Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, May 22, 2007

Securities Fraud Judgment Against C.E.C. Industries Officers

On May 8, 2007, the Honorable Henry H. Kennedy, U.S. District Judge for the District of Columbia, entered judgment against defendants Gerald H. Levine and Marie A. Levine in the Commission's litigation against them for violations of the federal securities laws. In addition to finding both Levines liable for securities fraud and other federal securities law violations, the Court held the defendants jointly and severally liable for disgorgement of $217,368.59 plus prejudgment interest and ordered them to pay, jointly and severally, a civil penalty of $200,000. The Court also enjoined the Levines for a period of ten years from violating the anti-fraud provisions of the federal securities laws, and barred each of them for a period of ten years from serving as an officer or director of a public company.

The judgment followed a December 2006 hearing during which the Court heard evidence on what remedies should be imposed as a result of the October 2003 jury verdict that found that the defendants had fraudulently overstated the assets of C.E.C. Industries Corporation (CEC) and filed false annual and quarterly reports with the Commission. In his Findings of Fact and Conclusions of Law, Judge Kennedy stated, among other things, that "[t]he Levines undertook a complex scheme of stealth and concealment by which they defrauded investors and brought financial gain to themselves," and that they were the "undisputed kingpins" of the scheme. Judge Kennedy further stated the Levines "utterly failed to acknowledge their wrongdoing or show contrition."  For further information, see the SEC press release.

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