SEC v. Chamberlin, et al.
Case No. 03-cv-74983 (E. D. Mich.)
On December 11, 2003, the Commission filed a complaint against Donald F. Chamberlin ("Donald Chamberlin") and David N. Chamberlin ("David Chamberlin") (collectively, the "Defendants"). The complaint alleged from approximately July 1997 through August 2000, Donald Chamberlin and his now defunct investment advisory firm, solicited clients and others to invest in two separate fraudulent prime bank schemes, which raised approximately $7.6 million from at least 50 investors. The complaint also alleged that Donald Chamberlin made material misstatements and omitted to state material facts to investors regarding the existence and risk of prime bank securities, the rate of return on the two prime bank programs, and the use of investment proceeds. The complaint further alleged that David Chamberlin aided and abetted Donald Chamberlin's misconduct by, among other things, setting up and acting as a signatory on domestic and offshore bank accounts and lulling investors through unfounded assurances that the programs were performing well. See Complaint.
On June 22, 2004, pursuant to their consent and without admitting or denying the allegations against them, the Court entered a partial final judgment against the Defendants, which was amended on February 28, 2006. The amended partial final judgment permanently enjoined Donald Chamberlin from violating Sections 5(a), 5(c), 17(a)(1), Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 and permanently enjoined the Defendants from violating Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (the "Amended Partial Final Judgment"). See Defendant's Amended Partial Final Judgment.
On February 28, 2006, pursuant to his consent and without admitting or denying the allegations against him, the Court entered a final judgment as to David Chamberlin, which incorporated by reference the Amended Partial Final Judgment. The final judgment ordered David Chamberlin to pay a total of $37,145.34 in disgorgement, prejudgment interest, and a civil penalty. See David Chamberlin's Final Judgment.
On July 27, 2006, the Court entered a final judgment as to Donald Chamberlin, which required him to pay a total of $3,037,315.57 in disgorgement, prejudgment interest, and a civil penalty. The final judgment also granted the SEC's motion for establishment of a Fair Fund for the funds received by the Defendants. See Donald Chamberlin's Final Judgment.
David Chamberlin paid $37,145.34 as ordered (the "Fair Fund"); however, no funds were received from Donald Chamberlin.
On November 14, 2006, the Court appointed Damasco & Associates LLP as the Tax Administrator to fulfill the tax obligations of the Fair Fund. On March 6, 2007, the Court entered an order for the Clerk to pay the Tax Administrator $1,729.00 from the Fair Fund for fees and expenses incurred.
On April 13, 2007, the Court approved an Amended Order for Distribution of Funds to Investors and to Pay 2007 Fees and Expenses, which ordered the Clerk to disburse $33,489.18 to injured investors and to pay $1,567.19 in outstanding fees and expenses to the Tax Administrator. See Amended Order for Distribution of Funds to Investors and to Pay 2007 Fees and Expenses (posted without Exhibits to protect investors' privacy).
Consequently, all of the Fair Fund funds have been disbursed and the distribution in this case is closed, unless and until additional funds are received from Donald Chamberlin.