U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17303 / January 10, 2002
SEC CHARGES TWO BROKERS AND A PROFESSOR IN STOCK SCAM
Securities and Exchange Commission v. Jean Baptiste Jean Pierre, Gabriel Toks Pearse and Darius L. Lee, Civil Action No. 02 civ 253
The Securities and Exchange Commission ("Commission") today charged two brokers, Jean Baptiste Jean Pierre ("Jean Pierre") and Darius L. Lee ("Lee"), and a college professor, Gabriel Toks Pearse ("Pearse"), in connection with fraudulent and unregistered offerings of securities of three related companies controlled by Jean Pierre. The complaint charges the defendants with making false and misleading statements and omissions of material facts while offering and selling limited partnerships interests of JB Stanley Group, LP ("JB Stanley"), an unregistered hedge fund, and stock of JB Stanley's general partner, Cambridge Capital Holdings Management, LLC ("Cambridge"), and Cambridge's wholly-owned subsidiary, Union Transfer and Cargo Corporation ("UTC"), all of which were controlled by Jean Pierre. Through these schemes, the defendants raised approximately $457,300 from approximately fifteen investors and misappropriated a large percentage of those funds.
The defendants are as follows:
- Jean Pierre, age 29, was last known to be a resident of Hollywood, Florida. Jean Pierre was the president and chief executive officer of JB Stanley, the president and chief executive officer of Cambridge, and the chairman of UTC. At the time of the conduct at issue, Jean Pierre lived in Forest Hills, New York.
- Pearse, age 53, resides in Brooklyn, New York. From February to October 1999, Pearse served as Cambridge's vice-president and secretary and UTC's president and chief executive officer. Pearse is currently an assistant professor of literature at the Dobbs Ferry campus of Mercy College.
- Lee, age 28, resides in Queens, New York. From November 1998 to September 1999, Lee worked at JB Stanley and Cambridge as an account representative. Lee solicited investors to purchase securities of JB Stanley and Cambridge. Lee is currently a registered representative at Delta Asset Management Company, LLC.
The complaint alleges as follows:
From July 1997 to October 1999, Jean Pierre raised approximately $304,700 through the sale of unregistered limited partnership interests in JB Stanley, an unregistered hedge fund. Jean Pierre and Lee told investors, orally and in writing, that JB Stanley was a hedge fund that pooled investor funds to purchase and sell securities. In fact, only a small portion of the offering proceeds were actually invested: Jean Pierre misappropriated most of the offering proceeds to pay for personal expenses and to finance UTC expenses. In connection with the JB Stanley offering, Jean Pierre and Lee also made misrepresentations about JB Stanley's business history and prospects, and Jean Pierre's history as a fund manager. To induce investors to maintain their investment at JB Stanley, Jean Pierre and Lee sent investors phony account statements that misrepresented the fund's performance.
From November 1998 to October 1999, Jean Pierre, Pearse, and Lee sold to at least eight investors an aggregate of $147,600 of Cambridge stock, and to at least one investor $5,000 of UTC stock. To induce investors to purchase Cambridge stock, the defendants made numerous fraudulent misrepresentations -- including that Cambridge was about to conduct an IPO which would allow investors to sell their private placement shares for a substantial profit -- and sent investors offering documents that contained false and misleading statements about Cambridge's business, the existence of a proposed merger, and the value of Cambridge stock. To induce investors to purchase UTC stock, the defendants sent investors offering documents containing false and misleading statements about UTC's business, the number of shares already sold, and the experience, qualifications, and identity of UTC's management team.
As a result of the foregoing, the Commission alleges that Jean Pierre, Pearse, and Lee violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that Jean Pierre violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission seeks: (i) an injunction enjoining the defendants from future violations of the above-cited provisions of the federal securities laws; (ii) disgorgement of all of their ill-gotten gains, plus pre-judgment interest; and (iii) civil penalties. The Commission's suit is pending in the U.S. District Court for the Southern District of New York.