U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21479 / April 7, 2010
Securities and Exchange Commission v. Stefan Benger, et al., Civil Action No. 1:09-CV-676 (United States District Court for the Northern District of Illinois)
The Commission announced that on April 1, 2010, the Honorable Joan H. Lefkow, U.S. District Court for the Northern District of Illinois, entered a final judgment by consent against Handler, Thayer & Duggan, LLC (HTD) in SEC v. Stefan H. Benger, et al., Civil Action No. 09-cv-00676 (N.D. Ill.). The judgment orders HTD to pay disgorgement in the amount of $196,912.45, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $16,447.18, and a civil penalty in the amount of $25,000. In addition, the judgment dismisses the Commission's claims for permanent injunctive relief and a penny stock bar against HTD in light of the fact that the firm is in the process of winding down its affairs and will be dissolved. HTD consented to entry of the final judgment without admitting or denying the allegations in the Commission's complaint.
The Commission commenced this action on February 3, 2009, when it filed an ex parte, emergency action alleging that four Chicago residents and their entities worked in concert with boiler room sales agents based in Europe to orchestrate a massive international boiler room scheme. The allegedly fraudulent scheme involved the sale of shares of U.S. penny stock issuers to investors located throughout Europe. Critical to the scheme was the fact that defendants never informed investors that more than 60% of their investment funds were used to pay sales commissions. From March 2007 until the filing of the Commission action, the scheme allegedly raised at least $44.2 million from at least 1,400 investors. On February 3, U.S. District Judge Joan Lefkow granted all emergency relief requested by the Commission.
The Commission alleged in its original complaint that HTD, a Chicago law firm, acted as an escrow agent through its employee, Philip T. Powers. The Commission charged HTD solely with effecting transactions in, or inducing or attempt to induce, the purchase or sale of securities, without registering with the Commission as a broker or dealer, in violation of Section 15(a) of the Securities Exchange Act of 1934 (Exchange Act).
In addition, Judge Lefkow granted the Commission leave to file an amended complaint naming Stephan von Hase (von Hase) and his entity, CTA Worldwide Services, SA (CTA) as defendants. The Commission alleges that von Hase and CTA participated in the boiler room scheme described in the original complaint by acting in concert with the remaining defendants. The amended complaint alleges von Hase and CTA entered into agreements with penny stock issuers to solicit foreign investors in exchange for commissions that collectively exceed 60% of the investor proceeds. Von Hase and CTA allegedly retained foreign sales agents to solicit investors and, through escrow agents, received approximately $16.7 million from investors without informing them of the exorbitant fees. The Commission's amended complaint alleges that von Hase and CTA violated Section 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder through their participation in the scheme and seeks an order of permanent injunction, disgorgement plus prejudgment interest, civil penalties and a penny stock bar.
For further information, see LR-20881 (February 4, 2009).