U.S. Securities and Exchange Commission
Litigation Release No. 21398 / February 1, 2010
Securities and Exchange Commission v. Vincent Montagna and Christine Palmer, 05 Civ. 4303 (DAB) (S.D.N.Y.)
SEC Case Against Former Investment Adviser Settled and Claims Against Relief Defendant Voluntarily Dismissed
The Securities and Exchange Commission announced that on January 8, 2010, the Honorable Deborah A. Batts of the United States District Court for the Southern District of New York entered a Final Consent Judgment against defendant Vincent Montagna (Montagna), the former investment advisor for Quantus Holding Company, Inc. Also on January 8, 2010, Judge Batts approved a stipulation of dismissal as to all claims against Relief Defendant Christine Palmer Montagna.
The final judgment against Montagna permanently enjoins him from violating 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 206(2) of the Investment Advisers Act of 1940. Based upon the restitution ordered against him in a parallel criminal case, no disgorgement was ordered, and no civil penalty was imposed, in the final judgment. Montagna consented to the entry of the final judgment without admitting or denying the allegations in the Commission's complaint.
The Commission's complaint, filed on May 2, 2005, alleged that from at least August 2001 until at least August 5, 2002, Montagna defrauded investors and prospective investors in two hedge funds he managed through Quantus — Tiburon Asset Management LLC and Tiburon Partners, Ltd. (collectively the "Funds"). Montagna allegedly defrauded the investors and prospective investors by: repeatedly causing extremely positive — and false — performance claims to be disseminated to them; failing to disclose to investors the declining value and increased risk of Fund holdings; failing to disclose conflicts of interest he had with respect to certain investments; converting Fund income and assets for his own (or his wife's) benefit; and causing the Funds to make payments to him and his associates in excess of the amounts to which they were entitled.
On February 9, 2007, in a criminal case based on some of the same conduct that underlies the Commission's complaint, Montagna pleaded guilty to one count of mail fraud. United States v. Vincent Montagna, Crim. Indictment No. 1:05-CR-0457 (DAB) (S.D.N.Y). On December 22, 2008, Montagna was sentenced to a prison term of 40 months and ordered to pay $7,716,390 in restitution.
On July 25, 2007, in an administrative proceeding based on Montagna's guilty plea, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions against Montagna, barring Montagna from associating with an investment adviser. (Rel. 2621; File No. 3-12709).
For further information, see LR-19211 (May 2, 2005).