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$25 Million Final Judgment Against Perpetrator of Offering Fraud That Targeted Retail Investors


(HedgeCo.Net) A federal district court in Washington, DC has entered a final judgment against Lawrence P. Schmidt in a case the Securities and Exchange Commission brought against Schmidt and several entities he controlled for defrauding investors in connection with unregistered debt offerings.

In its complaint, the SEC alleged that Schmidt defrauded investors by creating a web of seemingly legitimate companies, including Commercial Equity Partners, Ltd. and FutureGen Company, that were in fact simply designed to entice investment and conceal his misuse and commingling of investor funds. Over a six year period, from 2008 through 2014, Schmidt raised nearly $22 million from over 200 unsuspecting investors who purchased notes from the various companies, siphoning off almost $2 million of investor funds for his own benefit, paying old investors with new investor money and ultimately firing all his employees and fleeing the country when his scheme collapsed. The court previously appointed a receiver at the SEC’s request to gather the property and assets of the defendants for distribution back to harmed investors. To date, the Receiver has distributed more than $2 million to harmed investors.

After Schmidt failed to the answer the SEC’s complaint, the court granted the SEC’s motion for a default judgment and entered a final judgment against him on October 3, 2018, ordering him to pay more than $25 million, consisting of disgorgement of $12,025,210, prejudgment interest of $1,717,982.11, and a civil penalty of $12,025,210. The final judgment also enjoins Schmidt from violating the registration provisions of Section 5 of the Securities Act of 1933, and the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934, as well as Rule 10b-5 thereunder, and bars him from serving as an officer or director of a public company.

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