U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20201 / July 18, 2007
Securities and Exchange Commission v. Alan D. Libman, a/k/a Damian Vanderhaus, Civil Action No. 07-4634 (MMM/VBK) (C.D. Cal. July 18, 2007).
SEC Files Offering Fraud Action Against Alan D. Libman
The Securities and Exchange Commission announced that today it filed a civil action in the United States District Court for the Central District of California against Alan D. Libman ("Libman") alleging that Libman engaged in the fraudulent offer and sale of securities. As alleged in the complaint, Libman offered investors the opportunity to invest in purported celebrity-related and historical memorabilia and artwork through a non-existent entity called Investment Strategies. As alleged, the investments offered and sold by Libman were securities because they qualify as investment contracts under the federal securities laws.
The Commission alleges that Libman made numerous material misrepresentations to investors regarding the investments. For example, Libman often promised specific, large rates of return over brief periods. As alleged, Libman eventually stopped paying his investors the promised returns, evaded contact with them, and fled to Canada. The Commission alleges that, instead of using the investors' funds as he promised, Libman used their money for other purposes, including to cover his personal expenses and life style. According to the complaint, since the investments did not yield the claimed returns, investors lost most of their investments. As alleged, from 2000 through 2004, Libman's false representations led at least twenty investors to give him more than $1 million for the schemes that he carried out through Investment Strategies. According to the complaint, Libman, by soliciting investors, negotiating over investment terms, and representing that he would accept compensation for his efforts from the investment proceeds, acted as an unregistered broker. Libman also failed to register with the Commission any of the securities that he offered and sold to investors.
The complaint alleges that Libman violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b), 15(a)(1), and 15(b)(6)(B)(i) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5. The Commission seeks a permanent injunction, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties. The Commission also seeks a court order requiring Libman to provide an accounting for the receipt and disposition of all investor funds and an order requiring Libman to comply with an administrative broker-dealer bar order previously entered against him.
Libman has been the subject of prior Commission action. On May 26, 1992, in a settled action that the Commission brought, the U.S. District Court for the Central District of California enjoined Libman permanently from violating and/or aiding and abetting violations of the antifraud, securities registration, and other provisions of federal securities laws including, specifically, Sections 5(a), 5(c), and 17(a) of the Securities Act 15(c)(2), and 17(a) of the Exchange Act and Exchange Act Rules 10b-5, 10b-9, 15c2-4, 17a-3, and 17a-4. SEC v. Alan D. Libman, C.A. No. 88-5919 MR (1992). For additional information, see Litigation Release No. 11883 (October 5, 1988) and Litigation Release No. 13962 (February 4, 1994). On February 4, 1994, pursuant to a settlement with Libman, the Commission issued an Order permanently barring Libman from association with any broker, dealer, investment adviser, investment company, or municipal securities dealer based on the prior entry of the injunction against him. See In the Matter of Alan D. Libman, Admin. Proc. File No. 3-7803 (February 4, 1994).
On November 7, 2006, a Grand Jury sitting in the U.S. District Court for the Central District of California indicted Libman on multiple counts of mail fraud and money laundering. See United States v. Libman, 06 CR 835 (C.D. Cal., November 7, 2006). Libman was arrested on November 20, 2006 and remains in custody pending his criminal trial.
The Commission acknowledges the assistance of the United States Attorney's Office for the Central District of California, the United States Postal Service, and the Internal Revenue Service in this matter.