SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16763 / October 12, 2000
SEC v. Brennan, 85 Civ. 8585 (RO) (U.S. District Court for the Southern District of New York)
The Securities and Exchange Commission announced today that on October 12, 2000, the Honorable Richard Owen, U.S. District Judge for the Southern District of New York, issued a preliminary injunction against Defendant Robert E. Brennan and nonparty MJQ Corporation preventing the transfer of, and impairment of ownership interests in, a gambling cruise ship based in Fort Lauderdale known as the Palm Beach Princess. The Court found that the Commission established a prima facie case that Defendant Brennan has a beneficial interest in the Palm Beach Princess, which was in danger of being transferred or impaired absent injunctive relief against both Brennan and MJQ, the ship's nominal owner. Therefore, the Court prohibited Brennan and MJQ from transferring the home port of the ship, operating it or dealing with its revenues outside of the ordinary course of business, or transferring its ownership or any security interest or otherwise impairing MJQ's capital structure. In addition, the Court ordered MJQ to provide an accounting of funds that were used to purchase and renovate the ship, and of the results of its current operations.
The Commission sought the preliminary injunction after obtaining evidence that three offshore asset protection trusts established by Brennan under the law of Gibraltar had provided more than $12 million for the purchase and renovation of the ship to entities that were controlled by long-time Brennan associates. These transfers had gone through a series of conduits and been concealed until they were discovered as the result of international investigative efforts. In granting the preliminary injunction, the Court rejected MJQ's argument that that it lacked jurisdiction to enter a freeze and accounting order against MJQ because of Brennan's bankruptcy, as well as MJQ's argument that equitable relief could not be granted against a nonparty holding assets that can be traced to funds of an adjudicated securities law violator.
The Commission thanks the Attorney General for the Isle of Man for the assistance given in this matter.