uggs.co.uk Federal judge fines Kokesh
A federal judge has ordered former investment fund owner Charles Kokesh to pay a civil penalty and return almost $35 million “in ill gotten gains” taken before his Santa Fe based operation went broke. Magistrate Stephan M. Securities and Exchange Commission, which investigates non criminal cases of securities fraud. The judge’s order also bars Kokesh from doing any further business in the securities industry.
The judgment relates to funds that went by the name Technology Funding. Kokesh marketed the funds to smaller investors who were looking for access to technology startup companies during a time when there was an appetite for that sector.
“He specifically targeted smaller investors [$5,000 or less] because they would be less likely to sue if they discovered his schemes. Based on these circumstances, the court finds that defendant’s actions were egregious,” Vidmar wrote. District Court.
The attorney representing Kokesh, Clinton W. Marrs, did not return a telephone call or an email seeking comment. In earlier pleadings, Marrs argued that imposing a large financial burden on Kokesh would be counterproductive. “Mr. Kokesh is insolvent,” Marrs wrote in a court filing.
Kokesh argued in court filings that the national recession, not his business practices,
was the real culprit in the failure of his investment funds.
The judge’s order includes a memorandum opinion that lays out what he described as a system by Kokesh to cheat investors.
It says that Kokesh instructed another executive to take $23.8 million “from the funds to pay salary and bonuses to defendant and other advisers. The contracts between the advisers and the fund contains no bonus provision and prohibited payments to advisers that were not expressly specified in the contracts. Defendant did not disclose the bonus payments to the funds’ directors or in SEC filings he signed.”
Vidmar’s judgment also discusses a $6.1 million withdrawal in 2000 for “payments falsely described in SEC reports as tax distributions. Defendant personally received more than 90 percent of the money. Defendant knew the money he received was not related to a tax liability, but he did not return the money to the funds. Defendant paid only $10,304 in federal taxes in 2000.”
In all, the judge agreed with all the measures sought by the Securities and Exchange Commission. These are a civil penalty of $2.35 million and “disgorgement” of $34.9 million, a term that means repayment of ill gotten gains, as well an injunction restricting Kokesh in the securities business. The ruling also requires Kokesh to repay the interest on the $34.9 million, about $18.1 million.
Kokesh has degrees in both law and business and specialized in funding startup companies. His funds opened up that opportunity to small investors, and when he was in Santa Fe they attracted millions in new money and spawned dozens of successful companies.
Kokesh and his family were also active in the community with the purchase of the Santa Fe Horse Park, which was used for both recreational and collegiate level polo matches, as well as equestrian events.