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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19674 / April 27, 2006

United States v. Gregory Applegate, Case No. 1:05-cr-00577 (N.D. Ohio)

SEC v. Gregory Applegate, Case No. 1:05CV2363 (N.D. Ohio)

Broker Gregory Applegate, Previously Sued by SEC for Ponzi Scheme, Sentenced to Prison Term and Restitution

The Securities and Exchange Commission (Commission) announced that on April 26, 2006, the Honorable Judge Patricia A. Gaughan of the United States District Court for the Northern District of Ohio sentenced Gregory Applegate, a former Ashland, Ohio broker, to five years in prison for his use of the mails in connection with a Ponzi scheme fraud. Applegate was also ordered to pay approximately $2.9 million in restitution to defrauded investors. Previously, in January 2006, Applegate pled guilty to one count of mail fraud.

Applegate is the defendant in a pending civil injunctive action filed by the Commission on October 7, 2005 in the United States District Court for the Northern District of Ohio. The Complaint in that case alleged that Applegate violated the antifraud provisions of the federal securities laws by operating a Ponzi scheme. The Complaint alleged that from about 2001 through August 2005, Applegate solicited at least 140 investors to invest at least $5.8 million in a supposed "hedge fund" and other investment vehicles. Applegate guaranteed an annual rate of return to these investors and promised to make up any losses out of his own pocket. The Complaint alleged that in reality, Applegate's "hedge fund" was a Ponzi scheme in which Applegate misappropriated investor funds, using them to finance an unrelated personal business, pay personal expenses, and reimburse or pay "investment returns" to earlier investors. To further this Ponzi scheme, Applegate mailed to investors false monthly client statements reflecting securities holdings and returns that did not exist.

The Commission wishes to thank the Office of the United States Attorney for the Northern District of Ohio for its assistance and cooperation in this matter.

 

http://www.sec.gov/litigation/litreleases/2006/lr19674.htm


Modified: 04/27/2006