SEC v. David S. Haddad, et al.
Case No. 3:18-cv-00055-WWE (D. Conn.)
On January 11, 2018, the SEC filed a complaint (“Complaint”) against David S. Haddad (“Haddad”), Trafalgar Square Risk Management, LLC (“Trafalgar”), and New England RE, LLC (“New England RE”) (collectively, the “Defendants”). In summary, the Commission alleged in the Complaint that Haddad operated two companies in the re-insurance industry, Trafalgar and New England RE. Haddad allegedly began raising money from investors through the offer and sale of unregistered securities in Trafalgar in or before 2012. He began offering unregistered New England RE securities to investors in late 2014 and, through the Trafalgar and New England RE offerings, raised at least $2.5 million from at least 29 separate investors. The Complaint alleges that, while making these offers and sales, Haddad, individually and on behalf of Trafalgar and New England RE, made various misleading claims to investors about the use of their funds. According to the Complaint, Haddad led investors to believe that their funds would be used to build and grow Trafalgar and New England RE when, in fact, Haddad diverted a significant portion of the investors' money for his own purposes, including the purchase of multiple homes, art and antiques, entertainment, and expenses of a dog rescue charity founded by Haddad. Haddad also used some investors' money to make Ponzi-like payments to other investors. The Complaint alleges that the money Haddad used to support his lifestyle far exceeded Trafalgar's revenues. See the Complaint.
The Commission alleged that the Defendants violated Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78j(b), and Exchange Act Rule 10b-5, thereunder, 17 C.F.R. § 240.10b-5. Without admitting or denying the allegations of the Complaint, the Defendants consented to the entry of final judgments permanently enjoining them from violations of these laws.
On January 18, 2018, the Court entered Final Judgments against the Defendants. The Final Judgments held that Haddad and Trafalgar were jointly and severally liable to pay a total of $644,514.26 in disgorgement and prejudgment interest, pursuant to a payment schedule consisting of four installments within a nine-month period of the entry of the Final Judgments. The ordered amount of $644,514.26 consists of $619,382.43 in disgorgement plus prejudgment interest of $25,131.83. Further, Haddad and New England RE were ordered to pay, jointly and severally, a total of $271,672.66 pursuant to a payment schedule within a one-year period of the entry of the Final Judgments. The ordered amount of $271,672.66 consists of $269,080 in disgorgement, plus prejudgment interest of $2,592.66. In addition, Haddad was ordered to pay a civil monetary penalty of $181,071 within a one-year period of the entry of the Final Judgment and was permanently barred, prohibiting him from acting as an officer or director of a publicly-traded company. See Haddad’s Final Judgment; Trafalgar’s Final Judgment; and New England RE’s Final Judgment.
On May 24, 2018, the Commission filed a motion to establish a fair fund, appoint a tax administrator, appoint a distribution agent, approve the proposed plan of distribution, disburse funds, and authorize the payment of taxes and fees, together with the proposed plan of distribution (the “Plan”). See Motion, Memorandum of Law, and the Plan (Plan substituted to fix scrivener’s error on June 7, 2018).
On August 13, 2018, the Court issued an order to establish a fair fund, appoint a tax administrator, appoint a distribution agent, approve the proposed plan of distribution, disburse funds, and authorize the payment of taxes and fees. The Order directed disbursement of funds from the Fair Fund for distribution to the eligible customers in accordance with the Plan and appointed Sondra Panahi, a Commission employee, as the Distribution Agent of the Fair Fund. See the Court's Order.
For more information, please contact the Distribution Agent:
Office of Distributions