SEC v. Spiro Germenis, et al.
Case No. 06-cv-06153-LDW-ETB (E.D.N.Y.)
On November 16, 2006, the Commission filed a complaint against Spiro Germenis (“Germenis”), Oracle Services, Inc. (“Oracle Services”), and Oracle Evolution, LLC (“Oracle Evolution”) (collectively, the “Defendants”) and Oracle E Fund, LP (“E Fund”), Oracle J Fund, LP (“J Fund”), and Oracle Evolution Capital LLC (“Oracle Capital”) (collectively, the “Relief Defendants”). The Commission alleged that Germenis and two entities through which he operated, Oracle Services and Oracle Evolution, diverted investors’ funds for Germenis’ own use, and that Germenis then fled New York. The Commission further alleged that Germenis solicited investments in certain funds he was sponsoring, but instead of depositing the investments into the funds' brokerage accounts, Germenis diverted the investors' funds to his own use. The Commission also alleged that Germenis provided investment management and advisory services for individual clients, but abused those clients' trust by taking money from their accounts for his own use. Finally, the Commission alleged that Germenis created phony or altered account statements that he provided investors to conceal his misuse of the money entrusted to him. In total, over $6 million in investors’ funds went missing. See Complaint.
On July 7, 2008, the Court entered a final judgment by default against the Defendants and Relief Defendants, which was amended by the Court on October 2, 2008. The amended final judgment permanently enjoined Germenis and Oracle Evolution from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, as well as Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and permanently enjoined Oracle Services from future violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Court also ordered the Defendants and Relief Defendants to pay $7,705,249.83, representing undisgorged profits of $6,500,000 gained as a result of the conduct alleged in the complaint, with prejudgment interest of $1,205,249.83; and ordered Germenis and Oracle Evolution each to pay a civil penalty of $480,000.00, and Oracle Services to pay a civil penalty of $240,000.00. See Amended Final Judgment by Default.
Pursuant to the amended final judgment and further order of the Court, the Defendants and Relief Defendants’ frozen assets were transferred to an account held by the Court, which comprised the distribution fund (the “Distribution Fund”).
On May 23, 2012, the Commission filed a second motion for approval of a proposed distribution of the Distribution Fund, together with the proposed distribution plan (“Distribution Plan”). See Second Notice of Motion for Approval of Distribution Plan and Distribution Plan On October 10, 2012, the Court approved the Distribution Plan. See Order Approving Distribution Plan.
Pursuant to the final judgment and further order of the Court, additional funds were added to the Distribution Fund. Consequently, on April 7, 2015, the Commission filed a motion for approval of a supplemental distribution plan, together with a proposed supplemental distribution plan (“Supplemental Distribution Plan”). See Notice of Motion for Approval of Supplemental Distribution Plan. On April 10, 2015, the Court approved the Commission’s motion and approved the Supplemental Distribution Plan. See Order Approving Supplemental Distribution Plan.
On December 22, 2016, the Commission filed a motion to disburse the remaining funds for the payment of taxes, the tax administrator, and Investor #4 and discharge the fund and tax administrators. See SEC’s Motion. On January 3, 2017, the Court granted the Commission’s motion and entered an order approving it. See Court’s Order.