SEC v. Vitesse Semiconductor Corporation, et al.
Case No. 10-cv-09239-JSR (S.D.N.Y.)
On December 10, 2010, the SEC filed a complaint against Vitesse Semiconductor Corporation (“Vitesse”); its co-founder and former chief executive office, Louis R. Tomasetta (“Tomasetta”); its former chief financial offer and executive vice president, Eugene F. Hovanec (“Hovanec”); its former controller and chief financial officer, Yatin D. Mody (“Mody”); and, its former manager and director of finance, Nicole R. Kaplan (“Kaplan”) (collectively, the “Defendants”). The complaint alleged that, from during 1995 through April 2006, the Defendants perpetrated fraudulent and deceptive schemes to inflate revenue from shipment of Vitesse's products and to backdate stock options to employees and officers by failing to record millions of dollars of compensation expense. See Complaint.
Vitesse was ordered to pay a $3,000,000.00 civil penalty, and 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 Vitesse’s Final Judgment. Mody, Kaplan, Tomasetta, and Hovanec (collectively, the “Individual Defendants”) were ordered to pay a total of $3,267,587.00 in disgorgement, prejudgment interest, and penalties, and each were ordered to make their payments to the SEC. See Mody’s Final Judgment, Kaplan’s Final Judgment, Tomasetta’s Final Judgment, and Hovanec’s Final Judgment.
On January 11, 2016, the Court entered an order establishing a Fair Fund for the $3,000,000.00 paid by the Vitesse, appointed Damasco & Associates LLP as the Tax Administrator to fulfill the tax obligations of the Fair Fund, and appointed Berdon Claims Administration LLC (“Berdon”) as the Distribution Agent to oversee the administration and distribution of the Fair Fund to harmed investors. See Order to Establish a Fair Fund, Appoint a Tax Administrator and Appoint a Distribution Agent.
On October 19, 2016, the SEC filed a motion to establish a Fair Fund for the $359,815.00 paid by the Individual Defendants with the Fair Fund previously established for the funds paid by Vitesse, and approve a distribution plan, together with the distribution plan. See the SEC’s Motion and Distribution Plan.
On October 25, 2016, the Court granted the SEC’s motion and entered an order to establish a Fair Fund, combine the Fair Funds and approved the Distribution Plan. See Order Approving Distribution Plan.
The Distribution Plan adopted the same distribution plan as approved in the class action, Grasso v. Vitesse Semiconductor Corporation, et al., Case No. 06-cv-2639-R (C.D. Cal.). The harmed investors to be compensated are the same investors which have already been identified in the class action, in which Berdon also serves as the distribution agent in that matter. Because the Eligible Recipients in both the class action settlement and the SEC’s settlement are the same, the Distribution Agent will make one mailing to the Eligible Receipients of money obtained from both the class action settlement and the SEC’s settlement.
On January 18, 2017, the SEC filed a motion to turnover the assets of the Fair Fund, totaling approximately $2,989,989.00, plus accrued interest, minus court registry fees to the Distribution Agent for distribution to the Eligible Recipients in accordance with the Distribution Plan. See the SEC’s Motion and Memorandum in Support. On January 20, 2017, the Court granted the SEC’s motion. See the Court’s Order.
On February 28, 2017, the Clerk of the Court disbursed $2,999,023.45 to the Distribution Agent for distribution to Eligible Recipients in accordance with the Distribution Plan.
For more information, please contact the Distribution Agent: