COURT GRANTS SUMMARY JUDGMENT AGAINST DEFENDANT CAROL MARTINO FOR ILLEGAL
BROKERAGE ACTIVITIES AND MARKET MANIPULATION; ORDERS MARTINO TO DISGORGE
$4.416 MILLION, AND ORDERS HER HUSBAND TO TURN OVER A $2 MILLION YACHT
PURCHASED WITH PROCEEDS OF MARTINO'S ILLEGAL BROKERAGE ACTIVITIES
The Commission announced the issuance of an Order dated April 4 by U.S.
District Judge Milton Pollack granting summary judgment in favor of the
Commission and against defendant Carol C. Martino and her former stock
brokerage firm (CMA Noel, Ltd.), holding them liable for engaging in
illegal brokerage activities during the period 1992 through 1995, and
further holding Martino liable for engaging in a 1993 scheme to
manipulate the stock price of RMS Titanic, Inc. (a company that
attempted to salvage artifacts from the sunken ocean liner). The Court
awarded the Commission disgorgement of Martino's illegal brokerage
revenues ($4.416 million), plus prejudgement interest of $3,386,842.92,
and other equitable relief. The Court further ordered Martino's
husband, relief defendant Gerard Haryman, and his company, defendant JTM
Ltd., to turn over to a court-appointed receiver a $2 million luxury
yacht that Martino had purchased with proceeds of her illegal brokerage
activities. The Court granted summary judgment following a hearing on
the matter held on March 17, 2003.
The Commission sued Martino and CMA in May 1998 for repeated violations
of a 1992 Commission order that barred Martino from acting as a stock
broker, and for engaging in such activities without registering as a
broker with the Commission (in violation of the federal securities
laws). The Commission had barred Martino based upon her prior
fraudulent activities as Executive Vice President of Wellshire
Securities, Inc., a retail brokerage firm. In its April 2 ruling, the
Court found that, from 1992 through 1995, Martino "willfully violated
the Bar Order" by illegally brokering millions of dollars in sales of
stock by several U.S. companies to foreign purchasers. The Court
further found that Martino thus accumulated illegal brokerage
commissions and fees totaling at least $4.416 million. The Court
ordered Martino to disgorge that sum to the Commission, plus prejudgment
interest on that amount (accrued from Dec. 31, 1995 to the present).
The Commission further charged Martino with engaging in a scheme (along
with defendant Paul Montle) to manipulate the stock price of RMS
Titanic, Inc., one of Martino's U.S. brokerage clients. The Court found
that Martino and others employed several manipulative devices to
maintain and increase artificially Titanic's stock price during the
Spring and Summer of 1993. Martino personally participated in the
scheme by (1) "agreeing [with other Titanic shareholders] to control and
order their sales of Titanic stock into the marketplace"; (2)
"guaranteeing" Titanic's principal market maker "purchasers for his
Titanic stock"; and (3) "paying brokers to influence their clients to
purchase Titanic stock." The Court previously held defendant Paul
Montle liable as well for this scheme.
The Commission also charged Martino's husband, Gerard Haryman, and his
company JTM, Ltd., with helping Martino to hide her illegal brokerage
revenues through the purchase of a $2 million yacht called "Je T'aime."
In granting the Commission summary judgment on this charge, the Court
found that "Martino purchased the yacht in November 1997 in an attempt
to hide her assets from creditors." The Court further found that,
although the yacht nominally was held by JTM, "Martino had unfettered
access to the Yacht since the date of purchase," and "[n]o legitimate
claim to the Yacht exists upon which Haryman or JTM might rely."
Consequently, the Court ordered Haryman and JTM "to turn over the Yacht
or its proceeds to a court-appointed receiver as partial payment of the
disgorgement figure imposed on Martino and CMA."
In addition, the Court permanently enjoined Martino and CMA from future
violations of the federal securities laws.
On Jan. 7, 2002, in a separate criminal proceeding brought by the U.S.
Attorney for the Southern District of New York, Martino pled guilty to
three counts of personal income tax evasion and three counts of falsely
subscribing to corporate returns. The indictment in the criminal action
includes charges that Martino failed to disclose certain income,
including illegal brokerage revenue that was the subject of the
Commission's civil enforcement action against her. In April 2002,
Martino received a twenty-eight month sentence, which she began serving
at a federal detention center in Miami, Florida. On Dec. 12, 2002, due
to a serious illness, Martino was released from prison and is presently
on supervised-release. [SEC v. Carol C. Martino, et al., 98 Civ. 3446,
SDNY] (LR-18072) |
