U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16551 \ May 12, 2000
SECURITIES AND EXCHANGE COMMISSION v. WILLIAM MADON, Civil Action No. SACV 97-1023 DOC (EEx) (C.D. Cal.)
The Securities and Exchange Commission ("Commission") announced that, on May 2, 2000, the Honorable David O. Carter, United States District Judge for the Central District of California, issued an Order of Disgorgement and Other Relief Against Defendant William Madon ("Order") ordering him to pay disgorgement in the amount of $7,991,000, representing his gains from the conduct alleged in the Complaint. The Order waives payment of disgorgement by William Madon ("Madon") due to his financial inability to pay, except that he is required to liquidate certain accounts, valued at approximately $95,300, and disgorge the proceeds to the U.S. Treasury.
The Commission alleged in its Complaint that Madon raised at least $5 million from approximately 250 investors nationwide through the sale of interests in Capital Growth Group, which he purportedly operated as a mutual fund. The Complaint further alleged that Madon misused investor funds to, among other things, pay distributions to investors and invest in various undisclosed business ventures.
The Commission's Complaint alleged that Madon violated the antifraud and securities registration provisions of the federal securities laws. Specifically, the Complaint alleged that he violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act"), 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, and the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act. Madon previously consented, without admitting or denying the allegations in the Complaint, to the entry of a permanent injunction enjoining him from future violations of the provisions of the federal securities laws he was alleged in the Complaint to have violated. See Litigation Release 15597 (December 19, 1997).