CEO Of Broker-Dealer Charged In Manhattan Federal Court With Obstructing Regulatory Examination By Producing False Invoices To SEC Exam Team, And With Making False Statements And False Filings Related To Net Capital
Preet Bharara, the United States Attorney for the Southern District of New York, Philip R. Bartlett, Inspector in Charge of the United States Postal Inspection Service (“USPIS”), and George Venizelos, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced that CHARLES J. MOORE was arrested this morning and charged with obstructing a regulatory examination and making false statements and false filings. As alleged, MOORE repeatedly caused the broker-dealer firm Crucible Capital Group, Inc. (“Crucible”), which he controlled, to report its net capital above the threshold mandated by Securities and Exchange Commission (“SEC”) regulations, when, in fact, the firm had a net capital deficiency. MOORE is also alleged to have supported these false filings by directing a Crucible employee to falsify invoices received from vendors by removing references to past-due balances, and deliver the falsified invoices to SEC employees conducting a regulatory examination of Crucible. MOORE was arrested this morning at Crucible’s offices at 27 Whitehall Street in Manhattan, and will be presented before U.S. Magistrate Judge Sarah Netburn this afternoon.
Manhattan U.S. Attorney Preet Bharara said: “The SEC is entitled to the truth when it examines the books and records of institutions as it seeks to protect investors and our markets. Broker-dealers, from large institutions to boutique firms, have a duty to make accurate financial reports. As the charges set forth, Charles Moore attempted to blow smoke in the eyes of the SEC, which was also an attempt to deceive his clients, and such charges come with appropriately hefty maximum sentences.”
USPIS Inspector in Charge Philip R. Bartlett said: “The idea that Mr. Moore allegedly concocted a scheme to provide false documentation to a government agency and believe it would go unnoticed is a crime of great arrogance. Postal Inspectors along with their law enforcement partners have no tolerance for anyone who breaks the law.”
FBI Assistant Director-in-Charge George Venizelos said: “As alleged, Moore deliberately tried to hide debts on required SEC reports for almost eight months and then when the SEC was looking into it, he further tried to hide his lies and actions by directing employees to create falsified invoices and use personal email accounts to cover his trail. Lies and cover-ups are not an acceptable way for a chief executive officer to act. The FBI will continue to investigate this type of illegal conduct and prosecute those who violate our laws.”
According to the Complaint unsealed today:
MOORE was at all relevant times the Chief Executive Officer of Crucible, an SEC-registered broker-dealer that maintained no customer securities trading accounts, but held itself out as a “boutique” investment bank helping small businesses to raise capital and financing. Crucible used its status as an SEC-registered broker-dealer to solicit business.
MOORE was also at all relevant times the CEO of an affiliated company, Angelic Holdings LLC (“Angelic”), which was not registered with the SEC and conducted “due diligence” for Crucible-related business. Crucible and Angelic shared employees and office space. They also shared expenses, under an agreement that had Crucible paying Angelic a monthly fee and Angelic paying vendors of certain specified services on behalf of both Angelic and Crucible.
As an SEC-registered broker-dealer that maintained no customer accounts, Crucible was required to maintain net capital of at least $5,000 at all times. It was also required to file monthly “FOCUS” reports with the SEC reporting its net capital. Finally, Crucible was required to preserve and archive its business-related emails for review by the SEC upon request.
From in or about February 2013 through in or about September 2013, MOORE caused Crucible to file false FOCUS reports that failed to account for certain large debts. These debts, although nominally owed by Angelic, were required by SEC regulation and guidance to have been incorporated into Crucible’s net capital computation. Had they been so incorporated, Crucible would have been required to report a net capital deficiency throughout much of 2013.
In the fall of 2013, the SEC opened a regulatory examination of Crucible to explore, among other things, the accuracy of Crucible’s net capital reporting. As part of that examination, the SEC requested all 2013 invoices to Angelic for Crucible-related expenses.
MOORE, responding to this request, caused a Crucible employee to create falsified invoices to deliver to the SEC. Specifically, he directed the employee to take original invoices that had been sent to Crucible personnel, and create versions of those invoices that omitted references to large, unpaid debts appearing on the originals. MOORE then caused the employee to hand the falsified invoices to the SEC.
Finally, throughout 2013, MOORE tried to hide the truth about Crucible’s net capital and its outstanding debts by directing – in flagrant breach of regulatory requirements and his own firm’s compliance policy – that all correspondence with professionals involved in Crucible’s and Angelic’s finances take place not over Crucible’s business email accounts but instead over MOORE’s own and his employees’ personal email accounts. Many of the original invoices that MOORE directed his employee to falsify before furnishing to the SEC in the fall of 2013 had, at MOORE’s instruction, been sent by the vendor to a Gmail account belonging to a Crucible employee.
MOORE, 62, is charged with obstructing a regulatory examination, making false statements, and falsifying and failing to keep required books and records of a broker-dealer. The obstruction and falsifying records counts each carry a maximum sentence of 20 years in prison. The false statement charge carries a maximum sentence of five years in prison.
Mr. Bharara praised the investigative work of the USPIS and the FBI and thanked the SEC, which has filed civil charges in a separate action.
This case is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Sarah E. McCallum and Andrew B. Bauer are in charge of the prosecution.
The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.