Final Judgments Entered as to Massachusetts-Based Investment Adviser and Relief Defendants
Litigation Release No. 24841 / June 22, 2020
Securities and Exchange Commission v. Gregg D. Caplitz, et al., 1:13-cv-10612-MLW (D. Mass. filed Mar. 19, 2013)
On June 11, 2020, the U.S. District Court for the District of Massachusetts entered final judgments against two relief defendants, Brad and Brian Herman, in connection with the SEC's civil action against Massachusetts-based investment adviser Gregg Caplitz and his former advisory firm. These judgments conclude the SEC's litigation in this matter.
In March 2013, the SEC filed a civil injunctive action and obtained an asset freeze against Caplitz and Insight Onsite Strategic Management, the advisory firm Caplitz co-owned with Rosalind Herman. The SEC's complaint alleged that instead of using investor funds as represented, Caplitz transferred control of clients' money to Herman, her sons Brad and Brian Herman, her daughter-in-law Charlene Herman, and a company called Knew Finance Experts, to fund their personal expenses. The complaint named Rosalind Herman, her sons, her daughter-in-law, and Knew Finance as relief defendants.
The court's June 11, 2020, judgments require Brad Herman to pay a total of $167,572 in disgorgement and prejudgment interest, and Brian Herman to pay a total of $320,269 in disgorgement and prejudgment interest.
The court previously entered a final judgment against Caplitz on February 14, 2020, permanently enjoining Caplitz from violating the antifraud provisions of 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 of 1940. The SEC also previously barred Caplitz from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. Caplitz pled guilty to criminal charges based on substantially the same conduct.
On February 12, 2020, the SEC voluntarily dismissed its claims against Insight Onsite, which is defunct and whose registration as an investment adviser was cancelled in January 2016. On the same day, the SEC voluntarily dismissed its claims against relief defendant Rosalind Herman, who was sentenced in a parallel criminal case to seven years in federal prison and ordered to pay $1,819,391 in restitution following conviction by a jury, and against whom the SEC previously imposed associational bars. The SEC has also voluntarily dismissed its claims against relief defendant Knew Finance and against relief defendant Charlene Herman.