U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21411 / February 12, 2010
Securities and Exchange Commission v. Samuel B. Vitale and Joyce D. Vitale, Case No. 10-CV-20408 (S.D. Fla., Jan. 9. 2010)
SEC Charges Samuel and Joyce Vitale in Scheme to Defraud Banks and Their Depositors in Several Stock Offerings
The Securities and Exchange Commission today announced the filing of civil injunctive against Samuel Vitale and Joyce Vitale for orchestrating a fraudulent scheme involving seven mutual to stock bank conversion offerings. The SEC's complaint alleges that from approximately January 2005 until March 2007, the Defendants spearheaded a scheme to defraud the banks and their depositors by secretly using relatives and business entities as nominees to acquire stock in those conversions in contravention of the offering terms and applicable banking regulations. Over the course of the fraudulent scheme, the Defendants reaped $659,512 in ill-gotten profits from secondary market sales of the fraudulently obtained stock.
The SEC's complaint alleges that the defendants sought to circumvent federal and state banking regulations that prohibit the depositors of the converting banks from either transferring ownership of their stock subscription rights, or entering into any agreement regarding the sale or transfer of shares purchased in the offering. The SEC alleges that the Defendants and their nominees opened accounts at seven mutual savings banks and when the banks undertook a conversion the Defendants secretly purchased the bank stock through their nominees, controlled the sale of these shares, and retained most of the trading profits. The SEC's complaint further alleges that the Defendants directed the nominees to submit stock order forms in which they falsely certified they were purchasing the stock for their own account and had no agreement to transfer shares or the proceeds of their sale to anyone else. The Defendant's scheme limited the amount of stock available to other depositors.
The SEC's complaint, which was filed in the United States District Court for the Southern District of Florida, alleges that Samuel and Joyce Vitale violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Without admitting or denying the allegations in the complaint, Samuel and Joyce Vitale have consented to the entry of a final judgment that permanently enjoins them from committing future violations of the above provisions, and orders them to pay $757,179 in disgorgement and prejudgment interest, and $150,000 in civil penalties each.
See Also: SEC Complaint