Litigation Release No. 19235 / May 20, 2005

SEC v. Dennis Herula et al., (United States District Court for the District of Rhode Island, C.A. No. 02 154 ML, filed April 1, 2002)

Court Enters Default Judgment Against SEC Defendant Seaview Development and Holdings, Ltd. and Orders It to Pay over $2.8 Million

The Commission announced that on April 12, 2005, a Rhode Island federal court entered a default judgment against Seaview Development and Holdings, Ltd., a defendant in an action filed by the Commission in April 2002. The Commission alleged in its complaint that Seaview and others participated in a fraudulent offering scheme that raised at least $52 million from investors. The Commission further alleged that Seaview and the other defendants misappropriated approximately $20.5 million of those investor funds. In the default judgment, the Court permanently enjoined Seaview from future violations of the antifraud provisions of the federal securities laws and ordered it to pay approximately $2.8 million in disgorgement and prejudgment interest.

The Commission filed its action against Seaview and eight other defendants and a relief defendant on April 1, 2002, alleging that Seaview and others participated in a scheme that made fraudulent representations to investors about a purported high yield trading program. According to the Commission's complaint, the scheme raised approximately $52.75 million from six investors, and was perpetrated through entities formerly known as Seaview, Brite Business S.A. and Brite Business Corporation. The Court found in its final judgment that the defendants made intentional and egregious misrepresentations to solicit investor funds, $2,225,410 of which was funneled through financial institution accounts controlled by Seaview.

The Court's final judgment enjoins Seaview from future violations of 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, and orders it to pay disgorgement in the amount of $2,225,410, plus prejudgment interest in the amount of $651,913.12, for a total amount of $2,877,323.12.

For further information, please see Litigation Release Numbers 18917 (October 4, 2004) [default judgment entered against Defendant Robert M. Wachtel]; 18212 (July 3, 2003) [default judgment entered against Defendant Johan C. Hertzog]; 18196 (June 20, 2003) [default judgment entered against Defendant Michael Clarke]; 17800 (October 23, 2002) [default judgment entered against Defendant Dennis Herula]; 17957 (January 29, 2003) [default judgment entered against Defendant Mary Lee Capalbo]; 17514 (May 13, 2002) [preliminary injunction and asset freeze against Seaview and others]; 17461 (April 5, 2002) [asset freeze against Seaview and others].