U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18473 / November 20, 2003
Securities and Exchange Commission v. Adam G. Kruger and Kruger, Miller and Tummillo, Inc., Civil Action No. 03 CV 8288 (N.D. Ill. Nov. 19, 2003).
On November 19, the Securities and Exchange Commission filed an emergency injunctive action in the United States District Court for the Northern District of Illinois against Kruger, Miller & Tummillo, Inc. (KMT), a corporation located in Illinois, and its president Adam G. Kruger, age 22 and resident of Roselle, Illinois. The action seeks to halt a fraud relating to the offer and sale of interests in at least two investment schemes promoted by Kruger and KMT. On the same day, Judge Samuel Der-Yeghiayan issued a temporary restraining order restraining Kruger and KMT from moving assets, destroying evidence and raising additional funds for investments. Judge Der-Yeghiayan also ordered a preliminary injunction hearing for November 26 at 9 a.m.
The Complaint alleges that, since approximately August 2000, Kruger raised at least $908,750 from twelve known investors by telling those investors that he would pool their money to day-trade various securities or to purchase stock in a privately-held company. For these services, Kruger told investors that he would not take any compensation. The Complaint asserts, however, that Kruger and KMT did not use all the investor money for the promoted investments and, in fact, used at least some of the money to pay Kruger's personal expenses. Kruger and KMT concealed their misuse of investor funds and obtained additional investment dollars by providing false reports to investors that greatly overstated the value of their investments. The Complaint alleges that KMT's and Kruger's actions are ongoing in that Kruger has recently represented to investors that he will pay back their original investment amounts from money obtained through new investment and business deals.
The Complaint asserts that Kruger and KMT violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Complaint also asserts that KMT violated Sections 206(1) and 206(2) of the Investment Advisers Act and that Kruger aided and abetted such violations.
In a related case, Kruger was arrested on November 19. The Commission thanks the U.S. Attorney's Office for the Northern District of Illinois and the U.S. Postal Inspection Service for their assistance in this matter.