SEC Charges Individual with Multi-Million Dollar Offering Fraud
Litigation Release No. 24913 / September 24, 2020
Securities and Exchange Commission v. Craig A. Zabala, Civil Action No. 20-cv-7880 (S.D.N.Y., filed September 24, 2020)
The U.S. Securities and Exchange Commission today announced charges against New York City resident Craig A. Zabala for defrauding investors in his company, Concorde Group Holdings Inc.
The SEC alleges that, between February 2015 and August 2019, Zabala raised approximately $4.38 million from 17 investors throughout the United States, purportedly to develop Concorde into a merchant bank for mid-sized companies and to invest in affiliate entities. As alleged in the complaint, Zabala misrepresented to investors that Concorde had raised more than $24 million and was close to completing a $25 million offering. The SEC's complaint also alleges that Zabala misappropriated over $3 million of investor funds by making almost $2 million in unauthorized payments to himself and his longtime girlfriend, Doreen McCarthy, and $1.2 million in Ponzi-like payments to earlier investors in an affiliate company. Zabala allegedly used investor funds for personal expenses, including car payments and international travel expenses for himself and McCarthy.
The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, charges Zabala with violations of the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. The SEC seeks injunctive relief, disgorgement plus prejudgment interest, and civil penalties. The complaint also names McCarthy as a relief defendant in connection with her receipt of ill-gotten gains without a legitimate claim to those funds.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Zabala.
The SEC's investigation was conducted by William Conway, Kerri Palen, Christopher J. Dunnigan, and Sandeep Satwalekar. The case is being supervised by Lara Shalov Mehraban. The litigation will be handled by Mr. Conway and Mr. Dunnigan. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York, the U.S. Postal Inspection Service, and Financial Industry Regulatory Authority (FINRA).