U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20800 / November 7, 2008
Securities and Exchange Commission v. Jeffrey Laumbattus, and Joni Laumbattus, relief defendant, United States District Court for the Southern District of Illinois, Civil Action No. 3:08-CV-00787-MJR-CJP (S.D. Ill. November 7, 2008)
SEC Charges Phony Investment Adviser Jeffrey Laumbattus for Defrauding Investors and Obtains Emergency Asset Freeze
The Securities and Exchange Commission today filed an injunctive action in the United States District Court for the Southern District of Illinois against Illinois resident Jeffrey Laumbattus, alleging that he fraudulently obtained approximately $150,000 from at least twelve individuals who believed, based on Laumbattus' false and misleading statements, that he would invest their monies in the U.S. stock market for their benefit. In fact, the Commission alleges, Laumbattus never invested in the stock market any of the monies he received from those investors and used them for his personal use.
The Commission also filed an application for a temporary restraining order in order to freeze Jeffrey Laumbattus' assets. The Honorable Michael J. Reagan, United States District Judge in the Southern District of Illinois, has issued a temporary restraining order freezing Laumbattus' assets.
The Commission's complaint alleges that Laumbattus sought out investor funds by holding himself out as a consultant with "Moriah Group," a fictitious investment firm. Laumbattus falsely represented to investors that Moriah Group had been managing millions of dollars for large institutional investors since 1950 with average annual returns of 300 percent, and falsely represented to investors that their money would be pooled with large sums invested by institutional investors, in order to achieve a greater return on their money. The complaint further alleges that Laumbattus signed correspondence to investors on Moriah Group letterhead under a fictitious name as the purported "managing director" of Moriah Group, to further the appearance of a legitimate investment firm
The Commission's complaint alleges that after receiving monies from the unsuspecting investors, Laumbattus commingled those funds in a single bank account he controlled, and failed to invest those funds as promised or directed. Instead, the Commission alleges, he delivered counterfeit stock certificates and phony account statements and misappropriated all of his investors' monies to fund his lifestyle, using their money to pay personal living expenses. The complaint also names Laumbattus' wife, Joni Laumbattus, as a relief defendant, alleging that she received at least $65,000 of investor funds from Laumbattus.
By virtue of the conduct described above, the Commission alleges in its complaint that Jeffrey Laumbattus violated 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 (2) of the Investment Advisers Act of 1940. The complaint seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil money penalties.
On November 4, 2008, in the Southern District of Illinois, Laumbattus was indicted and charged with one count of securities fraud, six counts of mail fraud, one count of wire fraud, and one count of aggravated identity theft. US v. Jeffrey Laumbattus, Case 3:08-cr-30237-MJR-PMR.
The Commission acknowledges the assistance of the U.S. Attorney's Office for the Southern District of Illinois and the U.S. Postal Inspection Service in this matter.