South Florida Arbitration & Litigation Lawyer Blog
Summary Judgment Entered Against Defendants Charged With Defrauding Investors In Fictitious Offerings
The Commission recently announced that on December 17, 2012, the United States District Court for the Central District of California granted the Commission’s motion for summary judgment against all defendants and relief defendants in a civil action arising from two “prime bank” or “high yield” investment schemes that defrauded investors out of more than $11 million. In addition to permanently enjoining Francis E. Wilde, Steven E. Woods, Mark A. Gelazela, Bruce H. Haglund, and entities they control, from violations of the antifraud and other securities law provisions, the judgment also orders the defendants to pay disgorgement and civil penalties and bars Wilde and Haglund from acting as an officer or director of a public company. In addition, a separate judgment issued by the court orders relief defendants IBalance LLC, Maureen Wilde, and Shillelagh Capital Corporation to pay disgorgement of illegally obtained profits.
The Commission’s complaint, filed on February 24, 2011, alleged that Wilde, through his company Matrix Holdings LLC, orchestrated two fraudulent investment schemes. The first scheme began in April 2008 when Wilde obtained a U.S. Treasury bond with a market value of nearly $5 million from an investor by making false and misleading promises of outsized returns from what he claimed was a “private placement program.” Wilde eventually exhausted all of the funds obtained with the investor’s bond and never produced a return for the investor.
The Commission further claimed that, beginning in October 2009, Wilde concocted another fraudulent scheme with Woods and Gelazela in the form of a “bank guarantee funding” program using the services of Haglund as escrow attorney. Between October 2009 and mid-March 2010, Woods (through BMW Majestic LLC) and Gelazela (through IDLYC Holdings Trust (IDLYC) and IDLYC Holdings Trust LLC (IDLYC LLC)) signed contracts with 24 investors who sent over $6.3 million to Haglund’s trust account. Wilde never successfully acquired or leased a single legitimate financial instrument and exhausted all $6.3 million of the investors’ funds, much of which was taken by the defendants in the form of undisclosed fees.
The judgment permanently enjoins Wilde, Woods, Gelazela, Matrix, BMW Majestic, IDLYC, and IDLYC LLC from violating Sections 5 and 17(a) of the Securities Act of 1933 and Sections 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder; Woods and Gelazela from violating Section 15(a)(1) of the Exchange Act; and Haglund from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. [Securities and Exchange Commission v. Francis E. Wilde, Steven E. Woods, Mark A. Gelazela, Bruce H. Haglund, Matrix Holdings LLC, BMW Majestic LLC, IDLYC Holdings Trust LLC, and IDLYC Holdings Trust, et al., Case No. SACV 11-315 DOC (AJWx ) (C.D. Cal.)]
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