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U.S. Securities and Exchange Commission


Litigation Release No. 20839 / December 29, 2008

Securities and Exchange Commission v. Rica Foods, Inc. and Calixto Chaves, Case No. 08-23546-CIV-Hoeveler/Garber (S.D. Fla., filed December 29, 2008)

SEC Files Settled Financial Fraud Case against Rica Foods and its Former CEO

The Securities and Exchange Commission announced today that it filed settled civil injunctive actions against Rica Foods, Inc. (“Rica”) and its former Chief Executive Officer, Calixto Chaves, a resident of Costa Rica. Rica, headquartered in Costa Rica, traded on the American Stock Exchange until it was delisted in November 2006. According to the SEC’s complaint, while serving as CEO of Rica, Chaves engaged in pervasive self-dealing resulting in millions of dollars in related-party transactions which Rica failed to disclose in its SEC filings and the improper valuation of millions in assets Chaves caused Rica to purchase from him and his family. Rica and Chaves each consented, without admitting or denying the allegations in the SEC’s complaint, to the entry of a Final Judgment of Permanent Injunction and Other Relief (Final Judgment).

According to the SEC’s complaint, between 1998 and 2004, Chaves pledged and encumbered numerous assets belonging to Rica in order to secure approximately $37 million in loans made to him and entities under his control. Additionally, Chaves caused Rica to purchase approximately $24 million worth of real property and other assets owned by Chaves and his family. The SEC’s complaint alleges that Chaves engaged in the related-party transactions because of mounting personal and business debts that ultimately lead to his resignation from Rica in January 2005. As a result, Rica failed to disclose these related-party transactions and improperly recorded the value of the assets acquired from Chaves in its filings with the SEC between 2000 and 2005.

The Final Judgment will permanently enjoin Rica Foods and Chaves from violating Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 (Exchange Act), and Rules 10b-5, 12b-20, 13a-1 thereunder; and Chaves from violating Section 13(b)(5) of the Exchange Act, and Rules 13a-14, 13b2-1, and 13b2-2, thereunder. The Final Judgment against Chaves will further order him to pay $50,000 in civil penalties, and permanently bar him from serving as an officer or director of a public company in the United States. In a companion administrative proceeding, Rica has consented to an order revoking the registration of its securities pursuant to Section 12(j) of the Exchange Act for failure to comply with its requirements to make periodic filings with the Commission since August 2005.



Modified: 12/29/2008