UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Rel. No. 19519 / January 3, 2006
Court Enters Final Judgment by Consent Against Defendant Estate of Martin D. Fife
SEC v. Dennis S. Herula et al. (United States District Court for the District of Rhode Island, C.A. No. 02-154-ML)
The Commission announced that on December 30, 2005, a Rhode Island federal court entered a final judgment by consent against the Estate of Martin D. Fife, a defendant in a fraud action filed by the Commission in April 2002. The Commission alleged in its complaint that Fife, who passed away in April 2004, and others participated in a fraudulent offering scheme that raised at least $52 million from investors. In the consent judgment, the Court ordered Fife’s estate, which was substituted as a defendant subsequent to Fife’s death, to pay over $900,000 in disgorgement and prejudgment interest.
The Commission filed its action against Fife and eight other defendants and a relief defendant on April 1, 2002, alleging that Fife and others participated in a scheme that made fraudulent representations to investors about a purported high yield trading program that Fife operated through entities formerly known as Brite Business Corporation and Seaview Development & Holdings Ltd. The Commission alleged in its complaint that Fife was responsible for managing approximately $44.5 million of investor funds, over $17 million of which was not returned to investors. Among other things, the Commission’s complaint alleged that Fife made misrepresentations to a Brite Business investor by falsely promising the investor that Fife’s trading program had been successful and that the investor’s funds were safe, when in fact Fife had recently lost a significant amount of investor funds as part of his trading program.
Without admitting or denying the allegations in the Commission’s complaint, the Estate of Fife consented to a final judgment entered by the Court. The final judgment ordered Fife’s estate to pay disgorgement in the amount of $778,193, plus prejudgment interest in the amount of $153,200, for a total amount of $931,393.
For further information, please see Litigation Release Numbers 17514 (May 13, 2002) [preliminary injunction and asset freeze against Fife and others]; and 17461 (April 5, 2002) [temporary restraining order and asset freeze against Fife and others].