U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20031 / March 7, 2007
SEC v. David Sarna, et ano., Civil Action No. 06-CV-6084 (RJH) (S.D.N.Y.)
Final Judgments by Consent Entered as to David Sarna and Isaac Nussen
The Securities and Exchange Commission announced today that on March 5, 2007, the Honorable Richard J. Holwell, United States District Judge for the Southern District of New York, entered Final Judgments as to Defendants David Sarna and Isaac Nussen (collectively, the "Defendants"), enjoining each of them from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Defendants consented to the entry of the judgments without admitting or denying the allegations of the Commission's Complaint.
The Commission's Complaint, filed on August 10, 2006, alleged that in May and June 2006, Sarna and Nussen orchestrated a fraudulent scheme to manipulate the market for Aurora Medical Technology, Inc. In May and June 2006, Sarna and Nussen participated in an undisclosed kickback arrangement with a former stock promoter and business partner of Sarna and another individual whom Sarna and Nussen believed to be associated with a brokerage firm. To generate additional stock sales and create trading volume in Aurora stock, Sarna and Nussen agreed to pay these individuals an amount equal to 30% of Sarna's and Nussen's stock sale proceeds as a kickback for soliciting customers of the brokerage firm. On June 8, 2006, in accordance with the illicit arrangement, Sarna and Nussen deposited 3,286,403 shares of Aurora stock into an account at the brokerage firm. On June 21 and 22, 2006, the individuals sold 83,000 and 56,000 Aurora shares, respectively, from Sarna and Nussen's nominee account to other accounts at the brokerage firm. On July 3, 2006, Sarna and Nussen received the sale proceeds of approximately $25,000. On July 6, 2006, Sarna and Nussen paid a kickback to the individuals with a $7,500 check.
On August 10, 2006, in a case entitled U.S. v. Sarna, et ano., Criminal No. 06-CR-1067 (JFK) (S.D.N.Y.), the United States Attorney's Office for the Southern District of New York arrested the Defendants for their roles in the scheme. In November 2006, the Defendants each pled guilty to one count of conspiracy to commit securities fraud. The Defendants are scheduled to be sentenced on March 15, 2007.
For further information, see Litigation Release Number 19798 (August 10, 2006).