U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20591 / May 21, 2008
Securities And Exchange Commission v. Stephen L. Hochberg, Civil Action No. 08-10848 (D. Mass.) (Woodlock, J.)
SEC Charges Massachusetts Money Manager With Misappropriating Investor Funds From Elderly and Other Clients
The Securities and Exchange Commission today charged investment adviser Stephen Hochberg of Sudbury, Massachusetts with misappropriating over $1.7 million from clients and using the funds to pay off his own debts and to finance an expensive lifestyle.
The Commission's civil injunctive complaint, filed in the U.S. District Court in Massachusetts, alleges that, from as early as September 2002 to August 2007, Hochberg obtained at least $1.6 million from seven investors for a purported real estate investment fund, Realty Funding LLC, that did not exist. The complaint also alleges that, in June 2003 and April 2004, Hochberg obtained $150,000 from an elderly widow on fixed income for a purported investment in Massachusetts municipal bonds. According to the Commission's complaint, in both schemes, Hochberg, an accountant turned business consultant and unregistered investment adviser, never invested any funds and used most of the investor funds to pay his debts, to make payments to past investors or others who were threatening to sue or had sued him, and to pay various personal expenses, including payments to lawyers, credit card companies, and car payments. The Complaint further alleges Hochberg spent investor funds on liquor store purchases, sporting events, and a clown and a juggler.
The Commission's complaint charges Hochberg with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission is seeking a permanent injunction, disgorgement of ill-gotten gains plus prejudgment interest, civil penalties, and an order barring Hochberg from serving as an officer or director of a public company.
The Commission acknowledges the cooperation of the United States Attorney's Office for the District of Massachusetts, the Federal Bureau of Investigation, and the Massachusetts Securities Division in this matter.