U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19010 / December 22, 2004
SEC v. Dennis Herula et al., (United States District Court for the District of Rhode Island, C.A. No. 02 154 ML, filed April 1, 2002)
Court Enters Final Judgment by Consent Against Relief Defendant David L. Ullom
The Commission announced that, on December 6, 2004, a Rhode Island federal court entered a final judgment by consent against David L. Ullom, a relief defendant in a civil injunctive action filed by the Commission in April 2002, in connection with an alleged fraudulent scheme that raised at least $52 million from investors. The Commission named Ullom as a relief defendant in its complaint. The complaint alleges that Ullom received approximately $190,000 in investor funds to which he has no legitimate claim.
The Commission alleges in its complaint that individuals associated with an entity formerly known as Brite Business made fraudulent representations to investors, promising exorbitant returns through a high yield trading program. According to the Commission's complaint, most of the Brite Business investor funds were maintained in a brokerage account at the Cranston, Rhode Island office of Raymond James Financial Services, Inc. The complaint alleges that at all relevant times, Ullom was the branch office manager of Raymond James's Cranston office, and Dennis Herula was both a registered representative at the Cranston office of Raymond James and was the designated representative for the Brite Business account. The complaint further alleges that, between 1999 and 2001, Herula and others associated with Brite Business misappropriated, transferred or lost approximately $20 million in investor funds. According to the Commission's complaint, Ullom received $190,000 in Brite Business investor funds to which he was not entitled and for which he performed no services. The Commission alleges that those funds should be returned to investors. On July 17, 2002, the Court issued a Memorandum and Order freezing $190,000 of Ullom's assets, based on its finding that the Commission was likely to succeed in proving that Ullom has no legitimate claim to those funds.
In the December 6, 2004 final judgment, the Honorable Mary M. Lisi ordered that Ullom is liable for disgorgement of $190,000, representing profits gained by Ullom, together with prejudgment interest in the amount of $49,309.75, for a total of $239,309.75. Based on Ullom's sworn representations and other documents and information submitted to the Commission, however, the Court waived payment of all but $10,000 of the disgorgement and prejudgment interest. According to the final judgment, the Court's determination to waive payment of all but $10,000 is contingent upon the accuracy and completeness of Ullom's financial statements.
For further information, please see, Litigation Release No. 17633 (July 26, 2002) [$190,000 asset freeze as to Ullom]; Litigation Release No. 17514 (May 13, 2002) [asset freeze as to Ullom and preliminary injunction order and asset freeze as to certain defendants]; Litigation Release No. 17461 (April 5, 2002) [asset freeze as to Ullom and temporary restraining order and asset freeze as to certain defendants].