U.S. SECURITIES AND EXCHANGE COMISSION
Litigation Release No. 19245 /June 2, 2005
Securities and Exchange Commission v. Amerindo Investment Advisors Inc., et al., Civil Action No. 05 CV 5231 (LTS) (S.D.N.Y.)
SEC CHARGES AMERINDO INVESTMENT ADVISORS AND ITS CO-FOUNDERS AND PRINCIPALS, ALBERTO W. VILAR AND GARY A. TANAKA, WITH FRAUD AND MISAPPROPRIATION OF CLIENT FUNDS
The United States Securities and Exchange Commission filed a complaint yesterday alleging that Amerindo Investment Advisors Inc., Alberto William Vilar and Gary Alan Tanaka, Amerindo’s co-founders and principals, engaged in securities fraud by misappropriating at least $5 million from an Amerindo client. Amerindo is a registered investment adviser with offices in San Francisco, New York and London. The Commission’s complaint seeks disgorgement of the defendants’ ill-gotten gains, civil penalties, and permanent injunctions from future violations of the antifraud provisions of the federal securities laws. In addition, upon emergency motion by the Commission, the court granted a preliminary injunction against Amerindo, prohibiting Amerindo from future violations of the federal securities laws, and appointed a temporary monitor over Amerindo.
The complaint names the following defendants:
The Commission’s complaint alleges that in approximately June 2002, Vilar solicited an Amerindo client and close personal friend to invest $5 million in a limited partnership, the Amerindo Venture Fund LP, that was purportedly being organized to qualify and be operated as a Small Business Investment Company (“SBIC”). Shortly after the investor wired $5 million to a brokerage account as Amerindo had instructed, Tanaka began to transfer a portion of her funds to other accounts Vilar and Amerindo controlled. Specifically, within several days of her investment, Tanaka signed letters of authorization directing the transfer of at least $1.65 million to other accounts, including $1 million to a personal checking account held in Vilar’s name, and $650,000 to a bank account Amerindo controlled. Vilar then used the funds he received from the investor to pay personal expenses, including transferring $540,000 to Washington and Jefferson College, his alma mater to which he had pledged large sums, and $177,000 to the American Academy in Berlin, an institution to which Vilar had donated money in the past.
The complaint alleges that when the investor subsequently inquired about the status of her SBIC investment, Vilar informed her that, although the U.S. Small Business Administration (“SBA”) had approved Amerindo’s application for an SBIC license, Amerindo had to re-apply for a license because of personnel turnover at the SBA. Further, Vilar stated that, while this process was ongoing, Amerindo had to deposit funds for the SBA, and that her $5 million investment constituted part of the $10 million Amerindo was required to escrow to initiate the fund. The complaint alleges that Vilar’s statements were false because the SBA never approved a license for the Amerindo Venture Fund LP (or any other Amerindo affiliated fund), and Amerindo, the purported adviser to the fund, never deposited any funds or otherwise escrowed $10 million for the SBA.
The Commission’s complaint alleges that, based on the foregoing, Amerindo, Vilar and Tanaka violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further alleges that Amerindo violated, and Vilar and Tanaka aided and abetted violations of, Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-2(a).
On May 26, 2005, the United States Attorney’s Office for the Southern District of New York arrested Vilar and Tanaka.
The Commission acknowledges the assistance of the United States Attorney for the Southern District of New York and the United States Postal Inspection Service in connection with this matter.