Software Company Ceo And Former Adjunct Columbia Business School Professor Sentenced In Manhattan Federal Court For Multi-Million Dollar Fraud Scheme
Gregory Rorke, founder and CEO of Manhattan-based software company Navagate, Inc., Sentenced to Two Years in Prison for Defrauding Investors
Preet Bharara, the United States Attorney for the Southern District of New York announced today that GREGORY RORKE was sentenced to two years in prison for his scheme to defraud investors in his company, Navagate, Inc. (“Navagate”), of more than $3 million dollars. RORKE pled guilty on May 7, 2015, to one count of securities fraud and one count of wire fraud before U.S. District Court Judge Katherine Polk Failla, who also imposed today’s sentence.
U.S. Attorney Preet Bharara said: “As he admitted, Gregory Rorke lied to investors while soliciting their investments in his company. He overstated his own net worth and the tax liabilities of the company. Today, Rorke, a former professor at Columbia Business School, learned an important lesson in business ethics, as he was sentenced to two years in prison for his crimes.”
According to the Complaint, Indictment, other documents filed in the case, and statements made in open court:
From at least December 2009 through October 2014, RORKE engaged in a fraudulent scheme to mislead investors into making investments in a convertible debt offering (the “Navagate Offering”) in his company, Navagate. RORKE, a former adjunct professor at Columbia Business School, was the co-founder, chief executive, and principal owner of Navagate. RORKE solicited investments and was involved in the daily management and operation of Navagate.
RORKE solicited investor contributions to the Navagate Offering based on materially false and fraudulent misrepresentations. In particular, RORKE signed and provided to investors a personal guarantee supported by a financial statement. The financial statement falsely indicated that Rorke personally had at least $12 million in assets, including more than $1 million in cash, more than $5 million in “readily marketable securities” and a home worth more than $1 million. In truth, and as RORKE well knew, the majority of the pledged assets did not belong to RORKE.
In addition, in order to obtain access to funds invested by Navagate investors and maintained in an escrow account, RORKE signed a notarized affidavit indicating that he had paid monies owed to the Internal Revenue Service in satisfaction of Navagate’s tax liabilities. In truth, the tax liabilities had not been paid, remained outstanding, and were actually increasing.
As a result of his fraudulent scheme, RORKE raised approximately $3 million in investor money from more than 30 investors.
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In addition to the two-year prison term, RORKE, 63, of Manhattan and Bronxville, New York, was sentenced to three years of supervised release.
Mr. Bharara praised the work of the FBI and also thanked the Securities and Exchange Commission, which has brought civil actions against the defendant.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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 is 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 fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Andrea M. Griswold and Michael J. Ferrara are in charge of the prosecution.