U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19346 / August 23, 2005
Securities and Exchange Commission v. Frank D. Gruttadauria, DH Strategic Partners, Inc., JYM Trading Trust, Laurene English, Defendants, and Sarah Z. Emamy, Charlie Whiskey, LLC, and Margo Gruttadauria, Relief Defendants, Civil Action No. 1:02CV324 (N.D. Ohio) (Judge Gaughan)
FORMER GRUTTADAURIA ASSISTANT LAURENE ENGLISH ENJOINED IN CIVIL FRAUD ACTION AND BARRED FROM SECURITIES INDUSTRY
The Securities and Exchange Commission announced today that it has settled its pending fraud litigation against Laurene U. English, the longtime sales assistant to broker Frank D. Gruttadauria. Under the terms of the final judgment, signed by U.S. District Court Judge Patricia A. Gaughan, English is permanently enjoined from violating the antifraud provisions of the federal securities laws and ordered to pay disgorgement and prejudgment interest. Further, in a separate administrative proceeding, the Commission today barred English from the securities industry.
The Commission originally sued Gruttadauria in February 2002 for perpetrating a massive fraud over a fifteen-year period against scores of his customers. In June 2002, the Commission filed an amended complaint alleging that English aided and abetted Gruttadauria's scheme. In the amended complaint, the Commission alleged that English knowingly provided substantial assistance to Gruttadauria by, among other things, assisting in the preparation of false account statements, providing false information to clients regarding the values of their accounts, processing withdrawal requests for clients whose accounts had been depleted, and facilitating unauthorized transfers of funds.
The final judgment entered on August 17, 2005 in the United States District Court for the Northern District of Ohio permanently enjoins English from future violations of Sections 17(a)(1), (2) and (3) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The Court ordered that English pay $55,000 of the $114,847 in disgorgement and prejudgment interest for which she is liable, but waived the remaining amount and did not order a civil penalty based on English's sworn financial statements.
Based on the entry of the injunctions, the Commission today issued an Order Instituting Administrative Proceedings Pursuant to Sections 15(b) and 15B(c)(4) of the Exchange Act and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (Order) against English. The Commission ordered that English be barred from association with any broker, dealer, municipal securities dealer, or investment adviser.
English consented to both the filing of the final judgment in the civil injunctive action and the issuance of the Commission's Order.
In March 2004, the Court permanently enjoined Gruttadauria and two entities that he created to facilitate his fraud from violating certain antifraud provisions of the federal securities laws. The Court also ordered Gruttadauria to disgorge monies he misappropriated and compensation he received during the fraud. In a separate administrative proceeding, the Commission barred Gruttadauria from associating with any broker, dealer, municipal securities dealer, or investment adviser. Gruttadauria is presently serving a seven-year term in federal prison.
For further information, see Litigation Release Nos. 17369 (February 21, 2002), 17418 (March 18, 2002), 17590 (June 27, 2002) 18549 (January 21, 2004), and 18678 (April 23, 2004), and Administrative Procedure Releases Nos. 48335 and 48336 (August 14, 2003) and 49589 (April 21, 2004).