U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23717 / January 12, 2017
Securities and Exchange Commission v. Gregory W. Gray, Jr., et al., Civil Action No. 15-cv 1465 (S.D.N.Y. February 27, 2015) (LAK)
U.S. District Court
Perpetrators of Ponzi-Like Scheme Settle Charges and Court Approves Plan of Distribution to InvestorsThe United States Securities and Exchange Commission announces that on January 10, 2017, Honorable Lewis A. Kaplan, United States District Court for the Southern District of New York, entered judgments, on the consents of Gregory W. Gray, Jr., Archipel Capital LLC, and BIM Management LP, permanently enjoining them from violating the antifraud provisions of the federal securities laws and ordering them to jointly and severally pay $8,034,355.19 in disgorgement with prejudgment interest. The Commission also announces that on January 9, 2017, the Court approved the Commission and Receiver's joint plan of distribution amended to address certain objections.
The Complaint, filed on February 27, 2015, and amended on July 19, 2015, alleged that Buffalo, NY resident Gray raised nearly $5.3 million from investors seeking to purchase pre-IPO Twitter shares under the terms of the fund's offering documents. However, Gray did not purchase enough shares before Twitter went public in November 2013, and he only managed to pay investors in the Twitter-related fund by tapping three other unrelated funds. The majority of money used to make these Ponzi-like payments came from one investor who was told he had bought the entirety of a fund supposedly investing in $5 million worth of stock in Uber Technologies Inc. when Gray in fact had purchased no shares of Uber stock.
Without admitting or denying the allegations of the Complaint, Gray, Archipel, and BIM consented to judgments which: (a) permanently enjoin them from violating Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities and Exchange Act of 1934, and Rule 10b-5 thereunder; and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder; and (b) order them to jointly and severally pay disgorgement of $7,894,100 with prejudgment interest of $140,255.19, which is deemed satisfied by the $5 million orders of forfeiture and restitution entered against Gray in the parallel criminal action United States v. Gregory W. Gray, Jr. No. 15 Cr. 297 (SHS) (S.D.N.Y). On December 23, 2015, Gray pled guilty to securities fraud and perjury in the criminal action, and on October 25, 2016, Gray was sentenced to 24 month in prison.
Investors may direct their inquiries concerning the joint plan of distribution to the receiver, Lucien A. Morin, II, at (585) 546-2500 and may review his website for investors at http://www.mccmlaw.com/archipel-capital-receiver-info.