U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21554 / June 11, 2010
SEC v. Chimay Capital Management Inc. and Guy Albert de Chimay, 10 CIV 4582 (WHP) (S.D.N.Y.)
SEC Brings Emergency Action to Halt Fraudulent Scheme by Investment Firm with Alleged Ties To Belgian Nobility
The Securities and Exchange Commission announced today that it has filed an emergency civil enforcement action to halt a fraudulent bridge loan scheme orchestrated by New York-based Chimay Capital Management, Inc. (Chimay Capital) and its chairman, Guy Albert de Chimay. The Commission's action also seeks emergency relief, including a freeze of the defendants' assets and the repatriation of any fraudulently-obtained assets held overseas.
The Commission alleges that Chimay and Chimay Capital, which marketed itself as the U.S. investment arm of the Chimay royal family of Belgium, solicited investments in a vehicle known as the Bridge Loan Facility (BLF) where investor funds were to be pooled with Chimay family money to make short-term loans. Investors were told that the BLF had been established as the private cash management vehicle for the Chimay royal family, and had a solid track record of safe and profitable returns. Investors were promised fixed annual returns of 12%, and were guaranteed the return of their principal and interest regardless of the actual performance of the loans.
The Commission alleges that the defendants successfully obtained at least $6 million dollars in BLF investments in 2008 and 2009. According to the Commission's complaint, the defendants did not use these funds to make short-term loans but rather misappropriated them for a host of improper purposes, including to bankroll Chimay's personal and business expenses, and to pay other investors. Among other things, the Commission alleges that nearly $600,000 in investor funds were diverted to pay Chimay's divorce lawyers, and that additional funds were misappropriated to pay Chimay's mortgage and credit card bills.
The complaint alleges that the defendants violated Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
The Commission seeks, among other emergency relief, a temporary restraining order: (i) enjoining the defendants from future violations of the federal securities laws; (ii) freezing the defendants' assets and repatriating the defendants' fraudulently obtained assets found overseas; (iii) directing the defendants to provide verified accountings; and (iv) prohibiting the destruction, concealment or alteration of documents. In addition to this emergency relief, the Commission seeks preliminary and permanent injunctive relief and civil money penalties against the defendants as well as disgorgement by the defendants of their ill-gotten gains plus prejudgment interest.
The Commission's investigation is continuing. The Commission acknowledges the assistance of the New York County District Attorney's Office and the Bermuda Monetary Authority in this matter.
See Also: SEC Complaint