U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20066 / April 2, 2007
SEC v. Steven E. Thorn, et. al, (U.S.D.C. S.D. Ohio, Civil Action 01-CV-290, filed April 2, 2001)
The Securities and Exchange Commission (Commission) announced that on March 21, 2007, Steven E. Thorn (Thorn), one of several defendants in a $75 million offering fraud that the Commission halted in April 2001, was sentenced to 97 months incarceration, based upon his guilty plea to charges of one count of conspiracy, three counts of securities fraud, and one count of tax evasion brought by the United States Attorney's Office for the Northern District of Ohio. In addition to incarceration, the Court also ordered Thorn to pay $7.4 million in restitution to victims of the scheme.
Thorn's sentence was based upon criminal charges arising from the same misconduct that led to the Commission's action filed in April 2001. According to the indictment, from December 1997 through April 2001, Thorn, directly and through other others, raised approximately $75 million from investors through the through the offer and sale of investments in purported European bank trading programs invested in medium-term notes. Thorn and others told investors that there was little or no risk in the investment and promised monthly returns ranging from 3 to 100 percent. They also represented to investors that the Federal Reserve was involved in these trading programs when in reality it was not. Rather than using the funds to make any investment, Thorn instead used investor monies to pay for his extravagant lifestyle which included mortgage payments, luxury car leases, and lavish vacations, and to operate a massive Ponzi scheme in which investors were paid a purported return with money obtained from other investors.
On April 2, 2001, the Commission filed a Complaint against Thorn and others and obtained a temporary restraining order and asset freeze against him and his related entities. On February 28, 2007, the Commission obtained a Final Judgment against Thorn in which he was permanently enjoined from future violations of the antifraud and broker-dealer registration provisions of the securities laws and ordered to pay $5,070,395 in disgorgement, $1,802,132 in pre-judgment interest, and a $1 million civil penalty.