Court Orders Five Defendants in International Ponzi Scheme to Pay Over $13.1 Million
Litigation Release No. 25369 / April 15, 2022
Securities and Exchange Commission v. Damon Elliott, et al., Civil Action No. 1:20-cv-10860 (District of Massachusetts, Filed May 6, 2020)
The Securities and Exchange Commission recently obtained final judgments against defendant Damon Elliott, a United Kingdom citizen and French resident, in a civil action in which the SEC charged that Elliott engaged in a Ponzi scheme and misappropriated money from investors, as well as against multiple relief defendants. Among other things, Elliott has been ordered to pay a total of $6,445,837. The court also recently entered judgments against several other defendants and relief defendants that ordered additional money to be paid and will bring the SEC's enforcement action to a conclusion.
According to the SEC's May 6, 2020 complaint, Elliott, operating through his co-defendant entity Piptastic Limited, falsely represented to investors that he would use their money for an overseas fund that purportedly engaged in a trading strategy known as "spread trading" or "spreadbet trading," which involves speculating on the price movement of a security or other financial instrument. According to the complaint, Elliott knowingly misused investor assets for his own personal benefit, as well as that of his wife, relief defendant Sharon Elliott, and others including his associate, relief defendant Paul Rose. As further alleged, from at least 2019 through May 2020, when investors tried to redeem their money from Piptastic, Elliott lied about the status of the investments. Specifically, Elliott allegedly claimed that he had won profits for the investors through spread betting and that the funds were safely held in trading accounts for the benefit of the investors when, in fact, he used the money for personal expenses and payments to the relief defendants, as well as to make payments to investors as part of his Ponzi scheme. Elliott also allegedly provided fictitious account statements that purported to reflect the investors' preserved assets.
The SEC's complaint charged Elliott with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder and sought permanent injunctive relief, civil penalties, and disgorgement with prejudgment interest. Without admitting or denying the SEC's allegations, Elliott consented to a partial judgment entered by the Court on September 15, 2021, under which he is enjoined permanently from violating the above provisions of the securities laws and from participating in the issuance, purchase, offer, or sale of any security in an unregistered offering by an issuer, and where any financial remedies would be determined by the Court at a later date.
On April 8, 2022, the Court granted the SEC's motion seeking financial remedies against Elliott. The Court's order requires Elliott to pay disgorgement and prejudgment interest of $6,348,314 as well as a civil monetary penalty of $97,523. On January 27, 2022 and April 7, 2022, respectively, the Court issued final judgments by consent against relief defendant Sharon Elliott, ordering her to pay $1,310,552 on a joint and several basis with her husband, and against relief defendant Paul Rose, ordering him to pay $1,377,852.86. In addition, the Court issued an amended final judgment against Piptastic on April 8, 2022 permanently enjoining it from violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and ordering it to pay disgorgement and prejudgment interest totaling $5,937,335, on a joint and several basis with Elliott, and a civil monetary penalty of $5,289,028 The Court had previously entered a final judgment ordering relief defendant DSE Retail Limited to pay, on a joint and several basis with Piptastic, disgorgement plus prejudgment interest of $2,650,839.
For further information, see Litigation Release No. 24813, May 6, 2020.