U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23525 / April 22, 2016
Securities and Exchange Commission v. Sky Capital LLC (aka Granta Capital LLC), Ross Mandell, Steven Shea, Adam Harrington Ruckdeschel, Arn Wilson, Michael Passaro and Robert Grabowski, Civil Action No. 09-cv-6129 (PAC) (S.D.N.Y.)
SEC Obtains Final Judgment in the Sky Capital Boiler Room Case
The Securities and Exchange Commission announced today that the Honorable Paul A. Crotty of the United States District Court for the Southern District of New York entered final judgments on consent against defendant Arn Wilson, a former registered representatives ("RR") at Sky Capital, permanently enjoining him from violating the antifraud provisions of the federal securities laws. The judgment fully resolves the enforcement action before Judge Crotty as to Wilson.
In its complaint filed on July 8, 2009, the SEC alleged that Wilson, along with his co-defendants, used fraudulent boiler room tactics to raise more than $61 million from investors in two related companies - Sky Capital Holdings Ltd. and Sky Capital Enterprises, Inc. (the "Sky Entities"). The complaint alleged that the defendants orchestrated and participated in the extremely profitable scheme designed to fraudulently induce numerous individuals to invest in the Sky Entities. Additionally, the complaint alleged that the defendants prevented investors from selling their Sky Entities' stocks that were otherwise publicly traded on the Alternative Investment Market of the London Stock Exchange, which had the effect of artificially inflating the price of the Sky Entities' stocks. As a result of these fraudulent sales practices, investors were unable to sell their shares in the Sky Entities before trading in those stocks was suspended thereby rendering the investments worthless.
In the parallel criminal action brought by the U.S. Attorney's Office for the Southern District of New York, Wilson received significant criminal sanctions. Wilson, age 52, was credited for his cooperation and sentenced to three years of supervised release and substantial financial penalties. Wilson was an RR at Sky Capital from 2002 to 2008. On September 24, 2014, the Court sentenced Wilson to three years of supervised release, and over $74 million in forfeiture and restitution on a joint and several basis with the other defendants.
Wilson consented to final judgments which permanently enjoin him from 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's litigation against Ross Mandell, who was sentenced to 144 months imprisonment and over $74 million in forfeiture in the related criminal action, is ongoing.
The SEC's investigation was conducted by Shannon Keyes of the New York Regional Office, and the litigation was led by Jack Kaufman, Ms. Keyes and Charles Riely. The case has been supervised by Sanjay Wadhwa. The SEC thanks the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation for their assistance in this matter.
For further information, see Litigation Release No. 21120 (July 8, 2009) and Litigation Release No. 23518 (April 13, 2016).