SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17754 / September 30, 2002
SEC FILES CONTEMPT ACTION AGAINST DEFENDANT DAVID H. SIEGEL
SECURITIES AND EXCHANGE COMMISSION V. AMERICAN FINANCIAL GROUP OF AVENTURA, INC., ET AL., Case No. 02-22198-CIV-GRAHAM/GARBER (S.D. Fla.)
The Securities and Exchange Commission (SEC) announced that on September 27, 2002, it filed with the United States District Court for the Southern District of Florida, a Motion for an Order to Show Cause why Defendant David H. Siegel should not be held in civil contempt for failing to comply with the Court's repatriation order. The Receiver joined in this motion.
On July 24, 2002, the SEC filed its Complaint against American Financial Group of Aventura, Inc., a Florida corporation (AFG), David H. Siegel, AFG's senior vice president and director of investments, and relief defendant American Wealth Management of Aventura, Inc., a Florida corporation in connection with an alleged fraudulent securities offering. The SEC alleged that Siegel and others had been fraudulently offering and selling investment contracts in the form of fractional participation in a restricted stock loan program, from its Aventura, Florida office. The SEC's complaint alleges that AFG enticed investors with promises of high returns with low risk because investments were purportedly over-collateralized with restricted stock. The SEC's complaint further alleges that Siegel, a recidivist securities laws violator, misappropriated investor monies and issued false statements to investors falsely showing high returns when, in fact, the investments were losing value because Siegel was misappropriating the money raised by AFG. The SEC's complaint also alleges that AFG misled investors by failing to disclose in its offering materials and website that Siegel had a long history of securities laws violations, including an injunction entered against him in 1987 for participating in a stock manipulation scheme. The SEC charged AFG and Siegel with violations of Sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
On July 25, 2002, the Court granted the SEC's request for a Temporary Asset Freeze Order (TAF), and other emergency relief. The TAF provided, among other things that Siegel repatriate assets. On August 15, 2002, the Court entered an Order of Temporary Asset Freeze (Order), by consent, against Siegel. The Order required Siegel to comply with the repatriation provision contained in the TAF. To date, Siegel has not complied with the Court's repatriation order. The motion requests that Siegel show cause why he should not be held in contempt for failing to comply with the repatriation order. The motion is pending before the Court.