UNITED STATES SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 45690 / April 4, 2002
File No. 3-10748
ADMINISTRATIVE PROCEEDINGS INSTITUTED AGAINST JOAO P. SANTOS BASED ON HIS CRIMINAL CONVICTION
The Securities and Exchange Commission ("Commission") announced that it has instituted public administrative proceedings against Joao P. Santos, of Philadelphia, Pennsylvania. From November 1997 to June 1999, Santos was a registered representative associated with First Liberty Investment Group, Inc. ("First Liberty"), a broker-dealer registered with the Commission.
The Commission's Order Instituting Public Administrative Proceedings ("Order") alleges that on January 8, 2001, in the case of United States of America v. Joao Santos, Crim. No. 00-762, in the United States District Court for the Eastern District of Pennsylvania, Santos pled guilty to one count of mail fraud (18 U.S.C. 1341), and was subsequently sentenced to five years probation, fined $10,000 and ordered to make restitution of $12,890. The criminal information alleged that, between September 1998 and June 1999, while employed at First Liberty, Santos improperly diverted approximately $108,000 in customer funds and converted them for his personal use. As part of the fraud, Santos caused monthly account statements to be sent to post office boxes which he had leased so that customers would not learn that Santos had taken the funds which they had invested with First Liberty. He then orally informed the customers whose statements had been diverted that their investments were earning money, and/or delivered false monthly statements to them reflecting gains on the accounts.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Santos an opportunity to dispute these allegations, and to determine what sanctions, if any, are appropriate and in the public interest.
In a related matter, the Commission also filed a civil injunctive action today in the United States District Court for the Eastern District of Pennsylvania, naming as defendants Santos and two companies owned and controlled by him, PinPoint Media, Inc. and Luxury Superstore, Inc. The Commission's complaint alleges that, from at least July 1999, one month after being terminated by First Liberty, until at least March 2001, Santos, by and through the corporate defendants, engaged in a fraudulent scheme to convert for his personal use more than $483,000 solicited and received from four investors for the supposed purpose of purchasing stock of publicly traded companies or investing in Santos's personal business.
For further information, see Litigation Release No. 17457.