The United States Securities and Exchange Commission (SEC) is near the end of its proceedings against JM Capital Holdings LLC and Christopher Fulco, accused of fraud. Today, the regulator filed a proposed final judgment against the defendants, which is set to settle the matter.

The document, seen by FX News Group, proposes that the defendants will pay disgorgement of $1,604,573.75, representing net profits gained as a result of the conduct alleged in the SEC’s complaint.

In addition, the defendants are permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 promulgated thereunder [17 C.F.R. § 240.10b-5], by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security:

  • (a) to employ any device, scheme, or artifice to defraud;
  • (b) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
  • (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

According to the SEC’s complaint, Christopher Fulco, through his company, JM Capital Holdings LLC, cold-called investors, including many elderly retirees, and solicited investments in a number of private companies, some of which he claimed were about to substantially increase in value following initial public offerings.

In truth, the SEC alleged, the defendants never invested the money in the manner represented; instead, Fulco used the money to fund his lifestyle, gamble at casinos, take vacations, and purchase luxury goods. Fulco also allegedly transferred almost $100,000 of investor money to his ex-fiancé, whom the SEC has named as a relief defendant.

Throughout the three-year offering fraud, Fulco used a series of aliases to conceal his true identity from investors and created fictitious documents to induce investors to transfer money to JM Capital.

The SEC’s complaint charged the defendants with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act.