2006-08-16 sec-litreleases litigation_release 66 KB 4,192 chars

SEC v. Eric Walsh; and John Abresch, No. LR-19804, Southern District of Florida (Aug. 16, 2006) — Press Release

raw: Eric Walsh, John Abresch et al.

Eric Walsh, John Abresch et al., No. LR-19804 (Aug. 16, 2006)

Caption: SEC v. Eric Walsh, et al.

summary

Eric Walsh, former principal of Discovery Capital, was sentenced to 57 months in prison and ordered to pay $2.6 million in restitution for orchestrating a fraudulent boiler room scheme that raised $2.7 million from investors through misrepresentations and false statements to the SEC, while his co-conspirator John Abresch also pleaded guilty and faced penalties.

paragraph

Eric Walsh was convicted of conspiracy to commit wire, mail, and securities fraud, as well as securities fraud under Rule 10b-5 and making false statements to the SEC during a 2002 examination, after orchestrating a boiler room scheme that raised approximately $2.7 million from investors in the U.S. and Europe. He misappropriated investor funds via an off-the-books account and was sentenced to 57 months in federal prison and $2.6 million in criminal restitution, in addition to prior civil penalties of $500,000 in disgorgement and a $90,000 fine. His co-conspirator John Abresch also pleaded guilty, was permanently enjoined from securities violations, barred from the industry, and ordered to disgorge $195,000 after his civil penalties were waived.

narrative

Eric Walsh, former principal of Discovery Capital, a now-defunct broker-dealer based in Coral Springs, Florida, was sentenced to 57 months in federal prison and ordered to pay $2.6 million in criminal restitution for orchestrating a fraudulent boiler room scheme that raised approximately $2.7 million from investors in the U.S. and Europe. Walsh and his co-conspirator John Abresch used high-pressure sales tactics and made false claims about the company’s growth, affiliations with major brokerage firms, and the safety of investments to deceive investors. Walsh also misappropriated investor proceeds through an off-the-books account and lied in writing to SEC examiners during a 2002 on-site examination, leading to a separate conviction for making false statements to a federal agency. The SEC obtained an emergency injunction and asset freeze in March 2002, appointed a receiver, and later permanently enjoined both men from violating securities laws while revoking Discovery Capital’s registration. In 2003, Walsh was ordered to pay over $500,000 in disgorgement and a $90,000 civil penalty, while Abresch’s civil disgorgement was reduced to $195,000 after financial hardship claims. Both were barred from association with any broker-dealer, and Walsh’s criminal restitution of $2.6 million reflects the full extent of investor losses uncovered in the case.

Enriched metadata

Scheme: boiler-room (100%)
Court: Southern District of Florida
Outcome: convicted · 2006-09-11
Disgorgement: $195,000
Restitution: $2,600,000
Civil penalty: $90,000
Victim loss: $2,700,000
Entity: Eric Walsh

Classified boiler-room(confidence 100%). EDGAR detection: forms Form D· recall 50% / precision 4%. detection rule →

Extracted insights

Dollar amounts 7

$2.70M $2.7 million $1M–$10M
$2.60M $2.6 Million $1M–$10M
$2.60M $2.6 million $1M–$10M
$500K $500,000 $100K–$1M
$500K $500,000 $100K–$1M
$195K $195,000 $100K–$1M
$90K $90,000 $10K–$100K

Entities 1

organization Broker-Dealer

Triples 4

SEC announced Erik B. Walsh was sentenced on July 27, 2006
Eric Walsh was sentenced 57 months in prison
Eric Walsh ordered to pay $2.6 million in restitution
Broker-Dealer raised millions from investors in a fraudulent securities offering

View original SEC litigation releasesec.gov

Extracted body text (4,192c)

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 19804 / August 16, 2006 SEC v. Eric Walsh, John Abresch et al., United States District Court for the Southern District of Florida, Crim. No. 06-20071-CR-Moore Former Principal of Coral Springs, Florida Broker-Dealer Which Raised Millions From Investors in a Fraudulent Securities Offering Sentenced to 57 Months in Prison and Ordered to Pay $2.6 Million in Restitution The Securities and Exchange Commission (Commission) announced today that on July 27, 2006, Erik B. Walsh, was sentenced by the Honorable K. Michael Moore, United States District Court Judge for the Southern District of Florida, to a federal prison sentence of 57 months and ordered to pay criminal restitution in the amount of $2.6 million. Both Walsh and John Abresch, former principals of Discovery Capital, Inc., a Coral Springs broker-dealer formerly registered with the Commission, were convicted after pleading guilty to violations of the federal securities laws in connection with their role in a "boiler room" operation that fraudulently induced investors in the U.S. and Europe to invest millions. Abresch's sentencing is scheduled for September 11, 2006. In connection with the fraudulent Discovery Capital offering, Walsh was convicted of conspiracy to commit wire fraud, mail fraud and securities fraud (18 U.S.C. § 371), and securities fraud (15 U.S.C. §§ 78j(b) and 78ff(a), 17 C.F.R. § 240.10b-5). Walsh was also convicted of one count of making false statements to the Commission (18 U.S.C. § 1001(a)(2)), in connection with the Commission's on site examination of Discovery Capital in 2002. Specifically, Walsh lied in writing to examiners in response to their questions during the examination. In March 2002, the Commission brought an emergency action against Walsh and Abresch, charging them with violations of the antifraud and registration violations of the federal securities laws in connection with Discovery Capital's fraudulent securities offering. In that action, the United States District Court for the Southern District of Florida issued a temporary restraining order and an asset freeze to halt the on-going offering of securities by Discovery Capital. The District Court also appointed a receiver, Michael I. Goldberg, over Discovery Capital. The Commission's Complaint alleged that from at least June 2001 through the filing of the action, Discovery Capital raised approximately $2.7 million through the use of a network of primarily unlicensed sales agents using high pressure sales tactics and making misrepresentations about, among other things, Discovery Capital's growth, its affiliations with well-known brokerage firms and other institutions, and the safety of the investments. The Complaint further alleged that Walsh misappropriated investor proceeds through the use of an "off the books" account in the name of Discovery Capital. In October 2002, by consent, the District Court permanently enjoined Walsh and Abresch from violations of 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 enjoined Discovery Capital from further violations of Section 17(a) of the Securities Act, Sections 10(b), 15(c) and 17(a) of the Exchange Act, and Rules 10b-5, 15c1-2, 15c3-1, 17a-3, 17a-4, 17a-5, and 17a-11 thereunder. In October 2002, the Court further ordered Abresch to disgorge over $500,000, but waived payment of all but $195,000 and did not impose a civil money penalty based on Abresch's sworn financial statement and other information submitted to the Commission. In January 2003, the Court ordered Walsh to pay over $500,000 in disgorgement and prejudgment interest and imposed a $90,000 civil penalty. Subsequently, in March and April 2003, the Commission barred Walsh and Abresch, respectively, from association with a broker or dealer, and in March 2003, the Commission revoked the registration of Discovery Capital. For further information, see Litigation Release Nos. 17420 (March 19, 2002), 17813 (October 29, 2002), 17812 (October 29, 2002), 17914 (January 7, 2003), and 19610 (March 16, 2006).

OCR text (4,192c · plain-text · 99% conf)