U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18299 / August 20, 2003
Father and Son Investment Advisers Enjoined From Fraudulent Conduct and Ordered to Disgorge Over $800,000 in Ill-gotten Gains and Pay $500,000 in Civil Penalties
Securities and Exchange Commission v. Michael Batterman, Randall B. Batterman III, and Dynasty Fund, Ltd., et al., Civil Action No. 00 Civ. 2835 (S.D.N.Y) (LAP)
NEW YORK -- The Securities and Exchange Commission ("SEC") announced today that the United States District Court for the Southern District of New York has granted it summary judgment and entered a final judgment against a father and son for perpetrating a fraudulent scheme to sell at least $925,000 of securities of Dynasty Fund Ltd. ("Dynasty") a British Virgin Islands corporation that claimed to be an open-end investment management company. The Final Judgment, permanently enjoins the father and son from future violations of the anti-fraud provisions of the securities laws, orders both to disgorge a total of $837,182, consisting of $475,000 in funds misappropriated from investors plus prejudgment interest of $32,182, and imposes on each a penalty of $250,000.
Subject to the judgment are:
Michael Batterman ("M. Batterman") who is 71 years old and lives in Hackensack, New Jersey.
Randall B. Batterman III ("R. Batterman") who is 41 years old, lives in Hackensack, New Jersey and is M. Batterman's son.
The SEC's complaint alleged: between at least November 1993 through at least August of 1995, M. Batterman, R. Batterman and Dynasty fraudulently sold at least $925,000 of Dynasty's securities by promoting M. Batterman as a successful investment adviser with an unblemished record who would manage Dynasty's funds. In fact, M. Batterman previously had pled guilty to two felony counts of federal income tax evasion in 1993, was found by the court in those proceedings to have converted unlawfully $1.5 million in investors' funds for personal use, and was sanctioned in 1976 by the SEC for securities law violations and the New York Stock Exchange ("NYSE") for violation of NYSE rules. To conceal their fraud and solicit additional investments in Dynasty, M. Batterman and R. Batterman misrepresented Dynasty's performance. Thereafter, together they misappropriated a substantial portion of the funds they received from Dynasty's investors.
The Final Judgment entered by the Court on July 23, 2003, in addition to requiring the payment of disgorgement and penalties described above, permanently enjoins M. Batterman and R. Batterman from further violations of Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a), Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R § 240.10b-5, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-6(1) and (2).
On August 6, 2003, the Court denied a motion by M. Batterman and R. Batterman for relief from the judgment pursuant to Federal Rule of Civil Procedure 60.
On December 19, 2000, a Partial Judgment by Default was entered against Dynasty enjoining Dynasty from further violations of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R § 240.10b-5. On November 29, 2001, a Partial Final Judgment was entered against Dynasty requiring Dynasty to disgorge $730,000 plus prejudgment interest of $485,238 and imposes on Dynasty a $500,000 civil penalty.
See also Litigation Release No. 16615 (June 30, 2000)(filing of Complaint).