U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16520 / April 18, 2000
SECURITIES AND EXCHANGE COMMISSION v. ROBERT H. COSBY AND GLOBAL ACTION INVESTMENTS LIMITED, The Supreme Court of British Columbia, No.C992041, Vancouver Register.
The Securities and Exchange Commission ("Commission") announced that on March 29, 2000, the Supreme Court of British Columbia issued a ground breaking judgment holding that the disgorgement order against defendant Robert H. Cosby issued by the United States District Court for the Southern District of New York ("USDC") in SEC v. Softpoint, Inc., Robert H. Cosby, Ronald G. Stoecklein, Remington Publications, Inc., and John W. Lane, 95 Civ. 2951 (SS) ("the Softpoint Action "), was enforceable in British Columbia. In the Softpoint Action, the Commission alleged that Cosby, the former president of Softpoint, Inc., defrauded the public investors of that company and absconded with ill-gotten gains of $636,928. On August 24, 1996, the USDC entered a final judgment by default against Cosby directing him to disgorge $779,971 (representing the $636,928 in proceeds from the fraud plus prejudgment interest) ("U.S. judgment"). Cosby failed to pay those moneys and fled the United States.
On December 12, 1998, the United States Attorney's Office for the District of Nevada obtained a three-count grand jury indictment against Cosby charging him with money laundering for his handling of the ill-gotten gains he had obtained from the Softpoint fraud. On or about January 16, 1999, Cosby was stopped by Canadian authorities at the Vancouver International Airport in Vancouver, British Columbia, while seeking to enter Canada on a flight from Hong Kong. Cosby was questioned by Canadian immigration officials and the Royal Canadian Mounted Police ("RCMP"), who discovered on Cosby's person approximately $100,000 in cash. The RCMP seized these funds and refused Cosby entry to Canada.
On April 22, 1999, the Commission filed an action in the Supreme Court of British Columbia seeking enforcement of the U.S. judgment against Cosby and recovery of the funds held by the RCMP. Cosby, through Global Action Investments Limited, a corporation which the Commission alleged was owned or controlled by Cosby, opposed the Commission's application before the Supreme Court of British Columbia, asserting that the Commission's U.S. Judgment was not enforceable in British Columbia because it was allegedly "penal" in nature. In its recent decision, the Supreme Court of British Columbia held that the disgorgement relief in the U.S. Judgment was not a "foreign penal claim" and is enforceable in British Columbia. This ruling should enhance the Commission's efforts to return funds fraudulently obtained from investors that may have been transferred to Canada.
On July 16, 1999, Hong Kong authorities arrested Cosby and commenced extradition proceedings for Cosby's return to the United States pursuant to an official request by the United Department of Justice.