SEC v. Discover Capital Holdings Corp., et al.
Case No. 03-cv-01496-RMC (D.D.C.)
On July 9, 2003, the Commission filed a complaint against Discover Capital Holdings Corp. ("Discover"), Indianapolis Securities, Inc. ("Indianapolis Securities"), Eli Dinov, Ari Dinov, David Rubinov (a/k/a David Rubin), and Stronghold Associates, Inc. ("Stronghold") (collectively, the "Defendants"). The complaint alleged that Eli Dinov, his brother, Ari Dinov, and David Rubinov used spam e-mail touts and misleading, high pressure sales calls to raise more than $1.1 million through the sale of private placement shares in Discover, a company controlled by the individual defendants, through Discover's wholly-owned broker-dealer subsidiary, Indianapolis Securities, and managed by Stronghold's consulting services. See Complaint.
On March 19, 2004, David Rubin was ordered to pay $481,304.66 in disgorgement, prejudgment interest and civil penalties. See David Rubin's Final Judgment. The Court also entered a final judgment against Stronghold without ordering monetary sanctions.
On November 19, 2004, Eli Dinov was ordered to pay $3,050.43 in disgorgement and prejudgment interest; Ari Dinov was ordered to pay $230,713.58 in disgorgement, prejudgment interest and civil penalties; and, Discover Capital Holdings Corp. was found liable for $1,031,986.74 in disgorgement and prejudgment interest, waiving all but $481,000.00 or the total amount held in its attorney's escrow account, representing the funds frozen by the Court's Order of July 9, 2003, as modified by the Court's July 15, 2003 Order and subsequent Orders of the Court. See Eli Dinov's Final Judgment, Ari Dinov's Final Judgment, and Discover's Final Judgment. The Court also entered a final judgment against Indianapolis Securities and waived all monetary sanctions.
Collectively, the Defendants paid a total of $1,107,078.69 of disgorgement, prejudgment interest, and civil penalties (the "Distribution Fund").
On June 15, 2005, the Court appointed Damasco & Associates LLP as the Tax Administrator to fulfill the tax obligations of the Distribution Fund.
On December 14, 2005, the Court appointed Nancy Grunberg, Esquire, of the law firm of Venable, LLP, as Distribution Agent of the Distribution Fund.
On June 7, 2006, the Commission filed a motion to direct a plan of distribution. See the Commission's Motion. On July 10, 2006, the Court entered an order approving the distribution plan. See Court's Order dated July 10, 2006.
On December 14, 2007, the Distribution Agent filed an unopposed motion to disburse $965,810.57 from the Distribution Fund to Investors as detailed in Exhibit A. See Distribution Agent's Motion (posted without Exhibits to protect investors' privacy). On January 2, 2008, the Court granted the Distribution Agent's motion and entered an order to disburse $965,810.57 from the Distribution Fund to Investors. See Order Approving Disbursement.
In 2009, additional funds of $120,504.92 were deposited into the Distribution Fund. On November 15, 2011, the Distribution Agent filed an unopposed motion to authorize a supplemental distribution to disburse $321,936.88 from the Distribution Fund to Investors as detailed in Exhibit A. See Motion to Disburse (posted without Exhibits to protect investors' privacy). On November 16, 2011, the Court granted the Distribution Agent's motion for a supplemental distribution to Investors from the Distribution Fund of $321,936.88.
Due to the departure of Nancy Grunberg, Esquire, from Venable, LLP the Court entered an order on February 12, 2016, substituting Venable, LLP as the new Distribution Agent of the Distribution Fund. Venable, LLP was ordered all of the rights and duties as set forth in the Court's December 14, 2005 Order.
On January 5, 2018, the Commission filed a motion for an order for the Clerk of Court to transfer additional funds from the CRIS to the Distribution Agent for the final distribution to Investors. See the Commission’s Motion. On January 9, 2018, the Court entered an order granting the Commission’s Motion. See the Court’s Order.
For more information, please contact the Distribution Agent:
Joanna P. Breslow Boyd, Esq.
Telephone Number: 202-344-4751