SEC v. Michael A. Bodanza, et al.
Case No. 12-cv-1954-CAB (N.D. Ohio)
On July 31, 2012, the Commission filed a complaint (the “Complaint”) against Michael A. Bodanza (“Bodonza”) and Preferred Financial Holdings Co., LLC (“Preferred Holdings”) (collectively, the “Defendants”) and named Preferred Drilling Co., LLC, Preferred Financial Investment Co., LLC, Preferred Financial Leasing Co., LLC, and Preferred Well Management Co., LLC as relief defendants (collectively, the “Relief Defendants”). The Complaint alleged fraudulent misrepresentations and omissions in connection with the unregistered offer and sale of securities by Bodanza, the former chief financial officer and a founding member of Preferred Holdings, a company formed in 2006 to engage in oil and gas exploration, drilling, and leasing through operating subsidiaries. The complaint alleged that, from June 2007 to August 2010, the Defendants raised at least $6,769,535 from at least 61 investors through the sale of unregistered Preferred Holdings promissory notes. See Complaint.
Preferred Holdings and the Relief Defendants were found jointly and severally liable for $4,485,647.00 in disgorgement and $268,143.00 in prejudgment interest. See Preferred Holdings’ Final Judgment and the Relief Defendants’ Final Judgment. On the same day, Preferred Holdings and the Relief Defendants each filed a voluntary petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio. See In re Preferred Financial Holdings Co., LLC, Case No. 12- 15508-JPS (Bankr. N.D. Ohio, filed July 27, 2012); In re Preferred Drilling Co., LLC, Case No. 12-15510-JPS (Bankr. N.D. Ohio, filed July 27, 2012); In re Preferred Financial Investment Co., LLC, Case No. 12-15511-JPS (Bankr. N.D. Ohio, filed July 27, 2012); In re Preferred Financial Leasing Co., LLC, Case No. 12-15512-JPS (Bankr. N.D. Ohio, filed July 27, 2012), and In re Preferred Well ManaKement Co., LLC, Case No. 12- 15514-JPS (Bankr. N.D. Ohio, filed July 27, 2012).
The Court found Bodanza liable for a total of $410,207.00 in disgorgement and prejudgment interest; however, the Court determined not to impose a civil penalty and waived all but $154,000.00 in disgorgement, which Bodanza has paid to the Commission. The Commission was ordered to hold all funds (“Fund”) and that it may propose a plan to distribute the Fund subject to the Court’s approval. See Bodanza’s Final Judgment.
On October 10, 2018, the Court entered an order appointing Miller Kaplan Arase LLP as the Tax Administrator for the Fund. See the Court’s Order.
On November 26, 2018, the Commission filed a motion seeking the appointment of Nancy Chase Burton, a Commission employee, as Distribution Agent for the Fund (the “Distribution Fund”) and approving a distribution plan (the “Plan”). See the Commission’s Motion and the Plan.
On December 11, 2018, the Court issued an order that approved the Plan and appointed Nancy Chase Burton as the Distribution Agent of the Distribution Fund. See the Court’s Order.
The Plan provides that the distribution of the Distribution Fund shall be made to the 55 investors harmed by the Defendant’s misconduct on a pro rata basis, as provided for in the Plan.
For more information, please contact the Commission:
Office of Distributions