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U.S. Securities and Exchange Commission

Litigation Release No. 18152 /May 21, 2003

United States v. Jeffrey L. Goldberg, No. 03CR 332 (N.D. Ill.) (Hon. Milton I. Shadur).

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

Investment Adviser Jeffrey L. Goldberg Admits Scamming Millions of Dollars from Investors

The Securities and Exchange Commission announced that on April 23, 2003, Jeffrey L. Goldberg, age 51, of Buffalo Grove, Illinois, pled guilty to two counts of mail fraud for selling a series of investments that defrauded approximately 130 investors out of more than $8 million. Goldberg entered the plea before the Honorable Milton I. Shadur, Senior United States District Court Judge for the Northern District of Illinois. Goldberg is scheduled to be sentenced on June 18, 2003. Goldberg faces a maximum ten year prison sentence, and could be ordered to pay $500,000 in fines and more than $8 million in restitution to the victims of his fraud.

Goldberg admits to fraudulently raising funds from investors, many of whom were his investment advisory clients at Essex, LLC. 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.

One such investment that Goldberg admits was a fraud was the Stamford Escrow. Beginning in July 2000, Goldberg raised more than $1.7 million from forty-three investors purportedly to fund an escrow account required by Canadian law to complete a merger of a Canadian company and a high-tech American company. Goldberg represented that investors would receive stock in the merged companies when the merger was finalized. Goldberg further represented that investors' funds were refundable at any time because their money was in an escrow account in Canada. In reality, no such escrow account existed. Instead, Goldberg used investors' money to make payments to investors in an earlier investment called HCC Funding and to fund a land development project in Long Grove, Illinois called Acacia Ventures. As a result, all forty-three Stamford Escrow investors lost their entire investment.

Goldberg's guilty plea came just three weeks after the United States Attorney filed criminal mail fraud charges and the Securities and Exchange Commission civil securities fraud charges against him. The Commission's action against Goldberg is pending before the Honorable Rebecca R. Pallmeyer, United States District Court Judge for the Northern District of Illinois. Additional information regarding the Commission's lawsuit can be found in Litigation Release No. 18073, April 4, 2003.



Modified: 05/21/2003