U.S. Securities and Exchange Commission
Litigation Release No. 19256 / June 8, 2005.
Securities and Exchange Commission v. Bruce M. Perry and M. Brooks Turkel, Civil Action No. 05-21525-CIV-Martinez (S.D. Florida, filed June 8, 2005).
SEC CHARGES TWO FORMER OFFICERS OF MOUNT SINAI MEDICAL CENTER WITH FRAUD
The United States Securities and Exchange Commission (“Commission”) announced today that it filed a complaint charging Bruce M. Perry (“Perry”) and M. Brooks Turkel (“Turkel”) with securities fraud in connection with the offer and sale of municipal bonds issued in May 2001, by Mount Sinai Medical Center of Florida, Inc. (“Mount Sinai” or the “hospital”), a hospital based in Miami Beach, Florida. Perry and Turkel were senior officers of Mount Sinai. Specifically, Perry was the hospital’s chief executive officer from January 1999 through October 2001, and Turkel was its chief financial officer from December 1999 through July 2001 and then its chief planning officer from July 2001 until October 2001.
The complaint alleges that Perry and Turkel made material misrepresentations and omissions in the Official Statements and other documents disseminated to investors in connection with a series of three bonds issued by Mount Sinai in May 2001, through the City of Miami Beach Health Facilities Authority, totaling approximately $184 million (the “2001 bond offerings”). Specifically, the complaint alleges that Mount Sinai, through Perry and Turkel, made material misrepresentations and omissions in connection with the 2001 bond offerings because it failed to disclose in the Official Statements that the hospital was experiencing a significant deterioration in its cash position, and was in the midst of a severe liquidity problem. Further, the complaint alleges that the Official Statements misrepresented that eight of Mount Sinai’s high volume managed care contracts had been renegotiated, and that the renegotiated contracts were expected to contribute approximately $10 million annually of additional revenue for the hospital beginning in 2001. According to the complaint, the Official Statements also contained baseless projections of the hospital’s anticipated revenue.
As alleged in the complaint, Perry and Turkel re-iterated the above misrepresentations to institutional investors and bond rating agencies prior to the 2001 bond issue. Moreover, the complaint alleges that Mount Sinai, through Perry and Turkel, made additional misrepresentations and omissions in its second quarter report for the quarter ended June 30, 2001, which was filed with various repositories in accordance with the terms of the bond covenants.
The complaint alleges that, as a result of the foregoing, Perry and Turkel violated Section 17(a) of the Securities Act of 1933 (“Securities Act”), Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), and Rule 10b-5 thereunder. The Commission seeks a permanent injunction against Perry and the imposition of civil money penalties against Perry and Turkel. Turkel has consented, without admitting or denying, to the entry of a Final Judgment imposing a civil money penalty of $35,000 against him.
In a separate administrative action, the Commission issued an Order Instituting Cease-and-Desist Proceedings, Making Findings, and Imposing Cease-and-Desist Order (“Order”) against Mount Sinai, Turkel and another former senior officer of Mount Sinai. The Order, which makes findings based on the same conduct alleged in the Commission’s complaint against Perry and Turkel, orders Mount Sinai, Turkel and the other former senior officer to each cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Rule 10b-5 thereunder. Mount Sinai, Turkel and the other former senior officer each consented to the issuance of the Order without admitting or denying any of its findings.