(HedgeCo.Net) The Securities and Exchange Commission has charged a New Jersey “claims aggregator” – a firm that submits claims on behalf of its clients to administrators tasked with returning settlement funds to harmed investors – and its three principals with defrauding distribution funds established to return money to securities fraud victims in a multi-year scheme that yielded millions of dollars.
The SEC’s complaint, filed in the U.S. District Court for the Eastern District of Pennsylvania, alleges that Joseph Cammarata, Erik Cohen, and David Punturieri, and two entities that they control, AlphaPlus Portfolio Recovery Corp. and Alpha Plus Recovery LLC (collectively AlphaPlus), stole at least $40 million from approximately 400 distribution funds, including more than $3 million from settlement funds arising from SEC enforcement actions. The complaint alleges that, starting in 2014, AlphaPlus engaged in a serial scheme to fraudulently obtain money by submitting false claims to settlement fund administrators – purporting to represent clients who had traded the securities that were the subjects of the underlying settlements. The complaint further alleges that defendants used false trading data and broker-dealer letterhead they misappropriated from other companies to “document” the purported trades and provide an air of legitimacy to their fake claims. According to the complaint, Cammarata, Cohen, and Punturieri funneled the fraudulently obtained distributions through a web of accounts they controlled and used the stolen money to pay for numerous personal expenses, such as jewelry, home renovations, luxury automobiles, watercraft, and real estate.
“We allege that AlphaPlus and its principals engaged in a brazen fraud, deceiving fund administrators to line their pockets with ill-gotten gains,” said Scott A. Thompson, Associate Regional Director of the SEC’s Philadelphia Regional Office. “We filed this action on an emergency basis to put a stop to this fraud and protect distribution funds and their rightful claimants from further harm.”
The complaint charges AlphaPlus, Cammarata, Cohen, and Punturieri with violating the anti-fraud provisions of the Securities Exchange Act of 1934. The court granted the SEC’s request for an asset freeze and temporary restraining order. The SEC seeks disgorgement of ill-gotten gains and prejudgment interest, and civil penalties against the defendants.
In a parallel action, the U.S. Attorney’s Office for the Eastern District of Pennsylvania announced criminal charges against Cammarata, Cohen, and Punturieri.