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SEC Brings Emergency Charges Involving Fraudulent Securities Sold on Craigslist

Scheme Also Put Municipal Employee Paychecks at Risk


Washington, D.C., May 14, 2009 — The Securities and Exchange Commission today charged two New Jersey men with orchestrating a fraudulent scheme that sold unregistered securities and commingled investor funds with their payroll service used by New Jersey municipalities and small businesses.

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The SEC alleges that Paul G. Bultmeyer and Arthur J. Piacentini carried out the fraud through their firms Sherbourne Capital Management, Ltd. and Sherbourne Financial, Ltd. by offering and selling so-called "Prime Certificates of Participation" they advertised in print publications as well as on Craigslist and other Internet sites.

According to the SEC's complaint, instead of safely investing the money as advertised in private placement debt, high-grade corporate bonds, preferred stock, and government securities, the defendants funneled the investor proceeds to themselves as well as a charter aviation company and a payroll services company that they operate with many New Jersey municipalities and small businesses as clients.

"By commingling the fraudulently raised investor funds with the accounts of the payroll services company and its clients, the defendants jeopardized both investor funds and the funds belonging to the payroll company's clients," said James Clarkson, Acting Director of the SEC's New York Regional Office. "The SEC is seeking remedies that will protect the interests of not just the defrauded investors but also the customers of the defendants' payroll business and their employees whom the fraud has put at grave risk."

The SEC has obtained an emergency court order freezing the defendants' assets to protect against further harm. Additionally, the Court ordered a receiver to take control of the operations of Sherbourne Capital, Sherbourne Financial and Ameripay LLC.

The SEC's complaint, filed in federal court in Newark, N.J., names the payroll services company (Ameripay, LLC) and the charter aviation company (Equitaire, Ltd.) as relief defendants in order to recover investor assets now in their possession.

The SEC alleges that the defendants raised more than $1.1 million from investors between December 2004 and March 2009. Instead of investing the money as promised, they transferred the bulk of the investor funds from Sherbourne's bank accounts to Ameripay's bank accounts. The Sherbourne investors were never informed that their funds were being transferred to Ameripay.

According to the SEC's complaint, the defendants targeted retirees in the scheme. Sherbourne Financial's web site described the firm as "Your Retirement Income Specialist" and advertised that its Prime Certificates of Participation were designed to yield higher interest rates than savings accounts, certificates of deposit, money market accounts, or mutual funds.

The SEC's complaint charges each of the defendants with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to the emergency relief, the SEC's complaint seeks permanent injunctions barring future violations of the charged provisions of the federal securities laws, disgorgement of the defendants' and relief defendants' ill-gotten gains plus pre-judgment interest, and financial penalties from the defendants.

The SEC acknowledges the assistance of the U.S. Attorney's Office for the District of New Jersey.

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For more information, contact:

Kay Lackey
Associate Director, SEC's New York Regional Office
(212) 336-0117

Sanjay Wadhwa
Assistant Director, SEC's New York Regional Office
(212) 336-0181

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Modified: 05/14/2009