U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20143 / June 5, 2007
SEC v. Amit Mathur, et al., (United States District Court for the District of Massachusetts, C.A. No. 05-10729MLW)
Court Enters Final Judgment Against Investment Adviser Accused of Misappropriating Client Funds
The Commission announced today that the Massachusetts federal district court entered a Final Judgment by consent on June 4, 2007 against defendant Rajeev Johar, of West Monroe, Louisiana, in connection with a civil injunctive action filed by the Commission against Johar, his partner, and Entrust Capital Management, Inc., a Worcester, Massachusetts-based investment advisory firm. The final judgment enjoined Johar, a principal of Entrust, from engaging in future violations of the antifraud provisions of the federal securities laws and ordered him to pay $446,276 in disgorgement, plus prejudgment interest of $58,557 and a civil penalty of $120,000.
The Commission originally filed its action against Entrust and others on April 12, 2005 and filed an amended complaint adding Johar as a defendant on September 14, 2005. The amended complaint alleged that, beginning in October 2000, Entrust, through Johar and another Entrust principal, raised more than $16 million from approximately twenty investors. The amended complaint also alleged that Johar, Entrust, and the other principal, dissipated nearly all of their clients' assets through undisclosed trading losses in Entrust's brokerage accounts, unauthorized use of investor funds to support Entrust's operating expenses, and misappropriation of client funds for personal use. The Commission's amended complaint further alleged that Johar, Entrust, and the other principal transferred at least $1 million in investor funds to AMR Realty LLC, which the Commission named as a relief defendant and alleged had no legitimate interest in the funds. The Court, on September 21, 2005, entered a preliminary injunction and asset freeze against Johar and earlier, on April 12, 2005, entered a temporary restraining order and asset freeze against Entrust and the other principal and an asset freeze against AMR Realty LLC.
The Final Judgment enjoined Johar from violating Section 10(b) of the Securities Exchange Act of 1934 and rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Judgment further ordered Johar to pay $446,276 in disgorgement, plus prejudgment interest of $58,557, and a civil penalty of $120,000.
For more information, see Litigation Release Nos. 19181 (April 13, 2005) and 19396 (September 27, 2005).