U.S. Securities and Exchange Commission
Litigation Release No. 18243 / July 23, 2003
Securities and Exchange Commission v. Philip R. Gratz, Case No. 91-2136-CIV-MARRA
SEC Seeks Civil Contempt Sanctions Against Philip And Eric Gratz For Violating A Federal Court's Asset Freeze Order
The Securities and Exchange Commission (SEC) announced that on June 27, 2003, it filed with the United States District Court for the Southern District of Florida, an Application for an Order to Show Cause why Philip Gratz ("Gratz") and Eric Gratz should not be held in civil contempt for failing to comply with the Court's Asset Freeze Order of March 21, 2003. That order, among other things, froze the assets of Philip, Christine and Eric Gratz. In the Application for an Order to Show Cause, the SEC alleged that Philip and Eric Gratz, only days after being served with the Asset Freeze Order, arranged to sell expensive artwork photographs. The Order remains in place and specifically lists artwork as assets that cannot be transferred or sold. The Application alleged that Eric and Philip Gratz, in direct contravention of the March 21, 2003 Order, sold artwork in order to raise money for their personal use.
The Application arose out of a prior motion for contempt filed on March 20, 2003, against Gratz for violating the Final Judgment of Permanent Injunction and Other Relief entered on April 30, 1992, in SEC v. Delta Rental Systems, et. al., Case No. 91-2136-CIV-MARRA (S.D. Fla.) (the "Delta Final Judgment"). The Delta Final Judgment prohibited Gratz from violating the antifraud provisions of the federal securities laws in the future.
In the March 20th Motion for Contempt, the SEC alleged that from at least November 1998 through the filing of the first contempt motion, Gratz violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934, and Rule 10b-5, thereunder. These violations arose when Gratz fraudulently offered and sold securities to the public, raising over $9 million from investors. In addition, the motion alleged that Gratz failed to disclose his disciplinary history to investors, which included the Delta Final Judgment, an SEC administrative bar, and a federal criminal conviction for securities and mail fraud.
See also Litigation Release No. 18051 (March 25, 2003).