by personal service or otherwise, including by facsimile transmission, electronic mail or overnight delivery service, are restrained from destroying, mutilating, concealing, altering, or disposing of any items, including but not limited to any books, records, documents, correspondence, contracts, agreements, assignments, obligations, tape recordings, computer media or other property relating to Goto and Cassily or any of their securities, financial or other business dealings.

    9. Requires that the parties may commence discovery forthwith, without any time constraints imposed by the Federal Rules of Civil Procedure or the Local Rules of this District, that all parties shall respond to any discovery request, including any notice of deposition or document request, within three (3) business days following service thereof, and that all depositions may be taken upon three (3) business days notice and all depositions of parties may be taken in Boston, Massachusetts.

    10. Requires that, pursuant to Rule 5 of the Federal Rules of Civil Procedure, service of all pleadings and other papers to be served in this action, except the Summons and Complaint, may be made personally, by facsimile transmission, by overnight delivery service, or as this Court may direct by further order and that service of the Summons and Complaint shall be made pursuant to Rule 4 of the Federal Rules of Civil Procedure or as this Court may further order.

    11. Requires that Goto and Cassily shall each serve the statements and accountings required by the Order and all other filings in this action on counsel for the Commission by messenger, overnight delivery service, or by facsimile to Gary Grassey, Esq., U.S. Securities and Exchange Commission, 73 Tremont Street, 6th Floor, Boston, Massachusetts 02108, facsimile number (617) 424-5940.

    B. Enter a preliminary injunction extending the terms of the temporary restraining order described above;

    C. Enter a permanent injunction restraining Goto and each of his officers, agents, servants, employees, attorneys, and those persons in active concert or participation with them who receive actual notice of the order or injunction by personal service or otherwise, from directly or indirectly engaging in the conduct described above, or in conduct of similar purport and effect, in violation of:

    1. Section 17(a) of the Securities Act [15 U.S.C. 77q(a)], and

    2. Section 10(b) of the Exchange Act [15 U.S.C. 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5];

    D. Require Goto and Cassily to disgorge their ill-gotten gains and unjust enrichment, including prejudgment interest, with said monies to be distributed in accordance with a plan of distribution to be ordered by the Court;

    E. Order Goto to pay appropriate civil monetary penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 78u(d)(3)];

    F. Retain jurisdiction over this action to implement and carry out the terms of all orders and decrees that may be entered; and

    G. Award such other and further relief as the Court deems just and proper.

    Respectfully submitted,


    By: __________________________
    Ian D. Roffman (Mass. Bar No. 637564)
    Steven Y. Quintero (Mass. Bar No. 632079)
    Gary T. Grassey (Mass. Bar No. 636687)
    ATTORNEYS FOR PLAINTIFF
    SECURITIES AND EXCHANGE COMMISSION
    73 Tremont Street, 6th Floor
    Boston, Massachusetts 02108
    (617) 424-5900 ext. 615 (Grassey)

    Dated: November 14, 2003


    http://www.sec.gov/litigation/complaints/comp18456.htm


    Modified: 11/17/2003