Tuesday, August 28, 2007
On August 23, 2007, the federal district court in the Western District of New York issued an order granting the Commission's motion for summary judgment against defendants Edward Tackaberry ("Tackaberry") and Mark Palazzo ("Palazzo"), the owners and managers of six real estate investment companies (the "Pittsford Issuers") that raised approximately $15 million from 275 investors, including many senior citizens. The Court permanently enjoined Tackaberry and Palazzo from future violations of the antifraud provisions of the federal securities laws. The Court also ordered Palazzo and Tackaberry to disgorge $11,725,294.82, plus prejudgment interest, and imposed civil penalties of $75,000 each.In his order granting summary judgment, the court found that, of the $15.5 million raised in the offerings, Palazzo and Tackaberry distributed more than $4.4 million in a series of unauthorized and undisclosed loans that were not secured by mortgages and therefore contrary to the terms of the private placement memoranda. The Court also found that Palazzo and Tackaberry never disclosed that the separate bank accounts of the Pittsford Issuers had been closed and all funds commingled into a single account. Judge Telesca found that these and other misrepresentations and omissions were material, and that Palazzo and Tackaberry acted with a "high degree of scienter; they were trained securities professionals who repeatedly made materially false and misleading statements and omissions to investors in the Pittsford Issuers."