U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23605 / July 28, 2016
Securities and Exchange Commission v. Gregg D. Caplitz, et al., 1:13-cv-10612-MLW (D. Mass. filed Mar. 19, 2013)
United States v. Rosalind Herman, Criminal Action No. 1:12-cr-10015-WGY (D. Mass. filed Mar. 21, 2012)
Massachusetts-Based Investment Adviser Sentenced to Prison, Ordered to Pay Restitution
On July 27, 2016, Woburn, Massachusetts resident Rosalind Herman, a relief defendant in an ongoing SEC fraud action, was sentenced to seven years in federal prison and ordered to pay $1,819,391 in restitution in a parallel criminal case.
Herman and her business partner, Gregg D. Caplitz, were indicted in March 2012 and additional charges were added against both of them by a superseding indictment returned in March 2013. The superseding indictment alleged that Herman and Caplitz fraudulently induced clients to entrust their savings and other funds to them by falsely representing that the funds would be invested and managed for the clients' benefit when, in truth, the funds were used to pay the personal expenses for Herman, her family, and Caplitz. On April 3, 2014, Caplitz pled guilty to conspiracy, investment adviser fraud, making a false filing with the SEC, and wire fraud. On April 5, 2016, a federal jury in Massachusetts convicted Herman of conspiracy, investment adviser fraud, wire fraud and a tax-related charge.
In March 2013, the SEC filed a civil injunctive action and an asset freeze against Insight Onsite Strategic Management, Herman's investment advisory firm, and Caplitz. Herman and Herman's two sons, Brad and Brian Herman, and daughter-in-law, Charlene Herman, were named as relief defendants in the SEC's action for the purposes of recovering investor funds in their possession. The SEC's complaint alleged that instead of using investor funds as represented, Caplitz transferred control of clients' money to Herman, her sons, daughter-in-law, and a company called Knew Finance Experts to fund personal expenses.
The SEC's litigation continues against Caplitz and the Hermans. The SEC is seeking a permanent injunction, disgorgement of ill-gotten gains and prejudgment interest, and a penalty against Caplitz and Insight Onsite Strategic Management and disgorgement plus prejudgment interest against the Hermans and Knew Finance Experts.
For further information, see Litigation Release Nos. 22648 (Mar. 19, 2013), 23514 (Apr. 11, 2016), and 23542 (May 18, 2016).