Investment and Securities Fraud and Misrepresentation Litigation and FINRA Arbitration Lawyer, Russell L. Forkey, Esq.
United States Securities Exchange Commission v. Imperiali, Inc., Daniel Imperato, Charles Fiscina, and Lawrence O’Donnell Civil Action No. 9:12-cv-80021 (S.D. Fla.)(January 9, 2012)
SEC Charges Issuer, Officers and Auditor with Fraud
Recently, the Securities and Exchange Commission charged Florida-based Imperiali, Inc., one current and one former officer, and its former auditor for their involvement in a fraudulent disclosure and accounting scheme.
The SEC’s Complaint alleges that between 2005 and 2008, Daniel Imperato orchestrated a scheme to use Imperiali, a business development company that Imperato owned and controlled, to defraud investors by making it appear that Imperiali was a thriving multinational corporation with several wholly-owned businesses, when in fact it was nothing more than a shell corporation. The Complaint alleges that Imperiali raised approximately $2.5 million using offering materials that included numerous material misrepresentations and omissions, and that Imperato and Fiscina drafted, reviewed, and certified at least 16 materially false and misleading registration statements, periodic reports and current reports with the Commission on behalf of Imperiali. Among other things, the Complaint alleges that those filings overvalued Imperiali’s virtually worthless assets at amounts ranging from $3.5 million to $269 million, and failed to disclose the issuance of millions of shares of restricted stock. The Complaint also alleges that O’Donnell failed to audit Imperiali’s financial statements in accordance with Public Company Accounting Oversight Board (PCAOB) Standards, and issued audit reports on Imperiali’s financial statements that he knew or was reckless in not knowing contained materially false and misleading information.
The SEC’s complaint charges that Imperiali and Imperato violated, or aided and abetted violations of, Sections 5(a), 5(a), and 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder; that Imperiali also violated Sections 18(d), 31(a), and 34(b) of the Investment Company Act of 1940 (Investment Company Act) and rule 31a-1 thereunder; that Imperato also violated Sections 13(b)(5) and 15(a) of the Exchange Act and rules 13b2-1, 13b2-2, and 13a-14 thereunder, and Section 34(b) of the Investment Company Act; and that O’Donnell violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC seeks permanent injunctions and civil penalties from each defendant, disgorgement with prejudgment interest from Imperiali and Imperato, and an officer and director bar against Imperato, and Fiscina.
Without admitting or denying the SEC’s allegations, Fiscina has consented to the entry of a final judgment that permanently enjoins him from future violations of Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1, 13b2-2, and 13a-14 thereunder, and Section 34(b) of the Investment Company Act, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-11, and 13a-13 thereunder, and bars him from acting as an officer or director of a public company. The Fiscina final judgment does not impose a civil penalty against him based on his sworn inability to pay. The settlement is subject to the Court’s approval.