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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Rel. No. 18350 / September 12, 2003

SEC Files Civil Contempt Charges Against Law Firm and Accounting Firm for Violation of Asset Freeze Order

SEC v. Dennis Herula et al. (United States District Court for the District of Rhode Island, C.A. No. 02 154 ML)

The Commission announced that it filed civil contempt charges on September 11, 2003, against the Los Angeles, California-based law firm of Geragos & Geragos and two of its attorneys (Mark Geragos and George Buehler), and the Los Angeles-based accounting firm of Laffer & Gottlieb and its two principals (Martin Laffer and Barbara Gottlieb) for their violations of an asset freeze order. That order was entered in May 2002 by a Rhode Island federal court in a Commission fraud action against Dennis S. Herula, Mary Lee Capalbo, and others. Herula is also a defendant and Capalbo is a relief defendant in a second Commission fraud action filed in July 2002 in the U.S. District Court for the Northern District of California.

In its contempt application as to the Geragos law firm, the Commission alleged that, in connection with its representation of Herula and Capalbo in the Commission actions, the Geragos firm, through Mark Geragos and George Buehler, solicited and accepted attorneys' fees in the amount of $50,000 through credit card payments from Capalbo in October 2002. The contempt application alleged that those payments violated the asset freeze order entered by the Rhode Island District Court in May 2002 and served on the Geragos firm in July 2002 that prohibited Capalbo and her attorneys from transferring any of her funds. The Commission further alleged that the Geragos firm and the two individual attorneys also failed to adhere to procedures ordered by the court for the payment of attorneys' fees, which required court approval prior to the payment of such fees. In its contempt application as to the Laffer & Gottlieb accounting firm, the Commission alleged that, in connection with accounting services they provided to Herula and Capalbo in the Commission actions, the Laffer & Gottlieb firm, through Martin Laffer and Barbara Gottlieb, solicited and accepted fees in the amount of $41,350 through credit card payments from Capalbo in September and October 2002. The contempt application alleged that the payments to the Laffer & Gottlieb firm violated the May 2002 asset freeze order entered by the Rhode Island District Court against Capalbo.

For further information, please see Litigation Release Numbers 18082 (April 10, 2003)[civil contempt charges filed against Herula and Capalbo]; 17957 (January 29, 2003)[final judgment against Capalbo]; 17800 (October 23, 2002)[final judgment against Herula]; and 17514 (May 13, 2002)[preliminary injunction and asset freeze].

 

http://www.sec.gov/litigation/litreleases/lr18350.htm


Modified: 09/12/2003