SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16928 / March 9, 2001
SECURITIES EXCHANGE COMMISSION V. TODD J. LASCOLA, ET AL, United States District Court for the District of Rhode Island 98-610-T (December 29,1998)
TODD J. LASCOLA PLEADS GUILTY TO DEFRAUDING INVESTORS
The Securities and Exchange Commission ("Commission") announced that on February 26, 2001, Todd J. LaScola, the sole owner of CPI Investment Management, Inc. ("CPI"), a registered investment adviser, and principal and co-owner of CPA Advisors Network, Inc. ("CPA"), a registered broker-dealer, pled guilty to one count of embezzlement, three counts of mail fraud and five counts of wire fraud in a plea agreement with the U.S. Attorney's Office in Providence, Rhode Island. On November 16, 2000, LaScola was charged in a 55-count indictment that alleged, among other things, that LaScola received illegal commissions for improperly investing approximately $6 million of a pension fund account owned by the International Brotherhood of Electrical Workers ("IBEW"), a client of CPI, in speculative and illiquid promissory notes. The indictment alleged that when the IBEW demanded reimbursement for the promissory note investments, LaScola improperly directed funds from various CPI client and CPA customer securities accounts to the IBEW's account without the clients' and customers' knowledge or consent.
On December 29, 1998, the Commission filed a complaint in federal district court alleging that LaScola had violated the general and investment adviser antifraud provisions of the federal securities laws. The Commission's allegations arose from the same underlying conduct described in the criminal indictment. On June 23, 2000, the Commission's motion for summary judgment against LaScola was granted and he was permanently enjoined from further violations of Section 17(a) of the Securities Act of 1933, 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 Advisors Act of 1940. The judgment also directed LaScola to pay disgorgement in the amount of $6,329,825 plus prejudgment interest and to pay a civil monetary penalty of $100,000. On July 7, 2000, the Court also granted the Commission's Motion to Dismiss its Compliant against CPI, whose corporate charter had lapsed, and CPA, which is currently controlled by a Securities Investors Protection Corporation Trustee.
On February 22, 2001, the Commission instituted an administrative proceeding against LaScola based on the entry of the injunction. The Commission seeks to bar LaScola from association with any broker, dealer and investment adviser.
For further information, please see Litigation Releases Nos. 16658 (August 18, 2000), 16019 (January 11, 1999) and 16012 (December 30, 1998).