U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20619 / June 16, 2008
Securities and Exchange Commission v. Stephen L. Hochberg, Civil Action No. 08-10848 (D. Mass.) (Woodlock, J.)
Stephen L. Hochberg Pleads Guilty to Defrauding Investors
The Securities and Exchange Commission announced that on June 13, 2008, Stephen L. Hochberg, an accountant turned business consultant and unregistered investment adviser, pled guilty to eight counts of wire fraud and nine counts of fraud in connection with the purchase or sale of a security in a plea agreement with the U.S. Attorney's Office in Boston, Massachusetts. On May 21, 2008, Hochberg was charged in a 17-count criminal information that alleged, among other things, that from in or about September 2002 and continuing through in or about August 2007, Hochberg obtained at least $1,541,500 from six investors for a purported real estate investment fund, Realty Funding LLC, that did not exist. The information also alleges that, in or about June 2003 and April 2004, Hochberg obtained a total of $150,000 from an elderly investor for a purported investment in a tax free investment fund. According to the information, in both schemes, Hochberg never invested any funds as he described and instead used the funds for his own personal expenses and business debts, including payments on outstanding promissory notes he owed to other investors, legal settlements with former business partners, ATM withdrawals, debits at convenience stores and markets, entertainment expenses, and personal travel and vacation expenses including travel to Cape Cod and Canada. The information further alleges that, to conceal his scheme to defraud, Hochberg also used personal funds, and funds he received from other investors, to make sporadic interest payments to some investors.
On May 21, 2008, the Commission filed a civil injunctive complaint in the U.S. District Court in Massachusetts alleging that Hochberg had violated 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's complaint sought 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's allegations arose from the same underlying conduct described in the criminal information. The Commission's action against Hochberg is still pending.
For further information, please see Litigation Release No. 20591 (May 21, 2008).