U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18542 / January 14, 2004
S.E.C. v. Merrill Scott & Associates, Ltd., et al. Docket No. 2:02CV 0039C (USDC Utah)
The Securities and Exchange Commission filed, on November 10, 2003, a Motion for Contempt Against Patrick M. Brody, alleging that Brody had violated a January 15, 2002, order issued by the United States District Court for the District of Utah freezing his assets in S.E.C. v. Merrill Scott & Associates, Ltd., et al. Brody was originally charged by the Commission in that civil injunctive action with violations of the antifraud provisions of the federal securities laws for his conduct in an offshore investment scheme.
In the January 2002 action, the Commission obtained an order, among other things, enjoining Brody from violations of federal securities laws and freezing the assets of Brody and a complex network of legal entities and accounts that operated under the umbrella of Merrill Scott & Associates, Ltd. ("Merrill Scott"). The contempt motion alleges that in violation of the January 15, 2002, order, Brody continued to engage in the same conduct from which he was enjoined under the name of Fortune Advisors, Inc., and that he financed Fortune Advisers using funds transferred to Merrill Scott agents prior to imposition of the asset freeze. It is further alleged that Brody has continued his deceptive business practices by misappropriating investor funds intended for Fortune Advisors in violation of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Advisers Act.
The Commission is seeking that Brody be held in contempt of the court's orders, and is requesting that Brody be ordered to repay the funds transferred in violation of the court's asset freeze and to provide a sworn accounting of all accounts and assets of the Merrill Scott organization.