SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17572 / June 17, 2002
Securities and Exchange Commission v. Terrance Michael O'Donohue and O'Donohue Fund Management, Inc., Civil Action No. 1:02 CV 1663 (N.D. Ga.)
THE SEC FILES SETTLED CIVIL ACTION AGAINST TERRANCE MICHAEL O'DONOHUE AND O'DONOHUE FUND MANAGEMENT, INC.
The Securities and Exchange Commission ("Commission") announced today that it has filed a settled civil action against Terrance Michael O'Donohue and O'Donohue Fund Management, Inc. The Commission's complaint alleges that, from June 1995 until November 2000, O'Donohue raised almost $3 million for three limited partnerships from 53 investors. The complaint alleges that O'Donohue, who was a Georgia resident, or O'Donohue Fund Management, a Georgia corporation controlled by O'Donohue, were the general partners and made the investment decisions for the partnerships. According to the Commission's complaint, O'Donohue diverted over $2 million of investor funds, falsely stated to investors that their funds were invested, sent out false account statements indicating that investors' funds were earning returns, and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors. The complaint also alleges that O'Donohue and O'Donohue Fund Management sold unregistered securities.
O'Donohue was convicted of three counts of mail fraud involving this same conduct. He was sentenced in the United States District Court for the Northern District of Georgia to serve 48 months in prison, followed by three years of supervised release, and was ordered to pay restitution of $2,468,912.41.
O'Donohue and O'Donohue Fund Management consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment that permanently enjoins them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission did not seek disgorgement or civil penalties because of the criminal sanctions already imposed.
The Commission wishes to thank the United States Attorney's Office for the Northern District of Georgia and the Georgia Secretary of State, Securities Division, for their assistance in this matter.