Defendants: Emanuel L. Sarris, Sr.,
Sarris Financial Group, Inc.
This complaint stems from a massive Ponzi scheme allegedly
perpetrated, in part, by Emanuel L. Sarris and his investment
advisory firm, Sarris Financial Group, Inc. According to the
complaint, Sarris convinced more than 70 investors to invest over
$30 million in the "Kenzie Funds," which purportedly
invested in foreign currency. Allegedly, the Kenzie Funds invested
less than one-third of investor capital, inflated performance
figures, and funded redemption requests with principal from other
investors. In total, from 2001 through 2009 the Kenzie Funds
defrauded more than 400 investors out of over $100 million. In
2010, the SEC filed a lawsuit against the Kenzie Funds and their
manager, Daniel Spitzer, who the court ordered to pay $44 million
in disgorgement and prejudgment interest and a $150,000 civil
penalty. Spitzer was later indicted on multiple counts of criminal
fraud for his involvement in the scheme.
The complaint alleges that Sarris continued to sell the Kenzie
Funds in 2010, despite the Kenzie Funds' apparent dissolution
after the 2010 suit filed by the SEC. The complaint further alleges
that Sarris falsely represented to investors that his firm was
independent from the Kenzie Funds and "gets nothing out
of" attracting investment capital. However, the defendants
allegedly earned an annual salary and received over $1.5 million in
incentive payments from one of the Kenzie companies. Allegedly,
Sarris lured investors, most of whom were retired individuals, by
soliciting existing Sarris Financial Group estate planning and
insurance clients or by hosting free estate planning seminars and
private conferences or dinners. The plaintiff alleges that Sarris
fraudulently assured investors of the safety of the Kenzie Funds,
while ignoring blatant red flags regarding their legitimacy.
Further, the complaint alleges that on at least two occasions
Sarris recommended that the Kenzie companies use incoming
investments to fund redemption requests.
Based on these allegations, the complaint alleges four causes of
action against the defendants: (i) violations of sections 5(a) and
5(c) of the
Securities Act (ii) violations of sections 17(a)(1) of the
Securities Act; (iii) violations of sections 17(a)(2) and (3) of
the Securities Act; and (iv) violations of section 10(b) of the
Exchange Act, and Rule 10b-5 promulgated thereunder. According to
the complaint, the plaintiff seeks an order enjoining defendants
from engaging in securities transactions in violation of the
provisions alleged in the complaint, disgorgement of wrongful
gains, and civil penalties under the Exchange Act and Securities
United States District Court for the Eastern District of
July 26, 2012
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In its first public Policy Statement regarding the treatment of cooperation in investigations, the Public Company Accounting Oversight Board provided guidance on how it will consider a firm’s or associated person’s "extraordinary cooperation".
After a two-week trial before United States District Court Judge Edward Chen of the Northern District of California, David Nosal was convicted of three counts of violating the Computer Fraud and Abuse Act.
The U.S. Court of Appeals for the Second Circuit in United States v. Walsh ruled that the defendant could not use the proceeds from the sale of his house to fund his criminal defense because he used tainted funds to obtain the home.
In Commonwealth v. Nies, No. 5793-2012 (Pa. Ct. Com. Pl, Apr. 18, 2013), the Honorable John A. Boccabella of the Berks County Court of Common Pleas applied a somewhat rare exception to the requirement that those who do not submit to a blood test in connection with a DUI investigation are subject to enhanced sentencing requirements.