SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17707 / September 3, 2002
United States v. Steven M. Bolla, Case No. 02-196 (D.C.D.C.)(TPJ)
Steven M. Bolla Sentenced to One Year In Prison for Making False Statements to the SEC
Roscoe C. Howard, Jr., the United States Attorney for the District of Columbia, announced today that, on August 30, 2002, United States District Judge Thomas Penfield Jackson sentenced former investment adviser Steven M. Bolla, 43, of Alpharetta Georgia, to twelve months incarceration for making false statements to the Securities and Exchange Commission in 1999 and 2000. Judge Jackson also ordered Bolla to pay a $20,000 fine and restitution to the Commission of $90,000. Following his incarceration, Bolla is to be placed on supervisory release for a period of three years.
Bolla, the former president of Security Financial, Inc., an investment advisory firm, had pleaded guilty on May 9, 2002 to a one-count information charging him with violating 18 U.S.C. Section 1001 by making false statements to the SEC in connection with the June 2000 settlement of SEC v. James L. Foster, Laurie F. Foster, Steven M. Bolla and William E. Busacker, Jr., Civil Action No. 1:00CV01192 (D.C.D.C.). In SEC v. Foster et al., Bolla was permanently enjoined from violating the antifraud and other provisions of the federal securities laws, and ordered to pay a $10,000 penalty. In the final judgment in that case, United States District Judge Thomas A. Flannery specifically noted that Bolla was not directed to pay additional amounts as a civil penalty because of his demonstrated inability to pay a higher amount, as shown by sworn financial statements Bolla had furnished to the SEC. As part of the settlement, on June 20, 2000, the Commission also barred Bolla from associating with any investment advisor, with a right to reapply for association after five years. In the Matter of James L. Foster et al., Securities Exchange Act Release No. 42963 (June 20, 2000).
The SEC subsequently learned that Bolla's financial statements materially underreported his assets and income. Among other things, before submitting a financial statement to the SEC in November 1999, Bolla transferred over $940,000 in assets to an account in his wife's name, but over which he had general power of attorney. Bolla improperly failed to report these assets to the SEC. Bolla also failed to disclose to the SEC income of more than $50,000 per month during the relevant period. In addition, in a February 5, 2000 declaration to the SEC, Bolla claimed that he had less than $4,000 in cash assets during the reporting period. In fact, as of January 31, 2000 he had more than $816,000 in money fund shares and $98,000 worth of securities in the account in his wife's name, and on February 3, 2000, he deposited an additional $128,000 into the account. Bolla also failed to disclose the existence of various securities and bank accounts, as well as more than 40 transfers of more than $1,000 that he was required to report.
In a separate matter, on July 31, 2002, the Commission charged Bolla with securities fraud and with violating the June 2000 Commission order barring Bolla from associating with an investment adviser. SEC v. Steven M. Bolla et al., Civil Action No. 1:02CV01506 (D.C.D.C.)(CKK), Litigation Release No. 17642 (July 31, 2002). The SEC's litigation is pending in the United States District Court for the District of Columbia.
The SEC thanks the United States Attorney's Office for the District of Columbia and the Federal Bureau of Investigation for their efforts in investigating and prosecuting the case.