U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18901 / September 28, 2004
Securities and Exchange Commission v. Von Christopher Cummings, et al., No. C2 02 629 (S.D. Ohio).
DEFENDANTS IN $15 MILLION HEDGE FUND SCHEME CENTERED IN COLUMBUS, OHIO AGREE TO SETTLE SEC ACTION
The Securities and Exchange Commission today announced that on September 27, 2004, the United States District Court for the Southern District of Ohio, entered Final Judgments of Permanent Injunction and other relief ("Final Judgments") against defendants Von Christopher Cummings and two entities that he controlled, Paramount Financial Partners, L.P. and Paramount Capital Management, LLC, John A. Ryan, Kevin L. Grandy, James Curtis Conley, Kevin D. Hightower, John E. Hawley, Michael L. Vogt and Omar Benaouda. As part of the settlements, the defendants consented to permanent injunctions and other relief, without admitting or denying the allegations in the Commission's complaint.
The Final Judgments also order:
Final Judgments were also entered against Relief Defendants Gordon L. Yocom, Gordon Lending Corp. and Patrick Susemihl, pursuant to their consents. Gordon Lending Corp. and Yocom, age 35, of Powell, Ohio, were ordered to jointly and severally to disgorge $72,734 (including prejudgment interest). Susemihl was ordered to disgorge $108,318 (including prejudgment interest).
The Commission's complaint alleged that Von Cummings and others defrauded dozens of investors by conducting a Ponzi scheme through a purported Ohio-based hedge fund, Paramount Financial Partners, L.P. The complaint alleged that Cummings and various marketers induced investors to pay at least $15 million into the hedge fund from at least May 2000 through March 2001, but that Cummings and others misappropriated or diverted those funds to pay earlier investors and pay personal and business expenses. Cummings owned, managed and controlled the Paramount entities. Ryan and Grandy were two of Paramount's chief marketers.
The Commission's complaint charged that Cummings, Paramount Financial, Paramount Capital, Ryan, Grandy and Conley violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further alleged that Paramount Financial and Paramount Capital violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 ("Advisers Act") and that Cummings, Ryan, Grandy and Conley aided and abetted those violations of the Advisers Act.
The Commission's complaint charged that Hightower aided and abetted Cummings and Paramount's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In addition, Hightower aided and abetted violations of Section 15(a) of the Exchange Act by Vogt, Hawley, Benaouda and others.
The Commission's complaint alleged that Vogt and Hawley violated Section 15(a) of the Exchange Act by accepting compensation from Paramount and "selling away" from their employer, a brokerage firm. The complaint also charged that Benaouda violated Section 15(a) of the Exchange Act by engaging in the securities brokerage business without a license.
The Commission previously obtained default judgments against defendants Mark D. Deyak and Michael J. Louis and relief defendant U.S. African Corp. The final judgments imposed on these defendants conclude the Commission's action in this matter.
For further information about the Commission's action in SEC v. Cummings, et al., see Litigation Release No. 17581 (June 24, 2002), Litigation Release No. 17598 (July 3, 2002) and Litigation Release No. 17840 (November 15, 2002).