SEC v. Thomas Fletcher & Co. Inc. et al. C.A. No. CV 02 9355 (S.D.N.Y.)
The Securities and Exchange Commission filed an emergency injunctive action today in the United States Court for the Southern District of New York alleging that Thomas Fletcher & Co. Inc. ("Thomas Fletcher") conducted a fraudulent unregistered offering that raised over $2.5 million from at least 32 investors. Sergei Voronchenko, the President and Director of Thomas Fletcher and Roman Thaker, the Secretary and Treasurer of Thomas Fletcher, were responsible for a false and misleading private offering memorandum. In addition, the complaint alleges that, an affiliated broker-dealer, Thomas Fletcher & Company Inc. ("TFC"), and its registered representatives, Alex Berg, John Donadio, and Padraig McGlynn made oral misrepresentations to investors to induce them to purchase Thomas Fletcher securities.
The Commission's complaint names the following defendants:
- Thomas Fletcher, a New York corporation, which has its principal place of business in New York, New York. Thomas Fletcher is purportedly in the business of providing management services for TFC. Thomas Fletcher also owns 33% of Algosoft, which is engaged in the development of software for the brokerage industry.
- TFC, a Delaware corporation, is a registered broker-dealer located in New York City.
- Sergei Voronchenko, age 28, is the President and Director of Thomas Fletcher. Voronchenko is a resident of Fort Lee, New Jersey.
- Roman Thaker, age 29, is the Secretary, Treasurer and Director of Thomas Fletcher. Thaker is also the CEO of TFC. He also acted as the incorporator of Thomas Fletcher. Thaker is a resident of New York, New York.
- Alex Berg, age 20, is a resident of Brooklyn, New York. Berg is a registered representative of TFC.
- John Donadio, age 20, is a resident of Staten Island, New York, and is a registered representative of TFC.
- Padraig McGlynn, age 26, is a resident of Maspeth, New York, and is a registered representative TFC.
Specifically, the Complaint alleges the following: From approximately March 2002 through the present, Voronchenko and Thaker effectuated a fraudulent unregistered offering of Thomas Fletcher securities through which Thomas Fletcher raised approximately $2.5 million from at least 32 investors. To facilitate this Offering, Voronchenko and Thaker retained Berg, Donadio, and McGlynn and other salespersons to offer and sell Thomas Flectcher securities to investors.
In connection with the Offering, Thomas Fletcher distributed a private offering memoranda ("Offering Memorandum"), prepared by Voronchenko, Thaker, and company counsel, to investors in order to induce them to purchase preferred shares. The Offering Memorandum failed to note that Thomas Fletcher's certificate of incorporation did not permit it to issue such preferred shares. Additionally, one of the primary purposes of the Offering was to enable Thomas Fletcher to make a subordinated loan to TFC so that TFC would be able to increase its operating and net capital and expand its operations. Contrary to the express representations contained in the Offering Memorandum, however, Thomas Fletcher has made no subordinated loan to TFC.
In connection with their efforts to solicit investors, Berg, Donadio, and McGlynn also concocted a variety of purported facts to persuade investors to purchase Thomas Fletcher securities. Among other things, Berg, Donadio, and McGlynn told investors that (i) Thomas Fletcher was planning an initial public offering ("IPO") which was imminent (i.e. within two to three months), and (ii) investors could sell their stock the first day Thomas Fletcher stock was publicly traded at a specific price (i.e. $20-25 per share), which was a significant premium over the $10.00 per share that investors were paying to purchase the stock in the Offering. These representations were false. In fact, Thomas Fletcher had not taken any steps to conduct an IPO. Additionally, Berg, Donadio, and McGlynn told investors that Thomas Fletcher securities were a risk-free investment and that in the worst case scenario, investors would have their funds returned to them with 10% interest.
The Commission alleges that through this conduct, Thomas Fletcher, TFC, Voronchenko, Thaker, Berg, Donadio, and McGlynn violated 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934. In addition to expedited relief, including a temporary restraining order, asset freeze, and accounting, the Commission is seeking permanent injunctions, disgorgement and prejudgment interest, and civil penalties against all of the defendants.
