United States Securities and Exchange Commission
Litigation Release No. 16573 / May 31, 2000
SEC FILES COMPLAINT AGAINST CLAUDE COSSU OF FAIRFIELD, CALIFORNIA, FOR HIS ROLE IN SEBASTIAN INTERNATIONAL ENTERPRISES' $17.7 MILLION PONZI SCHEME
Securities and Exchange Commission v. Claude Cossu, Case No. CIV-S-00-1198 (E.D. Ca.) (filed May 31, 2000)
The Securities and Exchange Commission (SEC) announced that on May 31, 2000, it filed a civil complaint against Claude Cossu of Fairfield, California, for his role in raising over $2.5 million from the public as part of a $17.7 million Ponzi scheme conducted by Sebastian International Enterprises, Inc. (SIE). The SEC's lawsuits follow an emergency action brought by the SEC in August, 1999 that halted SIE's fraudulent offering.
In its complaint, the SEC alleges that between at least July, 1997 and August 19, 1999, SIE sold $17.7 million worth of purportedly "high interest promissory notes" to over 400 investors nationwide. The complaint further alleges that SIE sold the notes through a network of insurance agents, financial advisers and registered representatives of broker dealers.
The SEC's complalint alleges that Cossu, a former registered representative of a broker-dealer and an insurance agent, raised over $2.5 million from investors of the $17.7 total raised by SIE. The complaint further alleges that Cossu made material misrepresentations and omissions to investors that purchased the SIE notes concerning, among other things, the risk and safety of SIE's securities, the ability of SIE to pay interest and principal on the notes, and the alleged existence of a surety bond guaranteeing the notes. Additionally, the complaint alleges that Cossu received over $397,000 in commission payments from SIE.
The SEC's complaint against Cossu, which seeks injunctive relief, disgorgement of ill-gotten gains and civil money penalties, alleges that he violated the securities and broker-dealer registration provisions and the antifraud provisions of the federal securities laws. Specifically, the complaint alleges that he violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder.