SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18119 / April 29, 2003
SEC v. Kenneth P. Kasarjian and The Kenton Group, Inc. f/k/a Kenton Portfolio Management, Inc., 97 Civ. 2516 (JES)(SDNY)
BENNETT FUNDING GROUP OFFICER AND COMPANY HE CONTROLLED CONSENT TO SETTLE SEC FRAUD CHARGES AGREE TO BAR FROM OFFERING UNREGISTERED SECURITIES
The Securities and Exchange Commission (Commission) announced today that Kenneth P. Kasarjian (Kasarjian), formerly an executive of The Bennett Funding Group, Inc. (BFG), and The Kenton Group, Inc. (Kenton), a company Kasarjian owned, have agreed to settle the Commission's enforcement action pending against them in the United States District Court for the Southern District of New York. The settlement, which remains subject to court approval, resolves the action in which the Commission charges that Kasarjian and Kenton played instrumental roles in a massive "Ponzi" scheme perpetrated by BFG and its former chief financial officer, Patrick Bennett. In the settlement, Kasarjian and Kenton have consented to the entry of a final judgment that not only enjoins them from committing further violations of the securities laws, but also bars them from again participating in the offer or sale of unregistered securities.
In its complaint, the Commission alleged that, between 1990 and 1995, Kasarjian fraudulently offered and sold over $810 million of unregistered securities to investors while he was senior vice president of BFG and a registered representative of a broker-dealer wholly owned by BFG. Kasarjian, through Kenton, sold investments in purported office equipment leases that did not exist or that already had been assigned to others. The Commission also alleged that Kasarjian and Kenton distributed materially false BFG financial statements in connection with the sale of promissory notes to the public and, from approximately October 1995 through March 1996, sold membership interests in four investment funds by falsely representing that the funds would invest in particular types of income-generating obligations of BFG.
Without admitting or denying the Commission's allegations, Kasarjian and Kenton consented to a final judgment permanently enjoining them from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1993 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. That final judgment, if approved by the court, will also bar the defendants from ever again offering or selling unregistered securities professionally to investors. Specifically, it will permanently enjoin Kasarjian and Kenton from participating in an unregistered offering "while acting as, on behalf of, or in association with, an issuer, underwriter, broker, or dealer."
On April 10, 1997, in a parallel action brought by the United States Attorney's Office for the Southern District of New York, Kasarjian pleaded guilty in federal court to criminal charges in connection with the fraudulent scheme and agreed to pay $900,000 from the sale of his home to BFG's bankruptcy estate. On July 19, 2000, Kasarjian was sentenced to two years imprisonment and ordered to pay $100,000 in restitution to the BFG estate. In addition, Kasarjian has given the BFG estate an additional $300,000 in proceeds from the sale of his home, $129,641 from his sale of certain securities, and certain other stock holdings.
For more information, see Litigation Release Nos. 14875 (April 15, 1996), 14991 (July 26, 1996), 15324 (April 10, 1997) and 15398 (June 26, 1997).