U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19920 / November 21, 2006
Securities and Exchange Commission v. Spiro Germenis, et al.,, 06-CIV 6153 (LDW) (E.D.N.Y.)
SEC Freezes Assets of New York Hedge Fund Manager
The Securities and Exchange Commission has filed securities fraud charges against a New York investment adviser, Spiro Germenis, accusing him of stealing millions of dollars from investors, including many senior citizens. The complaint, filed on November 16, 2006 in the U.S. District Court for the Eastern District of New York, alleges that Germenis and two entities though which he operated, Oracle Services Inc., and Oracle Evolution LLC, diverted investors' funds for Germenis's own use. Germenis has now fled to Greece.
The court issued an order on November 17 freezing the assets of Germenis, Oracle Services, and Oracle Evolution, as well as the assets of two purported hedge funds the defendants managed, Oracle E Fund, LP and Oracle J Fund, LP, and their general partner, Oracle Evolution Capital LLC. The complaint names the two funds and the general partner as relief defendants.
The Commission's complaint alleges that Germenis and Oracle Evolution engaged in a fraudulent scheme to defraud the funds of their assets by withdrawing investors' money from the funds' brokerage accounts or otherwise diverting investors' fund contributions to his own use. The complaint also alleges that Germenis provided investment management and advisory services directly or through Oracle Services or Oracle Evolution to individual clients. Abusing these clients' trust, Germenis took their money for his own use. Over $6 million in client funds are now missing. In both aspects of the scheme, Germenis created phony or altered account statements that he provided to investors to conceal what he was doing with the money they had entrusted to him.
Based on this conduct, the complaint alleges that Germenis and Oracle Evolution violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint also alleges that Germenis, Oracle Services, and Oracle Evolution violated Sections 206(1) and 206(2) of the Investment Advisors Act of 1940 ("Advisers Act") and that Germenis aided and abetted Oracle Services' and Oracle Evolution's violations of Sections 206(1) and 206(2) of the Advisers Act. The Commission seeks emergency, preliminary and permanent injunctive relief, disgorgement of ill-gotten gains, civil penalties, and other relief.