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Securities and Exchange Commission

Litigation Release No. 18549 / January 21, 2004

SEC To Recover About $4 Million in Settlements with the Girlfriend and Estranged Wife of Jailed Stockbroker Frank Gruttadauria

Securities and Exchange Commission v. Frank D. Gruttadauria, DH Strategic Partners, Inc., JYM Trading Trust, Laurene English, Defendants, and Sarah Z. Emamy, Charlie Whiskey, LLC, and Margo Gruttadauria, Relief Defendants, Civil Action No. 1:02CV324 (Judge Gaughan)

The Securities and Exchange Commission announced today that the federal judge presiding over its lawsuit against former broker Frank Gruttadauria has approved the settlements that the Commission has reached with Sarah Z. Emamy, the girlfriend of Frank Gruttadauria, and Margo Gruttadauria, his estranged wife. Under the settlements, Emamy will disgorge $2.1 million in cash and transfer a residence to a court-appointed liquidation agent. Frank Gruttadauria and Emamy had purchased the residence in early 2001 for about $1.5 million. Margo Gruttadauria will disgorge $400,000 in cash. The total amount to be recovered under these settlements is about $4 million.

In February 2002, the Commission sued Frank Gruttadauria in the United States District Court for the Northern District of Ohio for perpetrating a massive fraud over a fifteen-year period against scores of his customers. Gruttadauria misappropriated over $115 million during that period and sent falsified account statements that overstated the actual holdings in customer accounts by over $280 million. The Commission also sued Emamy, seeking to recover assets that it alleged Frank Gruttadauria had given her and were the direct or indirect proceeds of his illegal conduct. In June 2002, the Commission amended its complaint to sue Margo Gruttadauria, seeking to recover assets that it alleged Frank Gruttadauria had given her. The Commission did not allege that either Emamy or Margo Gruttadauria had known of, or participated in, Frank Gruttadauria's fraud.

On February 26, 2002, Judge Gaughan granted the Commission's motion for a temporary restraining order against Frank Gruttadauria and froze his assets. On March 11, 2002, Judge Gaughan granted the Commission's motion for a preliminary injunction against Frank Gruttadauria, who is presently in federal custody serving a seven-year jail term. On August 14, 2003, the Commission issued administrative orders against SG Cowen Securities Corporation and Lehman Brothers, Inc. for failing to supervise Frank D. Gruttadauria.

For further information, see Litigation Release Nos. 17369 (February 21, 2002), 17418 (March 18, 2002), 17590 (June 27, 2002) and Administrative Procedure Releases Nos. 48335 and 48336 (August 14, 2003).



Modified: 01/21/2004