U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20928 / March 5, 2009
Securities and Exchange Commission v. Zahra Ghods and RUSA Cap., Inc., Defendants, and Unisource Cap., LLC, Relief Defendant, Civil Action No. 1:07-CV-1047-CC (N.D. Ga.)
The Securities and Exchange Commission ("Commission") announced today that on February 26, 2009, United States District Court Judge Clarence B. Cooper granted the Commission's motion for summary judgment on its claims against Zahra Ghods ("Ghods"), and RUSA Cap., Inc. ("Rusa Cap"). Ghods and Rusa Cap, a company that she controls, were found to have defrauded investors in connection with Ghods's false promises to earn generous returns for investors in "prime bank" instruments. The Court ordered Ghods to pay disgorgement of $4,045,736, prejudgment interest of $810,121, and a $120,000 civil penalty. In addition, the Court ordered Rusa Cap to pay a civil penalty of $600,000. The Court also enjoined Ghods and Rusa Cap from further violations of the federal securities laws.
The Court found that Ghods and Rusa Cap violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder by actively and knowingly participating in certain fraudulent "prime bank" schemes perpetrated by Geoffrey Gish ("Gish"). Gish and the companies that he operated were the subject of a separate enforcement action in SEC v. Geoffrey Gish; Weston Rutledge Financial Services, Inc.; Zamindari Capital, LLC; Lexington International Fund, LLC; and Oxford Adams Capital, LLC, Case No. 1:06-CV-1171-CC (N.D. Ga.), in which a final judgment was entered on June 15, 2007. The Complaint against Gish alleged that he sold unregistered securities to investors through fraudulent misrepresentations and omissions of material fact, and that the investment programs offered through the three defendant companies operated as Ponzi schemes.
In awarding summary judgment in favor of the Commission, the Court found that Ghods made material misrepresentations concerning: (1) the placement of investor funds in supposedly "blocked" accounts; (2) the supposed use of the proceeds for investment in risk-free medium term bank notes, (3) the supposed profitability of investing in such bank notes, (4) the investors' supposed inability to access investment funds that had been sent out of the country due to the Patriot Act, (5) the supposed safety and security of the investors' funds following their unauthorized removal by an associate of Ghods from an account in the Republic of San Marino to an unknown account in Austria; (6) Ghods's non-existent $100 million certificate of deposit at the Canadian Imperial Bank of Commerce ("CIBC") as security for the investments and Ghods's non-existent account at CIBC in "the high ten figures;" and (7) the supposed availability as security for the investments of iron ore in mines in Mexico that Ghods claims to own.
See also: L.R. 20111 (May 10, 2007).