U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20727 / September 19, 2008
SEC v. Daniel N. Jones and Azure Bay Management, LLC, Case No. 07-CV-1198 (W.D. Mich.)
SEC Obtains Permanent Injunction Against Investment Adviser Firm and Its Owner For Fraud
The Securities and Exchange Commission ("Commission") announced today that on September 18, 2008, Judge Jonker of the U.S. District Court for the Western District of Michigan entered a final judgment as to Daniel N. Jones ("Jones") and Azure Bay Management, LLC ("Azure Bay") in connection with their fraudulent management of The Addington Fund LP ("Addington" or the "Fund"), a private hedge fund. Jones and Azure Bay consented to the entry of the final judgment. The final judgment, among other things, permanently enjoins Jones and Azure Bay from violating Section 17(a) of the of the Securities Act of 1933 (the "Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 (the "Advisers Act") and Rule 206(4)-8 thereunder. Jones and Azure Bay were also found liable for disgorgement of $2,563,613, representing profits gained as a result of the fraudulent conduct, together with prejudgment interest in the amount of $380,345, for a total of $2,943,958. The Commission did not seek a civil penalty and, based on the financial condition of Jones and Azure Bay, the Commission waived its right to pursue payment of all but $467,702 of the disgorgement. On September 12, 2008, the Commission submitted a proposed distribution plan that would dispense available funds to injured investors.
A parallel criminal proceeding was brought against Jones on March 18, 2008 based on the conduct alleged in the Commission's pleadings. On April 1, 2008, Jones pleaded guilty to one count of wire fraud in violation of Title 18 United States Code, Sections 1343 before the United States District Court for the Western District of Michigan, in United States v. Daniel N. Jones, No. 1:08-CR-74. Jones was sentenced on August 11, 2008 and received 21 months in prison.
The Commission wishes to thank the Federal Bureau of Investigation in Kalamazoo, Michigan and the U.S. Attorney's Office for the Western District of Michigan for their assistance in this matter.
For more information, see Litigation Release No. 20376 (November 30, 2007).