U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22111 / September 30, 2011
U.S. Securities & Exchange Commission v. Stephen Amella, et al., Civil Action No. 11 C 6849 in the United States District Court for the Northern District of Illinois.
TWO RECIVIDISTS CHARGED IN A REAL ESTATE FRAUD
The Securities and Exchange Commission announced that on September 29, 2011, it charged two recidivists, Stephen Amella and Andre Hayden, residents of Illinois and Tennessee, respectively, with making misrepresentations to investors regarding investments in a purported real estate joint venture and for acting as unregistered brokers. The Commission seeks, among other relief, conduct-based injunctions against the defendants, permanently enjoining them from soliciting existing or potential investors to purchase or sell securities.
According to the SEC’s complaint, filed in federal court in Chicago, Stephen Amella and Andre Hayden sold $450,000 in interests in a real estate joint venture on behalf of Titan Investment Partners Corp and its president, Andrew Buie, by making material misrepresentations about the joint venture and by failing to conduct due diligence on the joint venture. The complaint alleges that Amella and Hayden represented that investments in the purported real estate joint venture would generate a guaranteed 10% monthly profit, and that the joint venture had already acquired some properties for which it needed investor funds to rehab and convert into condominiums for resale. Additionally, the complaint alleges that Amella and Hayden represented that investors’ initial investments in the joint venture would be returned to them when the projects were completed. The complaint adds that the joint venture did not acquire any real properties, and that Buie misappropriated the entire offering proceeds, spending it on his personal expenses and on commissions to Amella and Hayden. The complaint states further that had Amella and Hayden conducted due diligence, they would have uncovered that prevailing market conditions rendered it highly improbable that the purported real estate project could generate sufficient revenue to guarantee that investors would recover 10% monthly profits, and that Buie did not acquire any real properties. The complaint also alleges that Amella and Hayden sold the joint venture interests and received commissions for their selling activities without being registered with the Commission as brokers.
The defendants were previously charged by the Commission with participating in a fraudulent offering in which they misrepresented the use of proceeds, expected returns, and risks of the investment. As part of that offering, defendants raised $1.3 million from twenty-seven investors to purportedly trade in foreign currency. [see SEC v. Platinum Capital Advocates, Inc., et al., 07 C 0985 (N.D. Ill.)].
The complaint charges Amella and Hayden with violations of Section 17(a) of the Securities Act of 1933 and Sections 15(a) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks conduct-based injunctions against Amella and Hayden enjoining them from directly or indirectly soliciting existing or potential investors to purchase or sell securities, a statutory injunction enjoining them from acting as unregistered brokers, disgorgement, and civil penalties.