U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19844 / September 25, 2006
SEC v. Conrad P. Seghers and James R. Dickey, Civil Action No. 3:04 CV 1320-K (N.D. Tex.)
SEC Obtains Final Judgment Enjoining Conrad P. Seghers and Awarding $50,000 Civil Penalty in Hedge Fund Fraud Case
On September 14, 2006, following a March 1, 2006, jury verdict in favor of the Commission, the Honorable Ed Kinkeade of the United States District Court for the Northern District of Texas issued a final judgment permanently enjoining Conrad P. Seghers from violating the antifraud provisions of the federal securities laws and assessing a $50,000 civil penalty.
On June 16, 2004, the Securities and Exchange Commission filed a complaint alleging a hedge fund fraud perpetrated by Seghers, a resident of Garland, Texas, and James Dickey, a resident of Flower Mound, Texas. In its memorandum opinion and order issued with the final judgment, the court found, among other things, that from June 6, 2001, to September 30, 2001, Seghers caused overstatements to investors of 47% to 72% of the value of hedge funds he managed and controlled. The court further found that Seghers acted knowingly or with extreme recklessness in making these misrepresentations.
The court permanently enjoined Seghers from future violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The court declined to order disgorgement by Seghers.
Previously, on March 6, 2006, the court entered a final judgment of permanent injunction and other relief against Dickey pursuant to his consent, and on March 27, 2006, the Commission instituted an administrative proceeding against Dickey, pursuant to which he was barred from association with any broker, dealer or investment adviser, with a right to reapply for association after five years. [In the Matter of James R. Dickey, Respondent, Administrative Proceeding File No. 2-12248]. The Commission also instituted and settled public administrative and cease-and-desist proceedings against an alleged third participant in the fraudulent scheme, Samer M. El Bizri and his company, Bizri Capital Partners, Inc. [In the Matter of Samer M. El Bizri and Bizri Capital Partners, Inc., Administrative Proceeding File No. 3-11521].