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U.S. Securities and Exchange Commission

United States Securities and Exchange Commission

Litigation Release No. 18073 / April 4, 2003

Jeffrey L. Goldberg Charged by SEC and United States Attorney with Fraud for Operating a Ponzi Scheme

Securities and Exchange Commission v. Jeffrey L. Goldberg, No. 03C 2259 (N.D. Ill.)

United States v. Jeffrey L. Goldberg, No. 03CR 0332 (N.D. Ill.)

On April 1, 2003, the Securities and Exchange Commission and United States Attorney for the Northern District of Illinois announced the filing of civil securities fraud and criminal mail fraud charges against Jeffrey L. Goldberg, age 51, of Buffalo Grove, Illinois, for operating a Ponzi scheme that defrauded at least 130 investors out of millions of dollars. The charges against Goldberg are the result of close cooperation between the United States Attorney's Office, the Federal Bureau of Investigation, and the Commission's staff. Both actions were filed in federal district court in the Northern District of Illinois.

The Commission's complaint alleges that from at least 1988 through at least March 2002, Goldberg raised approximately $6.1 million from investors by selling six different investments. In raising money, Goldberg misrepresented the nature of the investments and that he would use investors' funds — without their permission — for his own purposes. When the investments inevitably failed to generate the promised returns, Goldberg perpetuated the investments, just like a Ponzi scheme, by paying returns from funds raised from new investors.

Throughout this time, Goldberg served in positions of trust to his potential and existing investors. The Commission alleges that Goldberg raised nearly all his funds from his investment advisory clients, most recently at Essex, LLC. Goldberg also served on the Board of Directors for two issuers for which he raised money — Stamford International, Inc. and Dauphin Technology, Inc. In March 2002, Goldberg's scheme finally collapsed leaving his remaining investors with worthless investments.

The Commission's complaint alleges that Goldberg engaged in multiple violations of the antifraud provisions of the federal securities laws in connection with his Ponzi scheme. The Commission seeks a permanent injunction barring Goldberg from violating Sections 17(a)(1), (2), and (3) 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 (2) of the Investment Advisers Act of 1940. The Commission also seeks civil monetary penalties from Goldberg, disgorgement of any ill-gotten gains, and an order permanently barring Goldberg from acting as an officer and director of any public company.

SEC Complaint in this matter



Modified: 04/07/2003