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This case was last updated from PACER on 06/12/2021 at 12:53:04 (UTC).

Securities and Exchange Commission v. Silver

Case Summary

On April 13, 2021, the Securities and Exchange Commission (the “Commission”), represented by Daniel Michael, Lindsay S. Moilanen and Philip Andrew Fortino attorneys at the SEC’s New York Regional Office, filed a civil enforcement action against Martin Silver (“Silver” or “Defendant”), seeking injunctive relief, disgorgement of all ill-gotten gains, among other reliefs, for an alleged multi-million dollar investment fraud perpetrated by the Defendant. This case was filed in the U.S. District Court for the Southern District of New York with Judge Denise L. Cote presiding. 

 

In its complaint, the Commission alleged that “Beginning in or about 2007, Silver, with others, engaged in various deceptive acts to misrepresent the performance of and conceal losses in TOF, including overvaluing portfolio assets and replacing non-performing assets with fictitious loans that were reported as if they were legitimate performing assets. Fearing that existing investors would flee the fund and that ongoing fundraising efforts would suffer if the loss were disclosed, IIG’s two co-owners, Silver and David Hu (“Hu”), decided to conceal the loss by incorrectly valuing the loan at par plus accrued interest on TOF’s books. The overvaluation of the Coffee Loan materially inflated the NAV reported to TOF investors. When it became untenable to continue to carry the Coffee Loan on TOF’s books as a performing asset due to auditor scrutiny, Hu and Silver removed the Coffee Loan from the firm’s books and replaced it with fake loans to different borrowers (each, a “Substitute Loan”). Hu and Silver directed that documentation be created to evidence each Substitute Loan for audit purposes. In addition, starting in about 2010, Hu and Silver arranged for the purported borrowers to provide confirmations of the fake debts to auditors. In one case, Silver arranged for TOF to pay a monthly fee to a purported borrower in exchange for receiving such false confirmations.”

 

The Commission further alleged that “In or about 2010, a seafood producer defaulted on another sizable TOF loan of approximately $30 million to (the “Seafood Loan”). As in the case of the loss on the Coffee Loan, Hu and Silver agreed to hide the new loss by first continuing to value the Seafood Loan at par plus accrued interest and, when that became untenable, then removing the Seafood Loan from the portfolio and replacing it with additional Substitute Loans. Over time, as new losses arose or as the fictitious loans matured, Hu and Silver would remove them from the TOF portfolio and replace them with additional Substitute Loans. Hu and Silver’s practice of overvaluing loans, including valuing the worthless Substitute Loans in the tens of millions of dollars, artificially inflated TOF’s NAV and resulted in IIG receiving management and performance fees to which it was not entitled. As a co-owner of IIG, Silver received distributions of a portion of these excess fees.”

 

There are three claims for relief laid down by the Commission. The first claim is for the alleged violation of Sections 206(1) and (2) of the Advisers Act; the second claim is for alleged violations of Section 10(b) of the Exchange Act and Rules 10b-5(a), (b), and (c) thereunder; and the third claim is for alleged violations of Sections 17(a)(1), (2), and (3) of the Securities Act.

 

In its prayer for relief, the Commission has requested the court to permanently restrain and enjoin the Defendant from violating the laws alleged in the complaint; order disgorgement of ill-gotten gains or unjust enrichment including prejudgment interest thereon; and order to pay civil monetary penalty.

 

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Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    1:21-CV-03179

  • Filing Date:

    04/13/2021

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Finance - Security/Commodity/Exchange

  • Court:

    U.S. District Courts

  • Courthouse:

    New York Southern District

Judge Details

Presiding Judge

Denise L. Cote

 

Party Details

Plaintiff

Securities and Exchange Commission

Defendant

Martin Silver

Attorney/Law Firm Details

Plaintiff Attorneys

Lindsay Senechal Moilanen

Attorney at Securities and Exchange Commission

200 Vesey Street, Suite 400

New York, NY 10281

Daniel Michael

Attorney at Securities and Exchange Commission

200 Vesey Street, Suite 400

New York, NY 10281

Philip Andrew Fortino

Attorney at U.S. Securities & Exchange Commission

200 Vesey Street, Room 400

New York, NY 10281

 

Court Documents

#9

(#9) ORDER: It is hereby ORDERED that a status letter is due November 23, 2021. So Ordered. (Signed by Judge Denise L. Cote on 4/16/2021) (js) (Entered: 04/16/2021)

#8

(#8) JUDGMENT AS TO DEFENDANT MARTIN SILVER: The Securities and Exchange Commission having filed a Complaint and Defendant Martin Silver ("Defendant") having entered a general appearance; consented to the Court's jurisdiction over Defendant and the subject matter of this action; consented to entry of this Judgment; waived findings of fact and conclusions of law; and waived any right to appeal from this Judgment: IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Judgment by personal service or otherwise: (a) Defendant's officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with Defendant or with anyone described in (a). IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is permanently restrained and enjoined from violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (the Advisers Act) [15 U.S.C. 80b-6(1) and 80(b)-6 (2)], by, while acting as an investment adviser, using any means or instrumentalities of interstate commerce, or any means or instruments of transportation or communication in interstate commerce, or by the mails or any facility of any national securities exchange: As further set forth. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Judgment by personal service or otherwise: (a) Defendant's officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with Defendant or with anyone described in (a). IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is incorporated herein with the same force and effect as if fully set forth herein, and that Defendant shall comply with all of the undertakings and agreements set forth therein. VIII. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Judgment. Pursuant to Fed. R Civ. P 54(b), there is no just reason for delay in the entry of Judgment. So Ordered (Signed by Judge Denise L. Cote on 4/16/2021) (js) (Entered: 04/16/2021)

#7

(#7) LETTER addressed to Judge Denise L. Cote from Philip A. Fortino dated April 15, 2021 re: Proposed Judgment. Document filed by Securities and Exchange Commission..(Fortino, Philip) (Entered: 04/15/2021)

#5

(#5) NOTICE OF APPEARANCE by Lindsay Senechal Moilanen on behalf of Securities and Exchange Commission..(Moilanen, Lindsay) (Entered: 04/13/2021)

#4

(#4) NOTICE OF APPEARANCE by Philip Andrew Fortino on behalf of Securities and Exchange Commission..(Fortino, Philip) (Entered: 04/13/2021)

#3

(#3) STATEMENT OF RELATEDNESS re: that this action be filed as related to 19-cv-10796. Document filed by Securities and Exchange Commission..(Michael, Daniel) (Entered: 04/13/2021)

#2

(#2) CIVIL COVER SHEET filed..(Michael, Daniel) (Entered: 04/13/2021)

#1

(#1) COMPLAINT against Martin Silver. Document filed by Securities and Exchange Commission..(Michael, Daniel) (Entered: 04/13/2021)

 

Docket Entries

  • 04/16/2021
  • View Court Documents
  • Docket(#9) ORDER: It is hereby ORDERED that a status letter is due November 23, 2021. So Ordered. (Signed by Judge Denise L. Cote on 4/16/2021) (js) (Entered: 04/16/2021)

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  • 04/16/2021
  • View Court Documents
  • Docket(#8) JUDGMENT AS TO DEFENDANT MARTIN SILVER: The Securities and Exchange Commission having filed a Complaint and Defendant Martin Silver ("Defendant") having entered a general appearance; consented to the Court's jurisdiction over Defendant and the subject matter of this action; consented to entry of this Judgment; waived findings of fact and conclusions of law; and waived any right to appeal from this Judgment: IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Judgment by personal service or otherwise: (a) Defendant's officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with Defendant or with anyone described in (a). IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is permanently restrained and enjoined from violating Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (the Advisers Act) [15 U.S.C. 80b-6(1) and 80(b)-6 (2)], by, while acting as an investment adviser, using any means or instrumentalities of interstate commerce, or any means or instruments of transportation or communication in interstate commerce, or by the mails or any facility of any national securities exchange: As further set forth. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who receive actual notice of this Judgment by personal service or otherwise: (a) Defendant's officers, agents, servants, employees, and attorneys; and (b) other persons in active concert or participation with Defendant or with anyone described in (a). IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is incorporated herein with the same force and effect as if fully set forth herein, and that Defendant shall comply with all of the undertakings and agreements set forth therein. VIII. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Judgment. Pursuant to Fed. R Civ. P 54(b), there is no just reason for delay in the entry of Judgment. So Ordered (Signed by Judge Denise L. Cote on 4/16/2021) (js) (Entered: 04/16/2021)

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  • 04/15/2021
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  • Docket(#7) LETTER addressed to Judge Denise L. Cote from Philip A. Fortino dated April 15, 2021 re: Proposed Judgment. Document filed by Securities and Exchange Commission..(Fortino, Philip) (Entered: 04/15/2021)

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  • 04/15/2021
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  • Docket***NOTICE TO COURT REGARDING PROPOSED JUDGMENT. Document No. #6 Proposed Judgment was reviewed and approved as to form. (dt) (Entered: 04/15/2021)

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  • 04/15/2021
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  • Docket(#6) PROPOSED JUDGMENT. Document filed by Securities and Exchange Commission. (Attachments: #1 Consent to Judgment).(Fortino, Philip) Proposed Judgment to be reviewed by Clerk's Office staff. (Entered: 04/15/2021)

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  • 04/15/2021
  • DocketMagistrate Judge Robert W. Lehrburger is so designated. Pursuant to 28 U.S.C. Section 636(c) and Fed. R. Civ. P. 73(b)(1) parties are notified that they may consent to proceed before a United States Magistrate Judge. Parties who wish to consent may access the necessary form at the following link: #https://nysd.uscourts.gov/sites/default/files/2018-06/AO-3.pdf. (laq) (Entered: 04/15/2021)

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  • 04/15/2021
  • DocketNOTICE OF CASE REASSIGNMENT to Judge Denise L. Cote. Judge Unassigned is no longer assigned to the case. (laq) (Entered: 04/15/2021)

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  • 04/15/2021
  • DocketCASE ACCEPTED AS RELATED. Create association to 1:19-cv-10796-DLC. Notice of Assignment to follow. (laq) (Entered: 04/15/2021)

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  • 04/14/2021
  • DocketCASE REFERRED TO Judge Denise L. Cote as possibly related to 1:19cv10796. (sj) (Entered: 04/14/2021)

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  • 04/14/2021
  • DocketCase Designated ECF. (sj) (Entered: 04/14/2021)

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  • 04/14/2021
  • DocketCASE OPENING INITIAL ASSIGNMENT NOTICE: The above-entitled action is assigned to Judge Unassigned. (sj) (Entered: 04/14/2021)

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  • 04/13/2021
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  • Docket(#5) NOTICE OF APPEARANCE by Lindsay Senechal Moilanen on behalf of Securities and Exchange Commission..(Moilanen, Lindsay) (Entered: 04/13/2021)

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  • 04/13/2021
  • View Court Documents
  • Docket(#4) NOTICE OF APPEARANCE by Philip Andrew Fortino on behalf of Securities and Exchange Commission..(Fortino, Philip) (Entered: 04/13/2021)

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  • 04/13/2021
  • View Court Documents
  • Docket(#3) STATEMENT OF RELATEDNESS re: that this action be filed as related to 19-cv-10796. Document filed by Securities and Exchange Commission..(Michael, Daniel) (Entered: 04/13/2021)

    Read MoreRead Less
  • 04/13/2021
  • View Court Documents
  • Docket(#2) CIVIL COVER SHEET filed..(Michael, Daniel) (Entered: 04/13/2021)

    Read MoreRead Less
  • 04/13/2021
  • View Court Documents
  • Docket(#1) COMPLAINT against Martin Silver. Document filed by Securities and Exchange Commission..(Michael, Daniel) (Entered: 04/13/2021)

    Read MoreRead Less
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