12.11.2009 The Federal Court for the District of Massachusetts entered consent judgments in a previously filed enforcement action against Frank J. Russo, a Massachusetts-based former investment adviser, and his investment advisory corporation, FJR Corporation. The court also entered an order by default on October 30, 2009, against Russo Associates Limited Partnership, a now defunct limited partnership controlled by Russo. The judgments enjoin Russo, FJR, and Russo Associates from future violations of the securities laws. Also, on October 2, 2009, the SEC voluntarily dismissed without prejudice the SEC’s case against Eliot Partners, also defunct, because it had no status as a legal entity and was merely a d/b/a for Russo.

The SEC had filed an emergency enforcement action on June 6, 2006, against Russo, FJR, Russo Associates, and Eliot Partners, and obtained a court order freezing Russo’s assets and the assets of entities he controlled. The SEC alleged that Russo and FJR convinced at least 160 investors to invest a total exceeding $15 million in the purported investment vehicles they controlled. The SEC alleged that Russo misled investors about the nature of the investments and their expected returns. According to the SEC, Russo also diverted at least $11.5 million in investor funds to Veritasiti Corporation, a private California company, which Russo co-founded with a college friend. On June 28, 2006, the SEC amended its complaint to name Veritasiti as a relief defendant and obtained a court order freezing its assets. On October 30, 2008, the court entered a default judgment against Veritasiti, ordering the company to pay disgorgement and pre-judgment interest of $14.1 million.

On February 25, 2008, in a parallel criminal proceeding, Russo pled guilty to federal charges of investment fraud and mail fraud. He was sentenced to 18 years in prison to be followed by three years of supervised release and ordered to pay $20 million in restitution and a $500,000 fine. Because of those criminal sanctions, the judgments the SEC obtained on December 11 against Russo and FJR do not include additional monetary relief. Russo, who is currently incarcerated, was also barred by the SEC in March 2008 from any future association with any investment adviser based on his criminal conviction.

Click http://www.sec.gov/litigation/litreleases/2009/lr21333.htm to access the release.