U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20833 / December 19, 2008
Securities and Exchange Commission v. Robert R. Ross, et al., Civil Action No. 3:05cv1036 (JBA) (D. Conn., filed June 28, 2005)
Defendant in NewAlliance Bancshares IPO Fraud Settles With SEC
The Securities and Exchange Commission announced today that the federal court in Connecticut entered a final judgment by consent against defendant John M. Lucarelli in an enforcement action relating to fraud in the initial public offering of NewAlliance Bancshares, Inc. On December 12, 2008, the U.S. District Court for the District of Connecticut entered judgment against Lucarelli, 36, a resident of Greenwich, Connecticut ordering him to pay disgorgement of $14,000 plus prejudgment interest of $4,450 and a civil penalty of $25,000. In related administrative proceedings instituted by the Commission on December 17, 2008, Lucarelli was ordered to cease and desist from violating Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and suspended from associating with any broker-dealer for 12 months.
According to the Commission's Complaint, filed on June 28, 2005, Lucarelli and others engaged in a fraudulent scheme in connection with the initial public offering of NewAlliance Bancshares, Inc. The Commission's Complaint alleges that first priority for receipt of stock in the IPO was given to depositors of New Haven Savings Bank (the predecessor to NewAlliance) as of June 30, 2002, and that the IPO offering was oversubscribed and that certain eligible depositors did not receive all the shares they requested. The Complaint also alleges that the defendants were not entitled to receive any stock in the IPO, but they illegally purchased stock in the NewAlliance IPO in violation of the federal securities laws. In particular, the Complaint alleges that, beginning in or about February 2004, one of Lucarelli's co-defendants, Robert Ross, orchestrated a scheme in which he and others used seven depositors of New Haven Savings Bank to illegally obtain 490,000 shares of NewAlliance Bancshares stock at the initial offering price of $10 per share. According to the Complaint, Lucarelli located depositors who would be willing to enter into arrangements with Ross. The Complaint further alleges that, as a result of this fraudulent conduct, the overall scheme generated approximately $1.75 million in total profits.
In addition to the Commission's action, Lucarelli was indicted on October 14, 2005, and charged with conspiracy, mail fraud, wire fraud, and securities fraud in connection with the NewAlliance IPO. Following a jury trial in July 2006, the jury found Lucarelli guilty of one count of securities fraud and one count of conspiracy. On March 22, 2007, however, the U.S. District Court for the District of Connecticut entered a judgment of acquittal in Lucarelli's favor, thereby setting aside the jury's verdict.
The Commission acknowledges the assistance and cooperation of the U.S. Attorney for the District of Connecticut, and the New Haven Division of the Federal Bureau of Investigation, and the Connecticut Department of Banking, Securities and Business Investment Division. The Commission's investigation is continuing.
[For further information, please see Litigation Release No. 19288 (June 28, 2005), Litigation Release No. 19444 (October 25, 2005), Litigation Release No. 19714 (June 1, 2006), Litigation Release No. 19797 (August 9, 2006), and the Investor Alert the Commission issued on June 28, 2005. The Investor Alert is available at: www.sec.gov/investor/pubs/mutualconversion.htm.