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SEC dismisses action against Goto

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The Honourable Joseph A.DiClerico for the United States District Court for the District of New Hampshire has granted the SEC’s Motion for Voluntary Dismissal of Defendant Koji Goto and Relief Defendant Shaleen Cassily in an enforcement action the Commission filed in 2003.

The Commission moved to dismiss the action after Goto was sentenced to up to 75 years in prison and ordered to pay USD3.2 million in restitution in a parallel state criminal proceeding, was found incompetent by a court to face further trials, and had all of his assets liquidated and distributed through a bankruptcy proceeding.

The Commission originally filed its action against Goto on 14 November, 2003, alleging that Goto misappropriated more than USD5 million of investor funds by falsely stating that the money would be invested in a Boston-based hedge fund and in a food services business. Instead of investing the funds in the businesses he purported to represent, Goto diverted investor funds to his own bank accounts for his own personal gain. Cassily, who was then Goto’s wife, was named as a relief defendant in the Commission’s action based on her alleged receipt of some proceeds of Goto’s fraud. On 14 November, 2003, the US District Court issued a temporary restraining order that, among other things froze defendant Goto’s and relief defendant Cassily’s assets. On 3 December, 2003, the District Court issued a preliminary injunction and asset freeze against Goto and Cassily. The asset freeze was modified by the court on 13 September, 2004 to allow two creditors to conduct a foreclosure sale of Goto’s house.

In a related criminal case, a New Hampshire state grand jury indicted Goto on 68 counts for his role in several fraudulent schemes. From December 1994 until November 2001, Goto had been employed in Concord, New Hampshire by subsidiaries of the John Hancock Financial Services Co., including Signator Investors, Inc., a registered investment adviser and broker-dealer, and Hancock- related insurance agencies as both a registered representative and licensed insurance broker. The indictment charged that Goto committed theft by misapplication of property, theft by deception, criminal solicitation, unlawful securities practice, and witness tampering. The case was filed in New Hampshire Superior Court and is entitled State of New Hampshire v. Koji Goto, (Docket #04-S-0492-0559) (Superior Court, Hillsborough County-North).

Among other things, the indictment charged that Goto, beginning in June 1999 and continuing until March 2002, successfully solicited certain individuals to invest their money in purported Hancock investments. According to the indictment, Goto then gained control over that money, but never invested it with Hancock. Instead, Goto stole approximately USD3.2 million from his purported Hancock clients. For purposes of trial the New Hampshire state court segregated the charges into five separate schemes including the two schemes alleged in the Commission’s Complaint as well as the scheme involving the purported Hancock investments.

On 27 September, 2004, Goto was found guilty by a jury in the criminal action of the 23 counts concerning the purported Hancock investments. The verdict found Goto guilty of: (a) nine counts of theft by deception in violation of New Hampshire Revised Statutes Annotated ("RSA") 637:4; (b) one count of theft by misapplication in violation of RSA 637:10; and (c) 13 counts of unlawful securities practice in violation of RSA 421-B:6. On March 22, 2006, Goto was sentenced on the 23 guilty verdicts to 25 to 75 years in prison and ordered to pay USD3.2 million in restitution. Subsequent to trial, the New Hampshire state court found Goto incompetent to stand trial on the remaining charges.

On 9 December, 2004, based on Goto’s criminal conviction, the Commission instituted public administrative proceedings against Goto pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Section 203(f) of the Investment Advisers Act of 1940 based on his criminal conviction. On 21 March, 2005, Goto was permanently barred from association with any broker, dealer, and investment adviser.

On October 20, 2004 Goto filed for bankruptcy, which was resolved as a fully administered Chapter 7 bankruptcy on 1 April, 2011.


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