Securities and Exchange Commission
Litigation Release No. 17163 / September 28, 2001
S.E.C. v. Credit Bancorp, Ltd., Credit Bancorp, Inc. Richard Jonathan Blech, Thomas Michael Rittweger, and Douglas C. Brandon, Civil Action No. 99 Civ 11395 (RWS) (USDC SDNY)
On September 9, 2001, the Honorable Robert W. Sweet, United States District Judge, Southern District of New York, entered an Order for Summary Judgment and issued a permanent injunction against Richard Jonathan Blech, the founder and chief executive officer of Credit Bancorp, Ltd., enjoining him from future violations of the antifraud provisions 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.
The court found that Credit Bancorp, which was based in Geneva, Switzerland, and Blech obtained investments of at least $180 million in marketable securities by promising individuals a risk-free return of 4% to 14% a year, without relinquishing ownership of their securities. The returns were to be generated by placing the securities in trust accounts established at major financial institutions in the name of Credit Bancorp. Major European banks were then to provide credit lines based on the value of the securities in the trust accounts, and the credit lines were to be used to invest in a trading program which would generate the promised returns.
Rather than being deposited in trust accounts, the securities were placed in brokerage accounts maintained by Credit Bancorp and then margined or sold outright, with the proceeds being wired to bank accounts in the United States and Switzerland. These proceeds were then used to fund the operations of Credit Bancorp and Blech's lavish personal lifestyle. Among other purchases, Blech bought a manor house in Monnetier-Mornex, France, automobiles, and a yacht which was moored on the Cote d'Azur in France.
The Court previously issued a Temporary Restraining Order and Asset Freeze against Blech on November 17, 1999, and appointed a Receiver on January 19, 2000. Blech is currently being held in prison in France awaiting extradition to the United States where criminal charges have been filed. The Commission acknowledges the assistance of the United States Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, the Ministry of the Interior of the Republic of France, the Police Department of the Principality of Monaco and the Office of the Magistrate of the Canton of Geneva of the Republic of Switzerland.