U.S. SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17523 / MAY 20, 2002
STEVEN E. THORN HELD IN CIVIL CONTEMPT FOR TRANSFERRING AND CONEALING FUNDS IN VIOLATION OF COURT-ORDERED ASSET FREEZE
SEC v. Steven E. Thorn, et al., No. C2-01-290 (Judge Sargus)(S.D. Ohio)
The Securities and Exchange Commission announced today that a defendant in a pending Commission enforcement action has been held in civil contempt for violating a court-ordered asset freeze. The defendant, Steven E. Thorn of the Cleveland suburb of Brecksville, Ohio, is charged with having fraudulently raised over $60 million from hundreds of victims purportedly to finance trading in notes issued by European banks. The Commission has alleged that the supposed European bank trading venture does not exist and that Thorn in fact conducted a ponzi scheme. The Commission sued Thorn and others on April 2, 2001 and obtained a temporary restraining order which included a provision freezing all Thorn's assets.
On April 29, 2002, after an evidentiary hearing on a contempt motion made by the Commission, the Honorable Edmund A. Sargus, Jr., United States District Judge for the Southern District of Ohio, ruled that Thorn, aided by an associate, had deliberately and purposefully thwarted the Court's freeze order and secretly moved and concealed funds frozen by that order. The Court found Thorn's conduct to have been most egregious and held Thorn in civil contempt.
The Court based its findings on the Commission's evidence that Thorn secretly transferred $200,000 to his associate on April 2, 2001-the very day the Court entered its freeze order; and that Thorn, despite knowing of the freeze order at least by the afternoon of April 2, directed his associate to disburse much of the illegally transferred money to pay various bills for Thorn over the next several months. The Court further found that the ultimate disposition of a substantial amount of the illegally transferred money remains unknown. The Court ordered Thorn to submit to a deposition and to provide additional discovery to the Commission. The Court postponed imposing sanctions against Thorn until after that discovery was completed.
The Court also found that although Thorn's associate is not a defendant in the Commission's action she should have made every effort to comply with the freeze order after the Commission served her with a copy of the order on September 5, 2001. The Court ruled that the associate's actions after September 5 were contrary to the freeze order. The Court ordered Thorn's associate to provide additional discovery to the Commission and reserved ruling on whether she would be found in civil contempt.
The Court also ordered that Thorn and his associate are prohibited from transferring any of Thorn's funds that are in the control of Thorn or his associate.
At a subsequent hearing on May 6, 2002, the Court stayed a final decision on the Commission's contempt motion until conclusion of the Commission's enforcement action. In the meantime, the Commission is to further trace the disposition of all the funds transferred in violation of the asset freeze.