UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17590 / June 27, 2002
Securities and Exchange Commission v. Frank D. Gruttadauria, DH Strategic Partners, Inc., JYM Trading Trust, Laurene English, Defendants, And Sarah Z. Emamy, Charlie Whiskey, LLC, And Margo Gruttadauria, Relief Defendants, Civil Action No. 1:02CV324 (Judge Gaughan)
SEC CHARGES LAURENE ENGLISH, FORMER SALES ASSISTANT TO FRANK GRUTTADAURIA, WITH AIDING AND ABETTING GRUTTADAURIA'S FRAUD; ALSO SEEKS ASSETS CONVEYED TO GRUTTADAURIA'S WIFE.
The Securities and Exchange Commission today filed an Amended Complaint in its securities fraud action pending against former broker Frank D. Gruttadauria and related entities in the United States District Court for the Northern District of Ohio. In its Amended Complaint, the Commission charges that Laurene English, Gruttadauria's longtime former assistant, aided and abetted Gruttadauria's fraudulent scheme. In addition, the Commission named Gruttadauria's wife, Margo Gruttadauria, from whom he is separated, as a relief defendant. The Commission seeks to recover assets that Gruttadauria conveyed to Margo Gruttadauria.
Frank Gruttadauria was the branch manager for the Cleveland, Ohio office of Lehman Brothers, Inc. On February 21, 2002, the Commission filed a Complaint charging Gruttadauria and two entities controlled by him with securities fraud. Specifically, the Commission alleged that, over at least a six-year period, while he worked at Lehman Brothers and at SG Cowen Securities Corporation, Gruttadauria, 44, of Gates Mills, Ohio, stole at least $40 million in the course of defrauding more than 50 clients. The Commission had also sought to recover assets from English as a relief defendant.
In the Amended Complaint, the Commission alleges that English knowingly provided substantial assistance to Gruttadauria in implementing his scheme. Specifically, the Commission alleges that English assisted in the preparation of false account statements and other documents, directly provided false information to certain clients regarding the values of their accounts and their purchases and sales of securities, processed withdrawal requests for clients whose accounts had been depleted, and assisted with or facilitated unauthorized transfers of funds. The Amended Complaint further alleges that she received as much as $700,000 in cash and other items of value from Gruttadauria. The Commission's Amended Complaint charges English with aiding and abetting violations of the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5.
In the Amended Complaint, the Commission also alleges that Gruttadauria's wife, Margo Gruttadauria, received $894,000 in cash from Frank Gruttadauria and holds title to real estate purchased with the direct or indirect proceeds of Frank Gruttadauria's illegal conduct, and/or that such assets were conveyed by him to her without adequate consideration.
On February 26, 2002, Judge Gaughan granted the Commission's motion for a temporary restraining order against Gruttadauria and froze his assets. On March 11, 2002, Judge Gaughan granted the Commission's motion for a preliminary injunction against Gruttadauria, who is presently in federal custody. For further information, see Litigation Release Nos. 17369 (February 21, 2002) and 17418 (March 18, 2002).
The Commission's investigation is continuing.