U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22836 / October 8, 2013
Securities and Exchange Commission v. Edward M. Laborio, Jonathan Fraiman, Matthew K. Lazar, Envit Capital, LLC, Envit Capital Group, Inc., Envit Capital Holdings, Inc., Envit Capital Private Wealth Management, LLC, Envit Capital Multi Strategy Mixed Investment Fund I LP, Aetius Group PLC, and Aetius Group LLC, Civil Action No. 1:12-cv-11489-MBB (District of Massachusetts, Complaint filed August 10, 2012)
Former Envit Capital Boiler-Room Salesman Settles SEC Fraud Charges
The Securities and Exchange Commission announced today that on October 8, 2013, the federal court in Massachusetts entered a judgment against Jonathan Fraiman in a previously-filed case, arising from his alleged participation in a boiler room operated by Edward M. Laborio. Fraiman consented to the entry of the judgment.
On August 10, 2012, the Commission charged Fraiman, Laborio, Matthew K. Lazar, and seven entities owned and controlled by Laborio, including a non-existent hedge fund, (collectively, the "Envit Companies") with raising up to $5.7 million from more than 150 investors through the fraudulent sale of five unregistered offerings. The Complaint alleged that Laborio hired Fraiman in January 2008 to market Envit Capital Multi Strategy Mixed Investment Fund I LP, a purported hedge fund that in reality never conducted any business, and Laborio also named Fraiman as the Director and Chief Compliance Officer of Envit Capital Private Wealth Management, LLC, the purported investment adviser arm of the Envit Companies. Among other conduct, the Complaint alleged that Fraiman raised hundreds of thousands of dollars for Laborio by misrepresenting the historical returns and financial health of the Envit Companies, including that: (i) the non-existent hedge fund returned 42.9% in 2006 and 43.7% in 2007; (ii) shares in one of the unregistered offerings pay a 5% to 10% dividend; and (iii) the company had no debt and was cash flow positive.
On October 8, 2013, the Court entered a final judgment against Fraiman: (i) permanently enjoining him from violating Section 17(a)(2) of the Securities Act of 1933 (Securities Act); Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5(b) thereunder; and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 (Advisers Act) and Rule 206(4)-8 thereunder; (ii) barring him from participating in any offering of penny stock; (iii) finding him liable for disgorgement of $180,961.42 and prejudgment interest of $24,537.22, for a total of $205,498.66; and (iv) waiving payment of the disgorgement and prejudgment interest, and not imposing a civil penalty, based upon the representations in Fraiman's sworn statement of financial condition. Fraiman agreed to settle the Commission's charges without admitting or denying the allegations in the Complaint.
To settle the Commission's charges in related administrative proceedings that the Commission will separately institute, Fraiman has consented to be barred from any future association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, with the right to reapply after ten years.
The Commission's civil injunctive action against Laborio, Lazar, and the Envit Companies, SEC v Laborio et al., 1:12-cv-11489-MBB (D. Mass., Aug. 10, 2012), is still pending.
In conducting its investigation, the Commission acknowledges assistance from the U.S. Attorney's Office for the District of Massachusetts, the Federal Bureau of Investigation, the State of Florida Office of Financial Regulation, and the Financial Industry Regulatory Authority (FINRA).
For more information, see Exchange Act Release No. 34-59900 (May 12, 2009) [Order suspending trading in Envit Group securities]; Initial Decision Release No. 385 (August 13, 2009) [Initial decision revoking registration of Envit Group securities]; Exchange Act Release No. 60658 (September 11, 2009) [Notice of final decision revoking registration of Envit Group securities]; Litigation Rel. No. 22444 (August 10, 2012) [Civil Complaint].