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U.S. SECURITIES AND EXCHANGE COMMISSIONLitigation Release No. 21684 / October 5, 2010SECURITIES AND EXCHANGE COMMISSION v. CARLO G. CHIAESE, ET AL., Civil Action No. 10-cv-5110 (WJM) (D.N.J.)SEC BRINGS EMERGENCY ACTION AGAINST INVESTMENT ADVISER CARLO G. CHIAESE AND HIS FIRM, C.G.C. ADVISORS, LLCThe Securities and Exchange Commission announced today that it filed an emergency enforcement action to halt a fraudulent scheme by investment adviser, Carlo G. Chiaese, age 38 and resident of Springfield, New Jersey, and his company, C.G.C. Advisors, LLC. The Commission also charged Chiaese's wife, Micol Chiaese, age 38 and resident of Chester, New Jersey, as a relief defendant for her unjust enrichment from the scheme. The Commission's complaint, filed in the District of New Jersey, alleges that, between 2008 and the present, Chiaese and CGC misappropriated at least approximately $2.5 million from at least six of their advisory clients, including a union pension trust fund for the benefit of approximately 880 members. Chiaese repeatedly made false and misleading statements to his clients regarding the clients' investments, including creating and providing to clients fictitious, self-generated account statements that (i) misrepresented the value of their investments and (ii) falsely stated that their investments were safely held at a broker-dealer, when in fact, Chiaese and CGC had misappropriated their clients' funds. Instead of investing these funds as Chiaese promised, he used much of his clients' funds to support his lavish lifestyle, including: mortgage payments on a million dollar home; approximately $32,000 on landscaping; approximately $70,000 on multiple country clubs; approximately $12,000 on his child's private school tuition; approximately $4,000 at a New York City hotel on New Year's Eve 2008; thousands of dollars on expensive cars; tens of thousands of dollars per month in living expenses; and numerous cash withdrawals. Micol Chiaese, an officer of CGC, benefited from this fraud by directly receiving at least $261,300 of clients' funds. The Complaint charges Chiaese and CGC 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, among other emergency relief, a temporary restraining order, which prohibits Chiaese and CGC from committing further violations of the federal securities laws and freezes the assets of Chiaese, Micol Chiaese and CGC. In its enforcement action, the Commission is seeking additional relief, including orders enjoining Chiaese and CGC, preliminarily and permanently, from committing future violations of the foregoing federal securities laws, and a final judgment ordering Chiaese, Micol Chiaese and CGC to disgorge their ill-gotten gains plus prejudgment interest, and assessing civil penalties against Chiaese and CGC. The Commission acknowledges assistance provided by the United States Attorney's Office for the District of New Jersey, the FBI and the United States Postal Inspection Service.
See Also: SEC Complaint |
