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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21326 / December 7, 2009

Securities and Exchange Commission v. John E. Brake, Case No. CV 08-4089 BZ (N.D. Cal. filed August 27, 2008)

JOHN E. BRAKE, REMAINING DEFENDANT IN OFFERING FRAUD LITIGATION, SETTLES TO PERMANENT INJUNCTION AND AGREES TO PAY $1.2 MILLION

The Securities and Exchange Commission today announced that the Honorable Bernard Zimmerman, United States Magistrate Judge for the Northern District of California, entered Final Judgment as to Defendant John E. Brake, of Newport Beach, California on December 4, 2009. Brake is the final defendant in the above-listed offering fraud litigation.

Pursuant to the judgment, Brake was permanently enjoined from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Brake has also consented to an order requiring him to disgorge more than $1.2 million in ill-gotten gains.

According to the Commission, Brake's private company, Pinnacle West, LLC, issued $20 million in promissory notes to investors from 1999 through 2005. The Commission further alleges that Brake falsely represented to investors that the promissory notes were secured by real estate Pinnacle West owned when, in reality, Pinnacle West did not own any property. According to the Commission's complaint, Brake also misused investor funds to pay for a wide variety of personal expenses. Among other things, Brake allegedly used investor funds to pay for a beachfront home rental in Carmel, California, luxury automobiles, a personal chauffeur, private jet travel, jewelry and designer clothing.

The Commission previously brought a settled fraud action in district court against Brake's former business associates, Gary Johnson and Mark Boucher.

See also: LR 20689 (August 27, 2008)

 

http://www.sec.gov/litigation/litreleases/2009/lr21326.htm


Modified: 12/07/2009