U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19094 / February 18, 2005
SECURITIES AND EXCHANGE COMMISSION v. THE BENNETT FUNDING GROUP, INC., PATRICK R. BENNETT, BENNETT MANAGEMENT AND DEVELOPMENT CORPORATION, BENNETT RECEIVABLES CORPORATION, and BENNETT RECEIVABLES CORPORATION-II, 96 Civ. 2237 (SPRIZZO) (S.D.N.Y.)
On December 17, 2004 the Honorable John E. Sprizzo, United States District Judge for the Southern District of New York, entered a final consent judgment against Patrick R. Bennett enjoining Bennett from violating the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and prohibiting Bennett from acting as an officer or director of any public company.
In March 1996 the Commission filed a complaint alleging that Bennett and entities controlled by Bennett violated the antifraud provisions of the federal securities laws by, among other things, engaging in a massive "Ponzi" scheme through which they defrauded investors out of over $570 million and diverting those funds to Bennett, members of his family and others who were connected to him. The Commission's case was stayed pending the outcome of parallel criminal proceedings against Bennett. Bennett was convicted of numerous charges, including two counts of securities fraud arising from conduct alleged in the Commission's complaint. He was sentenced to 22 years in prison ordered to forfeit $109,088,889. Bennett's conviction was affirmed on appeal, and the Supreme Court denied his petition for a writ of certiorari on January 12, 2004.
On July 26, 2004, Judge Sprizzo entered a final consent judgment against the entities named as defendants in the Commission's complaint -- The Bennett Funding Group, Inc., The Bennett Management and Development Corporation, Bennett Receivables Corporation, and Bennett Receivables Corporation-II -- enjoining them from violating the antifraud provisions of the federal securities laws and ordering them to disgorge $400 million in ill-gotten gains. The disgorgement obligation is satisfied by the distribution to injured investors of funds recovered by the bankruptcy trustee for the Bennett entities.