U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19036 / January 18, 2005
SEC v. Keith Mohn, Mohn Asset Management, L.L.C., Mohn Financial Group, L.L.C., J. Patrick Kisor, PDK International, Inc., Agave, Ltd., Genesis Trading Associates, L.L.C., NCB Investments, Inc., PCM, L.L.C., Jason Malkin, and Gilbert Howard, Civil Action No. 02-74634 (E.D. Mich., filed Nov. 21, 2002)
KEITH MOHN, MOHN ASSET MANAGEMENT, L.L.C., AND MOHN FINANCIAL GROUP, L.L.C. PERMANENTLY ENJOINED FROM COMMITTING SECURITIES FRAUD
The U.S. Securities and Exchange Commission (Commission) announced today that on January 11, the Honorable Patrick J. Duggan, U.S. District Judge for the Eastern District of Michigan, entered Orders of Permanent Injunction (Orders) against Keith Mohn (Mohn), Mohn Asset Management, L.L.C. (Mohn Asset Management), and Mohn Financial Group, L.L.C. (Mohn Financial Group) (collectively, the Mohn Defendants). The Orders prohibit the Mohn Defendants from engaging in securities fraud in violation of Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, Section 15(c)(1) of the Exchange Act and Rule 15c1-2 thereunder, and Sections 206 (1) and 206(2) of the Investment Advisers Act (Advisers Act). The Orders further prohibit the Mohn Defendants from acting as unregistered brokers in violation of Section 15(a) of the Exchange Act and selling unregistered securities in violation of Sections 5(a) and 5(c) of the Securities Act. The Orders also provide that the Court will determine whether and to what extent to order disgorgement and impose civil penalties against the Mohn Defendants at a separate hearing upon due notice and motion by the Commission.
The Commission sued the Mohn Defendants, among others, on November 21, 2002. The Commission's Complaint alleged that Mohn, Mohn Asset Management, Mohn Financial Group and J. Patrick Kisor ("Kisor") offered and sold investments in Agave, Ltd. ("Agave") and Genesis Trading Associates, L.L.C. ("Genesis"), raising a total of approximately $31 million. The complaint alleged that instead of investing in options, as represented to investors, Kisor misappropriated the vast majority of investor funds for personal purposes and used a significant portion of the funds for illiquid, risky investments in private companies or penny stocks. According to the complaint, when Mohn learned that Kisor was using the funds for undisclosed investments and that Kisor had misappropriated investor funds, Mohn failed to tell investors these facts. Rather, Mohn, through Mohn Asset Management and Mohn Financial Group, continued to send investors statements that overvalued their investments in Agave and Genesis and invested some of their funds in risky and illiquid investments in private companies, without telling investors. The Commission's complaint also alleged that Mohn, Mohn Asset Management, and Mohn Financial Group sold unregistered securities and acted as an investment adviser and unregistered broker.
Previously, Kisor consented, without admitting or denying the allegations in the complaint, to an order permanently enjoining him from engaging in fraud in violation of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, Section 15(c)(1) of the Exchange Act and Rule 15c1-2 thereunder, and Sections 206 (1) and 206(2) of the Advisers Act; acting as an unregistered broker in violation of Section 15(a) of the Exchange Act; and selling unregistered securities in violation of Sections 5(a) and 5(c) of the Securities Act. The order against Kisor also provided that Kisor would disgorge all ill-gotten gains received by him as a result of the conduct alleged in the Commission's Complaint and that the Court would determine the specific amount of disgorgement, and whether and to what extent to impose civil penalties against Kisor, at a separate hearing upon due notice and motion by the Commission.
For further information, see Litigation Release No. 17856 (November 21, 2002).