U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19181 /April 13, 2005
SEC v. Amit Mathur, et al., (United States District Court for the District of Massachusetts, C.A. No. 05-10729MLW, filed April 12, 2005)
Commission Obtains Temporary Restraining Order and Asset Freeze Against Massachusetts Investment Adviser Accused of Misappropriating Millions from Clients
The Commission announced today that it has obtained a temporary restraining order, asset freeze, and other emergency relief in a civil fraud action filed against Amit Mathur, a Shrewsbury, Massachusetts resident, and Entrust Capital Management, Inc., Mathur's Worcester, Massachusetts-based investment advisory firm. The Commission's complaint, which was filed in Massachusetts federal district court, alleges that Mathur, through Entrust, misappropriated at least $3.1 million in client funds for personal gain, and made material misrepresentations to investors about the performance and value of their accounts. The Commission also obtained an asset freeze against another Mathur-controlled firm, AMR Realty, LLC concerning its receipt of approximately $1 million in investor funds.
According to the Commission's complaint, beginning in September 2001, Entrust, through Mathur, raised almost $16 million from approximately fifteen investors. The complaint alleges that Entrust and Mathur, however, have dissipated nearly all of their clients' assets through undisclosed trading losses in Entrust's brokerage account, unauthorized use of investor funds to support Entrust's operating expenses, and blatant misappropriation of client funds for personal use. According to the complaint, Mathur used the misappropriated client money to, among other things, buy a Porsche sports utility vehicle, tens of thousands of dollars in jewelry, and New England Patriots season tickets; pay for millions of dollars in personal expenses; and fund several gambling trips. The complaint also alleges that Mathur and Entrust told at least four of their clients that they were making double-digit annual returns on their investments, when in fact, Entrust and Mathur had dissipated nearly all of their money.
The Commission alleges in its complaint that Mathur and Entrust violated the antifraud provisions of the federal securities laws, namely, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission also named as a relief defendant another Mathur-controlled firm, AMR Realty. The complaint alleges that Entrust and Mathur transferred at least $1 million in investor funds to AMR Realty. The Commission alleges AMR Realty has no legitimate interest in those funds and that it should not be allowed to retain them.
The Commission asked the court to enter emergency relief against Mathur and Entrust on the grounds that their fraud is ongoing and because they continue to hold investors funds. The Commission obtained entry of an order temporarily restraining Mathur and Entrust from directly or indirectly continuing to violate the federal securities laws, and an asset freeze against Mathur, Entrust, and AMR Realty. The court also granted other emergency relief, including repatriation of all assets obtained from investors that may presently be located outside of the United States and an order prohibiting the destruction of relevant documents. The hearing on the Commission's motion for a preliminary injunction is scheduled for April 19, 2005 at 10:00 a.m.
The Commission acknowledges the assistance of the United States Immigration and Customs Enforcement in its investigation.