U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23819 / April 28, 2017
Securities and Exchange Commission v. Kamal Zuhdi Abdallah, a/k/a Kamal Sulleman, et al., No. 17-CV-3117 (S.D.N.Y. filed April 28, 2017)
SEC Files Fraud Charges Against Recidivist Securities Violator Using Fake Name
The Securities and Exchange Commission today announced charges against a San Antonio man accused of using a phony name to hide his criminal history and commit securities fraud again while on supervised release from prison.
The SEC alleges that Kamal Zuhdi Abdallah recast himself as Kamal Sulleman to solicit and defraud two elderly investors in Texas out of at least $260,000. The SEC also named his daughter Zeina Abdallah and two companies as relief defendants because they received illicit proceeds from Abdallah's alleged fraud.
In a complaint filed in the U.S. District Court for the Southern District of New York, the SEC alleges that, while serving the supervised release portion of his criminal sentence in United States v. Abdallah, 09-cr-717 (E.D.N.Y.), Abdallah used a fictitious name to hide his criminal past from one of his victims, and when soliciting investments, Abdallah lied to his victims regarding the nature and use of investment proceeds. Of the $250,000 invested by Abdallah's first victim, this investor transferred $50,000 to relief defendant Seriaga Investments, Inc. ("Seriaga"), a company controlled by Zeina Abdallah, and $200,000 to Administrative Outsource Services, Inc. ("AOS"), a company controlled by Abdallah. Rather than use investor funds to invest in a currency trading scheme as he had promised, Abdallah, instead, made cash withdrawals and otherwise used the investor funds to pay for his and his family's personal expenses. For example, within days of receiving $200,000 from the first investor, Abdallah withdrew $189,500, consisting of: a wire transfer of $175,000 to Zeina Abdallah's personal bank account; a $10,000 check to Zeina Abdallah; and a $4,500 withdrawal by Abdallah. Abdallah's second investor wrote a $10,000 check to Seriaga on August 19, 2016, and the day after this check was deposited, $9,990 was transferred to himself.
The SEC charges Abdallah with violating Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking from Abdallah permanent injunctive relief, disgorgement plus prejudgment interest thereon and civil monetary penalties. The SEC is seeking from Zeina Abdallah, Seriaga and AOS disgorgement plus prejudgment interest thereon.
The SEC's investigation was conducted by Gerald Gross, Karen Lee, Debbie Chan and Paul Gizzi, all of the SEC's New York office. The litigation will be led by Mr. Gizzi. The case is being supervised by Sanjay Wadhwa.