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U.S. Securities and Exchange Commission


Litigation Release No. 23312 / July 30, 2015

Securities and Exchange Commission v. Gregory W. Gray, Jr., et al., Civil Action No. 15-cv 1465 (LAK) (S.D.N.Y. February 27, 2015)

SEC Files Amended Complaint Seeking Disgorgement of Ill-Gotten Gains from Relief Defendant

The United States Securities and Exchange Commission announced today that it filed an amended complaint against Gregory W. Gray, Jr. and his firms Archipel Capital LLC and BIM Management LP, in a case pending in the United States District Court for the Southern District of New York. In its original complaint, filed on February 27, 2015, the Commission alleged, among other things, that Gray and his firms Archipel and BIM fraudulently used money from three investment funds to pay fictitious returns to investors in a different fund. In its amended complaint, the Commission added Gray’s wife, Cynthia Gray, as a relief defendant, and included a claim seeking disgorgement against all relief defendants.

The Commission also announced today that, subject to approval by the U.S. District Court, Cynthia Gray has agreed to settle the Commission’s claims. Without admitting or denying the allegations of the amended complaint, Cynthia Gray has consented to the entry of a final judgment against her, ordering that, while she is liable to pay disgorgement in the amount of $159,500, representing ill-gotten gains to which she has no legitimate claim, plus prejudgment interest, this obligation is satisfied by her agreement to forego (i) her interest in a property owned by her and Defendant Gray in Buffalo, New York, less a sum equal to the lesser of one-half the equity interest in such property when sold, or $75,000; and (ii) all other interest in any asset of the estate which was frozen pursuant to an order of the court dated February 27, 2015 and extended on March 23, 2015. [http://www.sec.gov/litigation/litreleases/2015/lr23221.htm]

The Commission’s amended complaint charges Gray and his firms 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), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. Gray is additionally charged with aiding and abetting Exchange Act Section 10(b) and Rule 10b-5 violations. The Commission’s amended complaint seeks disgorgement against all defendants and relief defendants (except Archipel Capital – Amyris Biotechnologies LP, which did not receive any ill-gotten gains) and a financial penalty against defendants. The relief defendants are Archipel Capital – Agrivida LLC, Archipel Capital – Amyris Biotechnologies LP, Archipel Capital – Bloom Energy LP, Archipel Capital – Late Stage Fund LP, Archipel Capital – Lineagen LP, Archipel Capital – Social Media Fund LP, Archipel Capital – Social Media Fund II LP, Archipel Capital – Social Media Fund LP 3, Archipel Capital – Social Media Fund LP 4, Bennington – Everloop LP, and Cynthia Gray.

Investors may direct their inquiries to the receiver, Lucien A. Morin, II, at (585) 546-2500, or at receiver@mccmlaw.com. Information on the receivership can be found at http://www.mccmlaw.com/archipel-capital-receiver-info.