U.S. Securities and Exchange Commission
Litigation Release No. 18064 / April 2, 2003
SEC v. Platinum Investment Corp., et al. (S.D.N.Y. 02 CIV. 6093 (JSR))
The Securities and Exchange Commission ("Commission") announced today that on March 25, 2003, the Honorable Jed S. Rakoff, United States District Court Judge for the Southern District of New York, issued an order granting relief sought by the Commission against two non-parties who received assets from a transaction that violated an earlier order freezing the assets of defendant Platinum Investment Corporation ("Platinum").
On August 13, 2002, the court entered a Partial Final Consent Judgment against Platinum that, among other things, permanently enjoined Platinum from violating antifraud and registration provisions of the federal securities laws ("Partial Final Judgment"). In Paragraph X of the Partial Final Judgment, the court also ordered that Platinum's assets shall remain frozen until Platinum makes full payment of all amounts that Platinum is required or shall later be required to pay pursuant to the Partial Final Judgment ("Asset Freeze Order"). In the March 25, 2003 order and prior orders relating to the same subject, the court found that on September 24, 2002, Platinum conveyed real property to its president's maternal grandfather, Lee Sidoti, in violation of the Asset Freeze Order. The court further found that the mortgage proceeds from that sale were deposited in a bank account held by an entity called "White Orchid," an entity that was owned by Sidoti and controlled by his daughter, Margaret Antonucci, the mother of Platinum's president. The court also found that Antonucci then withdrew that money from the account in cash.
As a result of these transactions, the court previously issued an order freezing Sidoti's assets up to the amount of the purchase price of the real property, because, among other reasons, the court drew an adverse inference against Sidoti from his assertion of the Fifth Amendment privilege against self-incrimination at a deposition. In its March 25, 2003 order, the court denied Sidoti's motion to vacate the order freezing his assets despite the fact that Sidoti had testified since then that he had no knowledge of the original Asset Freeze Order when he took title to the property. The court held that Sidoti was "bound by the knowledge of his agent" Antonucci to whom "he delegated virtually all responsibilities in connection with the transactions here at issue." The court concluded that Antonucci had actual notice of the Asset Freeze Order, because "in addition to undertaking substantial business with Platinum on behalf of Sidoti, she was an officer of Platinum and the mother of its president." Moreover, Antonucci did not testify, and the court found that "the evidence strongly supports plaintiff's charge that Mrs. Antonucci acted in concert with defendants with full knowledge of the [Asset Freeze Order] when she withdrew the funds from the White Orchid account." As a result, the court ordered Antonucci to return those funds.
The underlying allegations of the Commission's case concern the fraudulent, unregistered offering of securities by Platinum and the other defendants. The Commission's complaint, filed on July 31, 2002, alleges that Platinum and the other defendants, which include former Platinum associates Lee Antonucci and Andrew Antonucci, defrauded dozens of investors of over $1.5 million by misrepresenting material facts about defendant Platinum Investment Holding Corp. ("PIHC"), purportedly a financial services firm looking to raise capital, and New Focus Capital Partners ("New Focus"), purportedly a hedge fund with a proven track record. The defendants falsely claimed, among other things, that PIHC was on the verge of launching an initial public offering ("IPO") even though PIHC did not file a registration statement with the Commission or otherwise take any steps toward an IPO, and that New Focus used a successful trading program purportedly owned by PIHC when, in fact, New Focus was a sham.
The litigation is still pending. For more information, see Litigation Release No. 17643 (July 31, 2002) and Litigation Release No. 17679 (August 14, 2002).