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Note: From 2008 to 2011, Brett A. Cooper enticed investors to invest in so-called high yield investment contracts with promises of extraordinarily high returns. During this time, Cooper persuaded at least ten investors to invest approximately USD 2.1 million.

Cooper pretended to use an escrow agent to make the investments seem legitimate, but in reality he was his own agent. The investors then wired money to Cooper’s own accounts. “Finally, after being sued for fraud, Cooper forged a letter showing that he was entitled to a USD 50,000 finder’s fee for services he did not actually render.”

Cooper managed fictitious corporation-like entities to further the fraudulent investments. “Cooper told investors they were investing in bank instruments ‘from major international banks,’ and that the instruments would be ‘monetized’ or ‘traded’ in secret transactions, assuring the investors that their funds were safe and if the investments fell through, the money would be returned to them. In fact, the bank instruments did not exist and Cooper invested his victims’ money in nothing more than his own lavish lifestyle.” All but one Investor lost everything they invested.

The U.S. Securities and Exchange Commission initially sued Cooper and five of his alter-ego entities in September 2013 for securities fraud seeking an injunction. In November 2015, the United States District Court for the District of New Jersey granted summary judgment against Cooper and permanently enjoined him from committing future violations of anti-fraud provisions of the U.S. Securities Act, Section 17(a); Sections 10(b) and 15(a) of the Exchange Act; Exchange Act Rule 10b-5; and “from ‘participating directly or indirectly in the issuance, offer, or sale of any securities.’” He was also ordered to disgorge over USD 2 million, as well as pay over USD 300,000 in prejudgment interest and a civil penalty of nearly USD 2.5 million.

Subsequently, the SEC Division of Enforcement commenced an administrative proceeding to bar Cooper “from associating with a broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or nationally recognized statistical rating organization.” James E. Grimes, Administrative Law Judge, granted the SEC motion for summary disposition.

In barring Cooper from such associations, an extraordinary remedy, the Judge stated that Cooper’s actions were egregious because he deliberately stole investors’ money on false pretenses. His scheme was intentional and calculated and his conduct was not isolated since he targeted over ten investors. The Judge noted that Cooper had shown no recognition of the wrongs he committed, did not answer questions during depositions, and did not respond to any of the current proceedings against him. Furthermore, Cooper had no other occupation beyond perpetrating his fraud. Thus, allowing him to continue to operate in the securities industry would present opportunities for more future violations of the law. The Judge also observed that he continued perpetrating securities fraud after being sued and notified of the Commission’s investigation. In conclusion, the Judge ruled that by a preponderance of the evidence that Cooper is unfit to take part in the securities industry, and allowing him to do so would be against the public interest.

[JLN]

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The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of the ICC or Coastline Solutions.