U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21011 / April 24, 2009
Securities and Exchange Commission v. David Praise, et al., Civil Action No. 09-2802 (United States District Court, Central District of California, Los Angeles Divison)
SEC Sues Promoters of High Yield Investment Programs for Fraud and Seeks Penalties and Disgorgement of Investor Funds
On April 22, 2009, the Securities and Exchange Commission filed a civil action in the United States District Court in Los Angeles, California, against defendants David Praise, Noel Kamanga Mwangi, Martin A. Burke, and William F. Dippolito. The Commission alleges that the defendants conducted two fraudulent high-yield securities offerings between August 2007 and August 2008, raising a total of $14.7 million from approximately 10 investors located throughout the United States and Canada.
The Commission's complaint alleges that, in the first offering, defendant Praise represented that investors could make $15 million for every $1 million invested through a so-called "buy-sell" trading program involving foreign bank instruments. Investors ultimately deposited a total of $12.2 million into a designated bank account, but no "buy-sell" transactions ever occurred. Instead, Praise and others absconded with the funds.
In the second offering, the Commission alleges that defendants Burke and Praise told an investor that a company Burke controlled had arranged to purchase a 500 million euro "medium-term note," which they would use to support a trading program. Burke and Praise told the investor he would receive $10 million in 30 days, plus trading profits over the next year. At their direction, the investor deposited $2.5 million into an account controlled by defendant William F. Dippolito, a Tacoma, Washington attorney who the Commission charged with fraud in a similar fraudulent scheme in 2007. See SEC v. Global Finance & Investments, Inc. et al., Litigation Rel. No. 20200 (July 18, 2007). The funds were never used as Burke and Praise claimed. Rather, Dippolito, at defendant Mwangi's direction, sent the funds to Mwangi, entities Praise controlled, and others.
The Commission's complaint charges defendants Praise, Mwangi, and Burke with violations of Section 5 and 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and charges Dippolito with aiding and abetting Praise, Mwangi and Burke's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Commission seeks permanent injunctive relief, disgorgement with prejudgment interest and civil penalties against all defendants.
In addition, the Commission has named the following people and entities as relief defendants because they received investor funds for no consideration: Marinco, Inc., China Infrastructure Capital Management, Inc., Werner Buettiker, Gabrial Pennicott, Cynthia Pennicott, Salomon Bassim, William Lenz, Lenzburg Capital Corporation, Integrated Technologies Group, Inc., Investor Select, A.G., Robert Justino, Kismet Cyriacks, Zara Akbar, Dr. Brian P. Killian, and William R. Chapman. As to these relief defendants, the Commission requests disgorgement of their ill-gotten gains, with prejudgment interest.