SEC v. Karroum, et al.
Case No. 17-cv-187 (E.D. Va.)
On February 16, 2017, the Commission filed a complaint (the “Complaint”) against Steve H. Karroum a/k/a Mustapha Karroum (“Karroum”) and FX & Beyond Corporation (“FX”) (collectively, the “Defendants”) and named Karroum’s wife, Sahar Karroum, as a relief defendant. The Complaint alleged that, from at least December 2007 through May 2014, the Defendants violated the federal securities laws when they solicited approximately $4 million from at least 18 investors in the U.S. under false pretenses, promising that the funds would be used for forex trading and would be kept safe. Instead, Karroum misappropriated the funds to make Ponzi-like payments to investors, unrelated business expense payments, and for personal use. See the Complaint.
Upon notice of Karroum’s death, the Court substituted Sahar Karroum, in her capacity as successor to Karroum, as a defendant in this action. FX was ordered to pay a total of $1,392,656.21 in disgorgement, prejudgment interest, and civil penalty and Prudential Insurance Company was ordered to transfer $1,392,656.21 of the proceeds from Karroum’s life insurance policy to the Commission in satisfaction of FX’s liability. The Court ordered the Commission to hold all funds (the “Fund”) pending further order of the Court. See the Defendants’ Final Judgment.
On November 2, 2018, the Court entered an order appointing Miller Kaplan Arase LLP as Tax Administrator, charged with fulfilling the tax obligations of the Fund. See the Court’s Order.
On March 7, 2019, the Commission filed a motion for an order establishing a Fair Fund, approving a distribution plan (the “Plan”), and appointing a distribution agent. The Commission sent notice of this motion and the Plan to all identified investors, providing to them an opportunity to object to the Plan. See the Commission’s Motion with the Plan and Plan Notice.
On April 11, 2019, the Commission filed a notice informing the Court that the objection period had expired and that it had received no objections to the Plan. See the Commission’s Notice.
Also on April 11, 2019, the Court entered an order establishing a Fair Fund for the monies in the Fund, approved the Plan, and appointed Catherine E. Pappas, a Commission employee, as the Distribution Agent of the Fair Fund. See the Court’s Order
On April 25, 2019, the Commission filed a Notice of Payments Pursuant to Approved Distribution Plan, listing, by investor notice the payments made. See the Commission’s Notice.
The distribution in this case was closed on October 23, 2019, when the Court granted the Commission’s motion and entered an order approving the final accounting, discharging the Distribution Agent, and related relief. See the Court’s Order.