U.S. Securities and Exchange Commission
Litigation Release No. 21964 / May 12, 2011
Securities and Exchange Commission v. Louis W. Zehil, Strong Branch Ventures IV LP, and Chestnut Capital Partners II, LLC, 07 Civ. 1439 (LAP) (S.D.N.Y.)
FINAL JUDGMENTS ENTERED AGAINST DEFENDANT SECURITIES ATTORNEY AND AFFILIATED ENTITIES IN SECURITIES FRAUD
On May 10, 2011, the Honorable Loretta A. Preska of the United States District Court for the Southern District of New York entered a final consent judgment against defendant Louis W. Zehil, and final default judgments against defendants Strong Branch Ventures IV LP and Chestnut Capital Partners II, LLC.
On February 28, 2007, the Commission brought an injunctive action in United States District Court for the Southern District of New York alleging that from approximately January 2006 to February 2007, Zehil, a corporate attorney, and his two entities he controlled Strong Branch and Chestnut, engaged in a fraudulent scheme to obtain and sell to the investing public millions of shares of securities in violation of the antifraud and registration provisions of the federal securities laws. The complaint charged Zehil, Strong Branch and Chestnut with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Without admitting or denying the allegations of the Commission’s complaint, Zehil consented to the entry of a judgment that permanently enjoins him from further violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgment further orders Zehil to disgorge $17,314.621 in ill-gotten gains, but deems this obligation to have been satisfied by forfeiture and restitution orders entered in a parallel criminal action.
The court also entered default judgments requiring that Strong Branch disgorge its ill-gotten gains of $9,754,935 and that Chestnut disgorge its ill-gotten gains of $4,684,868. These obligations have been deemed satisfied by the amounts collected by a receiver appointed in the Commission’s action and then turned over to the parallel criminal action.
For further information, see Litigation Release No. 20021 (Feb. 28, 2007).