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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22232 / January 24, 2012

SECURITIES AND EXCHANGE COMMISSION v. CARLO G. CHIAESE, ET AL. Civil Action No. 10-cv-5110 (WJM) (D.N.J. filed Oct. 5, 2010)

SEC OBTAINS FINAL JUDGMENTS AGAINST INVESTMENT ADVISER CARLO G. CHIAESE, HIS FIRM, C.G.C. ADVISORS, LLC, AND HIS WIFE MICOL CHIAESE

The Securities and Exchange Commission announced today that it has obtained final judgments in its civil enforcement action against investment adviser, Carlo G. Chiaese, age 39 and resident of Springfield, New Jersey, his company, C.G.C. Advisors, LLC, and his wife, Micol Chiaese, a relief defendant.

The Commission’s Complaint, filed in October 2010 in the District of New Jersey, alleged that, since 2008, Chiaese and CGC had misappropriated at least approximately $2.4 million from six of their advisory clients. Micol Chiaese, an officer of CGC, benefited from this fraud by directly receiving at least $289,000 of clients’ funds. The Complaint charged 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.

In a related criminal action, on March 31, 2011, Chiaese pled guilty to one count of fraud in violation of 15 U.S.C. 78j(b), 78ff, 17 CFR 240.10b-5, and 18 U.S.C. 2 before the United States District Court for the District of New Jersey, in United States v. Carlo G. Chiaese, Crim. Information No. 11-CR-00193. On August 18, 2011, the District Court entered a criminal judgment against Chiaese ordering 58 months imprisonment and payment of $2,464,518 in restitution to be distributed to the victims.

On October 27, 2011, Chiaese agreed to consent to a final judgment in the civil action for full injunctive relief, enjoining Chiaese from violating Section 10(b) of the Exchange Act, Section 17(a) of the Securities Act, and Sections 206(1) and 206(2) of the Advisers Act, and acknowledging that while he is liable for $2,464,518 in disgorgement, such disgorgement shall be deemed satisfied by the order of restitution in the criminal action. On January 23, 2012, the Court entered this consent and final judgment against Chiaese. Also on October 27, 2011, CGC agreed to consent to a judgment in the civil action for full injunctive relief, enjoining CGC from violating Section 10(b) of the Exchange Act, Section 17(a) of the Securities Act, and Sections 206(1) and 206(2) of the Advisers Act. On November 3, 2011, the Court entered this consent and judgment against CGC.

Finally, on December 12, 2011, the Court entered a final judgment against relief defendant Micol Chiaese in the civil action, ordering that she pay disgorgement of her ill-gotten gains of $304,860.34, inclusive of prejudgment interest.

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.

For further information, see Litigation Release No. 21684 (Oct. 5, 2010), Litigation Release No. 21701 (Oct. 20, 2010), and Release No. 64932 (July 20, 2011).

 

 

http://www.sec.gov/litigation/litreleases/2012/lr22232.htm


Modified: 01/24/2012