SEC v. Michael Clarke, No. LR-18196, District of Rhode Island (June 20, 2003) — Press Release

Litigation Rel. No. 18196 / June 20, 2003 Court Enters Default Judgment Against British Citizen Michael Clarke and Orders Him to Pay over $24 Million The Commission announced that, on June 10, 2003, a Rhode Island federal court entered a default judgment against British citizen Michael Clarke, a defendant in an action filed by the Commission in April 2002. The Commission alleged in its complaint that Clarke and others participated in a fraudulent offering scheme that raised at least $52 million from investors. In the default judgment, the Honorable Mary M. Lisi permanently enjoined Clarke from future violations of the antifraud provisions of the federal securities laws and ordered him to pay approximately $25 million in disgorgement, interest and a penalty. The Commission filed its action against Clarke and eight other defendants and a relief defendant on April 1, 2002, alleging that Clarke, operating through entities formerly known as Brite Business S.A. and Brite Business Corporation, initiated a scheme that made fraudulent representations to investors through a high yield trading program. According to the Commission's complaint, Clarke raised approximately $51.75 million from five investors. The Commission's complaint alleges that agreements Clarke entered into with these investors promised astronomical returns (such as a nearly 300% return in twelve banking days) and possessed characterizations of investment programs typical of "prime bank" investment schemes to defraud. The complaint further alleges that, between 1999 and 2001, Clarke and others associated with Brite Business misappropriated, transferred or lost approximately $20 million in investor funds. On April 3, 2002, the court issued a temporary restraining order freezing the assets of Clarke and others. The June 10, 2003 final judgment enjoins Clarke from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, orders him to pay disgorgement in the amount of $19,800,000, plus prejudgment interest in the amount of $4,863,372.72, for a total amount of $24,663,372.72, and assesses a $250,000 civil monetary penalty against him. For further information, please see Litigation Release Numbers 17800 (October 23, 2002) [permanent injunction entered against Defendant Dennis Herula]; 17957 (January 29, 3003) [permanent injunction entered against Defendant Mary Lee Capalbo]; 17461 (April 5, 2002) [asset freeze against Clarke and others].

Litigation Rel. No. 18196 / June 20, 2003 Court Enters Default Judgment Against British Citizen Michael Clarke and Orders Him to Pay over $24 Million The Commission announced that, on June 10, 2003, a Rhode Island federal court entered a default judgment against British citizen Michael Clarke, a defendant in an action filed by the Commission in April 2002. The Commission alleged in its complaint that Clarke and others participated in a fraudulent offering scheme that raised at least $52 million from investors. In the default judgment, the Honorable Mary M. Lisi permanently enjoined Clarke from future violations of the antifraud provisions of the federal securities laws and ordered him to pay approximately $25 million in disgorgement, interest and a penalty. The Commission filed its action against Clarke and eight other defendants and a relief defendant on April 1, 2002, alleging that Clarke, operating through entities formerly known as Brite Business S.A. and Brite Business Corporation, initiated a scheme that made fraudulent representations to investors through a high yield trading program. According to the Commission's complaint, Clarke raised approximately $51.75 million from five investors. The Commission's complaint alleges that agreements Clarke entered into with these investors promised astronomical returns (such as a nearly 300% return in twelve banking days) and possessed characterizations of investment programs typical of "prime bank" investment schemes to defraud. The complaint further alleges that, between 1999 and 2001, Clarke and others associated with Brite Business misappropriated, transferred or lost approximately $20 million in investor funds. On April 3, 2002, the court issued a temporary restraining order freezing the assets of Clarke and others. The June 10, 2003 final judgment enjoins Clarke from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, orders him to pay disgorgement in the amount of $19,800,000, plus prejudgment interest in the amount of $4,863,372.72, for a total amount of $24,663,372.72, and assesses a $250,000 civil monetary penalty against him. For further information, please see Litigation Release Numbers 17800 (October 23, 2002) [permanent injunction entered against Defendant Dennis Herula]; 17957 (January 29, 3003) [permanent injunction entered against Defendant Mary Lee Capalbo]; 17461 (April 5, 2002) [asset freeze against Clarke and others].