SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17643 / July 31, 2002
SEC OBTAINS EMERGENCY ORDER HALTING ONGOING FRAUD BY BROKER-DEALER AND AFFILIATES
SEC v. PLATINUM INVESTMENT CORPORATION, et al. (S.D.N.Y. 02 Civ. 6093 (JSR))
The Commission today brought an emergency action in federal court in Manhattan to halt an ongoing fraud by Platinum Investment Corp. ("Platinum"), a registered broker-dealer; Platinum Investment Holding Corp. ("PIHC"), a supposed "financial service holding corporation"; Lee Antonucci ("L.Antonuuci"), a PIHC principal; and Platinum associates Andrew Antonucci ("A. Antonucci"), Marcos Martinez ("Martinez"), James Frace ("Frace"), and Mathew Beaulieu ("Beaulieu"). The Commission alleges that, to date, defendants have fraudulently obtained over $1.5 million from at least 56 investors through two schemes: (a) an offering of stock in PIHC for $1.00 per share, and (b) an offering in New Focus Capital Partners ("New Focus"), a purported hedge fund. The complaint alleges that defendants have misled investors through a host of patently false misrepresentations about PIHC and New Focus - including the demonstrably false misrepresentation that PIHC is close to conducting an initial public offering ("IPO").
The Commission has moved for a preliminary injunction and other interim relief to preserve the status quo. Pending the outcome of that motion, on the Commission's application, the court has temporarily restrained the defendants from violating antifraud, registration, and books and records provisions of the Securities Act of 1933 ("Securities Act") and the Securities Exchange Act of 1934 ("Exchange Act"); frozen defendants' assets; ordered the defendants to submit accountings; ordered expedited discovery; and prohibited defendants from destroying documents and other evidence.
The Commission alleges that the defendants have deceived actual and prospective investors by claiming that PIHC is on the verge of launching an IPO within weeks or days. According to the complaint, PIHC has not filed any registration statement with the Commission or otherwise taken any steps toward an IPO. The Commission also alleges that the defendants have made baseless projections about the price at which PIHC stock would trade on the secondary market; have misrepresented the identity of PIHC's officers; diverted investor proceeds; falsely claimed that PIHC owns a successful, proprietary "momentum" trading program called IntelliTrendXLTM; and falsely portrayed New Focus as a hedge fund with a successful track record.
The complaint names the following defendants:
1. Platinum, a Nevada corporation and a registered broker-dealer based in Rochester, New York. Platinum employs eight registered representatives in Rochester, New York, nine registered representatives in New York City, five in Fort Lauderdale, Florida, and three "independent brokers" in California.
2. PIHC, a Nevada corporation with the same Rochester, New York office address as Platinum.
3. L. Antonucci, 32, a resident of Hilton, New York. He owns a majority stake in Platinum through a real estate company he controls, RDC Development, Inc. According to PIHC's January 2002 offering memorandum, he is Vice-President, Secretary and a Director of PIHC.
4. A. Antonucci, 30, a resident of Hilton, New York. He is associated with Platinum.
5. Martinez, 29, the branch office manager and principal of Platinum's Fort Lauderdale office. According to Martinez's business card, he is Managing Director of Platinum.
6. Frace, 33, a resident of Sunrise, Florida and a registered representative of Platinum.
7. Beaulieu, 34, is a resident of Rochester, New York. He is a registered representative associated with Platinum in the Rochester office.
The complaint seeks, as final relief against all defendants, permanent injunctions against future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act; Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. In addition, the complaint seeks against Platinum permanent injunctions against future violations of Sections 15(g), 17(a) and 17(b) of the Exchange Act, and Rule 15g-9 thereunder. The Commission also seeks against all defendants disgorgement of all ill-gotten gains plus prejudgment interest, and civil penalties.
The litigation is pending. A hearing on the Commission's motion for a preliminary injunction is scheduled for August 9.