Securities Law Prof Blog

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

Monday, November 10, 2008

SEC Charges Individual with Fraudulently Obtaining Investors' Funds

The SEC filed an injunctive action in the United States District Court for the Southern District of Illinois against Jeffrey Laumbattus, alleging that he fraudulently obtained approximately $150,000 from at least twelve individuals who believed that he would invest their monies in the U.S. stock market for their benefit. In fact, the Commission alleges, Laumbattus never invested in the stock market any of the monies he received from those investors and used them for his personal use.  The SEC also filed an application for a temporary restraining order in order to freeze Jeffrey Laumbattus' assets.

The Commission's complaint alleges that Laumbattus sought out investor funds by holding himself out as a consultant with "Moriah Group," a fictitious investment firm. Laumbattus falsely represented to investors that Moriah Group had been managing millions of dollars for large institutional investors since 1950 with average annual returns of 300 percent, and falsely represented to investors that their money would be pooled with large sums invested by institutional investors, in order to achieve a greater return on their money. The complaint further alleges that Laumbattus signed correspondence to investors on Moriah Group letterhead under a fictitious name as the purported "managing director" of Moriah Group, to further the appearance of a legitimate investment firm

The complaint seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil money penalties.  On November 4, 2008, Laumbattus was indicted and charged with securities, wire and mail fraud.

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