EOSC news from today's SEC Digest:
COURT SANCTIONS ATTORNEY CHARLES HECHT FOR CONTEMPT
On May 14, Judge Denise L. Cote of the Federal District Court in Manhattan signed a consent order that requires Charles Hecht, Esq., a partner in a New York law firm, to pay $180,000 to resolve a civil contempt motion brought by the Securities and Exchange Commission.
Mr. Hecht represented William N. Levy, one of twenty defendants in SEC v. Cavanagh, et al. (98 Civ. 1818 (DLC)), a pending civil case alleging massive fraudulent sales of unregistered stock of Electro-Optical Systems Corporation, mostly via the Internet. The SEC's contempt motion charged that (1) Mr. Hecht received legal fees from Levy while Levy's assets were frozen by Judge Cote's order; and (2) Mr. Hecht participated with Levy in preparing and filing with the Court a false accounting about Levy's assets and transactions that omitted to disclose that Levy had received unregistered Electro-Optical stock and then retailed it for about $560,000. (As previously announced, on January 7, 1999, Levy was ordered to pay $1,292,000 to the Court's Registry, which includes the $560,000 omitted from the accounting.)
At a May 14 hearing on the contempt motion, Judge Cote, responding to Mr. Hecht's explanation of his conduct, stated that the Levy accounting omitted "certain critical facts which you [Hecht] were aware of, and the filing was false in terms of its language, but it was also intended to be misleading." Judge Cote, noted the seriousness of an attorney's "obligations to the Court, to the law or under your license".
The $180,000 that Mr. Hecht agreed to pay includes more than $150,000 (with interest) as disgorgement of attorney's fees Mr. Hecht's law firm received in the case, as well as more than $20,000 representing the SEC's attorney's fees on the contempt motion, calculated at a rate of $300 per hour.
The civil case, SEC v. Cavanagh, et al., has been stayed pending a criminal investigation of related matters. [SEC v. Cavanagh, et al., 98 Civ. 1818, DLC, SDNY] (LR-16152)
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