SEC v. United Rentals, LLC, et al.
Case No. 08-cv-01354-CFD (D. Conn.)
SEC v. Nolan
Case No. 07-cv-01833-AVC (D. Conn.)
SEC v. Apuzzo
Case No. 07-cv-01910-CFD (D. Conn.)
SEC v. Milne
Case No. 08-cv-00505-EBB (D. Conn.)
SEC v. Terex Corporation
Case No. 09-cv-01281-AWT (D. Conn.)
On September 8, 2008, the Commission filed a complaint against United Rentals, Inc. (“URI”). The complaint alleged that, from late 2000 through 2002, URI engaged in a series of fraudulent transactions undertaken in order to meet URI's earnings forecasts and analyst expectations. The fraud was accomplished primarily through a series of interlocking three-party sale-leaseback transactions orchestrated by URI's then- Chief Financial Officer, Michael J. Nolan (“Nolan”), and its then- Chief Acquisitions Officer, John N. Milne (“Milne”). The complaint further alleged that, that from 1997 to 2000, during a period of enormous growth through acquisitions, URI engaged in other improper accounting practices involving its valuations of acquired assets, use of acquisition reserves, and accounting for customer relationships as well as improperly accounting for other items that overstated net income, including its estimation and recording of self-insurance reserves, its recognition of equipment rental revenues, and its income tax accounting. See URI’s Complaint.
Prior to that, on December 12, 2007 and April 4, 2008, the Commission filed complaints against Nolan and Milne, respectively, for their wrongdoings associated with URI’s violations. See Nolan’s Complaint and Milne’s Complaint. Additionally, on December 27, 2007, the SEC filed a complaint against Joseph F. Apuzzo (“Apuzzo”), former Chief Financial Officer of Terex Corporation, Inc. (“Terex”), for aiding and abetting the securities law violations of URI and Nolan. See Apuzzo’s Complaint. Then later, on August 12, 2009, the Commission filed a complaint against Terex for accounting fraud for making material misstatements in its own financial reports to investors, as well as aiding and abetting in URI’s fraudulent accounting scheme. See Terex’s Complaint.
On September 19, 2008, URI was ordered to pay a total of $14,000,001.00 in disgorgement and civil penalties. The Clerk was ordered to hold the funds in an interest bearing account with the Court Registry Investment System (collectively, the “Fund”), pending further order of the Court. See URI’s Final Judgment.
On August 20, 2009, Terex was ordered to pay a total of $8,000,001.00 in disgorgement and civil penalties. Terex’s final judgment ordered for $3,000,000.00 to be paid directly to the Commission for transfer to the United States Treasury. The remaining $5,000,001.00 was ordered to be paid into the Fund. See Terex’s Final Judgment.
On October 6, 2009, the Court appointed Damasco & Associates LLP, as the Tax Administrator to fulfill the tax obligations of the Fund.
On October 14, 2009, Milne was ordered to pay a total of $6,250,000.00 in disgorgement and prejudgment interest over the course of 3 years. Milne’s payments were ordered to be paid into the Fund. See Milne’s Final Judgment.
On January 10, 2011, the Commission filed a motion, together with a memorandum of support to approve a fair fund distribution to investors and appoint a fund administrator. The memorandum of support noted that as of its filing, URI had paid $14,000,001.00, Milne had paid $1,000,000.00, and Terex had paid $5,000,001.00 into the Fund for a total of $20,000,002.00, and the Nolan and Apuzzo actions were still being litigated. The Commission requested that a fair fund be established for the funds paid and to be paid from defendants in related actions, proposed Gilardi & Co., LLC (“Gilardi”) as the fund administrator, and proposed a plan of distribution. See SEC’s Motion and Memorandum of Law in Support of its Motion.
On January 28, 2011, the Court granted the Commission’s motion and entered an order that established a fair fund (“URI Fair Fund”) to distribute the payment of disgorgement and civil penalties made by URI and defendants in other, related actions, appointed Gilardi as the Fund Administrator to oversee the administration and distribution of the URI Fair Fund, and approved the plan of distribution (“Distribution Plan”) as detailed in the Order. See Order Approving a Fair Fund Distribution to Investors and Appointing a Fund Administrator.
The Distribution Plan provides that the distribution of the URI Fair Fund shall be made on a pro rata basis to Authorized Claimants, who were harmed by the defendants’ misconduct and suffered a net loss.
On July 18, 2012, the Commission filed a motion to pay the outstanding fees of the Fund Administrator and to disburse the URI Fair Fund, less a $350,000.00 reserve, to the Fund Administrator for distribution to the Authorized Claimants. See Motion for Distribution of Fair Fund and Approval of Fund Administrator Fees. On July 26, 2012, the Court granted the Commission’s motion and entered an order to disburse the URI Fair Fund. See the Court’s Order.
On July 23, 2012, Nolan was found liable for a total of $3,142,000.00 in disgorgement and prejudgment interest; however, the entire amount was waived based on his Statement of Financial Conditional. See Nolan’s Final Judgment.
On September 8, 2015, Apuzzo was ordered, and paid a $100,000.00 civil penalty into the URI Fair Fund. See Apuzzo’s Final Judgment.
On August 16, 2016, the Commission filed a motion for a second disbursement of the URI Fair Fund, less a 5% reserve, to the Fund Administrator for distribution to the Authorized Claimants. See Motion for Transfer of Fair Fund for Distribution to Investors. On September 29, 2016, the Court granted the Commission’s motion and entered an order to disburse the URI Fair Fund. See the Court’s Order.
For more information, please contact the Fund Administrator: