SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17642 / July 31, 2002
SEC V. STEVEN M. BOLLA, WASHINGTON INVESTMENT NETWORK, SUSAN BOLLA AND ROBERT RADANO, CIVIL ACTION NO. 1:02CV01506 (D.D.C.) (CKK)
SEC Charges Steven Bolla with Fraud and Violating Prior Investment Adviser Bar Order. Wife, Business Partner, and Bethesda-Based Washington Investment Network Also Charged.
The Securities and Exchange Commission today charged investment adviser Steven Bolla, 43, of Alpharetta, Georgia with securities fraud and with violating a June 2000 SEC order barring him from associating with any investment adviser. In today's action, the Commission alleges that, for months after he was barred, Bolla continued to manage finances and business relationships for the Washington Investment Network ("WIN"), an investment adviser based in Bethesda, Maryland, as well as deal with WIN clients. WIN is also charged with allowing Bolla to continue associating with the firm after the SEC had barred him from doing so. Bolla's wife, Susan Bolla, and his business partner, Robert Radano, are alleged to have aided and abetted the violations of the SEC's bar order.
The order barring Bolla from associating with any investment adviser was issued following a June 2000 enforcement action by the SEC in which Bolla was enjoined from violating the antifraud and other provisions of the federal securities laws. See SEC v. James L. Foster, Laurie F. Foster, Steven M. Bolla and William E. Busacker, Jr., Litigation Release No. 16567 (May 30, 2000); In the Matter of James L. Foster et al., Securities Exchange Act Release No. 42963 (June 20, 2000). In the June 2000 case, Bolla was ordered to pay a $10,000 penalty. The court's order imposing the penalty noted that Bolla was not directed to pay a higher amount because he had demonstrated an inability to pay in sworn financial statements that he had submitted to the SEC.
On May 9, 2002, in an action brought by the United States Attorney for the District of Columbia, Bolla pled guilty to federal criminal charges for making false statements in 1999 and 2000 to the SEC in violation of 18 U.S.C. Section 1001. In pleading guilty, Bolla admitted that the financial statements he submitted to the SEC during its prior investigation against him underreported his income and assets, and contained other false information. Bolla faces a maximum sentence in the criminal proceeding of five years imprisonment and a $250,000 fine. See United States v. Steven M. Bolla, Litigation Release No. 17512 (May 9, 2002). Sentencing in the criminal matter is scheduled for August 30, 2002.
The SEC Complaint filed today charges that WIN committed fraud, assisted by the Bollas and by Radano, by failing to disclose Bolla's bar and disciplinary history to the firm's advisory clients while Bolla continued associating with the firm. In addition, the Complaint charges that Bolla committed fraud by making material misrepresentations to one of his advisory clients regarding a private placement investment he was soliciting as an unregistered broker-dealer.
The Complaint charges that Bolla continued to associate with WIN by managing the firm's finances for nine months, acting as the investment adviser to firm clients for ten months and making business communications on behalf of the firm for three months following the SEC's June 20, 2000 bar order against him. Susan Bolla and Radano facilitated Bolla's continued association with the firm. The Complaint alleges that Susan Bolla, who had no previous investment advisory or other securities experience, was set up as the nominal co-owner of WIN in 1997 to conceal her husband's control of the firm. The SEC charges Bolla and WIN with violating Section 203(f) of the Advisers Act (investment adviser bar), and charges Susan Bolla and Radano with aiding and abetting these violations.
The Complaint further charges that while Bolla maintained his association with WIN subsequent to his bar, neither he, the firm, Susan Bolla nor Radano disclosed to the firm's clients that Steven Bolla had been barred, or any other aspect of Steven Bolla's disciplinary history. The Complaint alleges that WIN's failure to disclose Bolla's bar and disciplinary history violated Sections 206(1) and (2) of the Advisers Act (investment adviser fraud). By failing to make these disclosures on behalf of the firm, the Complaint charges Steven Bolla, Susan Bolla and Radano with aiding and abetting the firm's violations of Sections 206(1) and (2).
The SEC's Complaint also alleges that Steven Bolla violated Section 17(a) of the Securities Act (securities fraud), Sections 10(b) (securities fraud) and 15(a) (broker-dealer registration) of the Exchange Act, and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Advisers Act by making material misrepresentations to one of his advisory clients regarding a private placement investment he was soliciting as an unregistered broker-dealer. The Complaint charges Bolla with misrepresenting that his client would receive a discount for her investment and that he was not receiving compensation for selling her shares in the private placement.
The SEC's Complaint seeks injunctions against Steven Bolla from violating Section 15(a) of the Exchange Act and Section 203(f) of the Advisers Act. The Complaint seeks injunctions against WIN from violating Sections 203(f) and 206(1) and (2) of the Advisers Act. The Complaint also seeks injunctions against Susan Bolla and Radano from aiding and abetting violations of Sections 203(f) and 206(1) and (2) of the Advisers Act. In addition, the Complaint seeks disgorgement of unlawful profits from Steven Bolla and Susan Bolla and money penalties against all defendants for their violations of the federal securities laws.