Last week, the SEC filed civil fraud charges against a Florida-based business development company, its owner, a former officer, and a former auditor in connection to what officials say was a fraudulent disclosure and accounting scheme. Daniel Imperato, Charles Fiscina, Lawrence O’Donnell, and Imperiali, Inc. are the named defendants. The Complaint alleges that Imperato, from 2005 through 2008, used his company, Imperiali, to defraud Imperiali investors in a securities fraud scheme that misled investors about Imperiali’s financial status. Specifically, the Complaint alleges that Imperato directly solicited investments in Imperiali from approximately 60 investors, and sold a total of $2.5 million in Imperiali stock. He also allegedly hired a sales team to “cold call” potential investors. According to the Complaint, Imperato and his sales team distributed private-placement memorandums, which contained “numerous untrue and misleading statements,” to potential investors. These documents, the Complaint alleged, contained fictitious statements about Imperiali’s management, organization, and sales projections. “In documents distributed to investors and in reports filed with the Commission, Imperato, along with Fiscina and O’Donnel, portrayed Imperiali as a thriving, multinational corporation that owned multiple, valuable subsidiaries. In reality, Imperiali was just a shell corporation, having virtually no assets or operations. Its subsidiaries were worthless or, in some cases, even non-existent,” alleged the Complaint. The Complaint further alleged that the private-placement memorandums distributed to potential investors included statements that the stock-offering proceeds would be used to fund a business development company, which would then invest in other, promising companies. According to the Complaint, none of the stock-offering proceeds was used for this purpose. Instead, Imperato used the money to fund both his personal lifestyle and Imperiali’s operations. The SEC is seeking permanent injunctions and civil penalties from each defendant, as well as disgorgement with prejudgment interest against Imperiali and Imperato. The Commission further seeks an officer and director bar against Imperato and Fiscina. Fiscina has agreed to settle the charges against him, without admitting or denying the charges, according to a Jan. 11 litigation release.
