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U.S. Securities and Exchange Commission


Litigation Release No. 18664 / April 7, 2004

SECURITIES AND EXCHANGE COMMISSION V. METROPOLIS HOLDINGS, LLC AND EDWARD GRAY, United States District Court for the Eastern District of California, Civil Action No. F 03-5538 AWI

Judgments Entered Against Metropolis Holdings, LLC and Edward Gray For Operating Fraudulent Investment Scheme

United States District Judge Anthony Ishii entered judgments against a Fresno, California company and its manager for operating a fraudulent investment scheme. On March 30, 2004, the Court ordered Metropolis Holdings, LLC and Edward Gray to disgorge $3,320,000. The Court also enjoined Metropolis Holdings and Gray from future activities that violated the prohibitions on fraud in the federal securities laws.

On May 1, 2003, the Commission filed a complaint against Gray and Metropolis alleging that the defendants raised $5.1 million by selling interests in a non-existent "Asset Management Program" from July to November 2002. The Commission alleged that Gray lured investors by offering high returns on their investment and promising that investors' funds would be protected by insurance. According to the complaint, Gray dissipated approximately $2 million on personal items, including a new car and jewelry, and on expenditures for unrelated business projects. The complaint charged the defendants with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

In August 2003, Gray pleaded guilty to federal charges of wire fraud and mail fraud in connection with the same fraudulent scheme. He was later sentenced to 54 months incarceration.


Modified: 04/07/2004