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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23333 / September 3, 2015

Securities and Exchange Commission v. A.L. Waters Capital, LLC, et al., Civil Action No. 12-cv-10783-DJC (District of Massachusetts)

SEC Obtains Final Judgment Against Massachusetts Resident in Connection with Her Husband's Investment Fraud

The Securities and Exchange Commission announced today that on September 2, 2015, the U.S. District Court for the District of Massachusetts entered a final judgment against Janet L. Waters of Norwood, Massachusetts, in an enforcement action filed by the Commission in May 2012. Janet Waters, a former registered representative of broker-dealer A.L. Waters Capital, LLC, is a relief defendant in that enforcement action. The action was filed by the Commission on an emergency basis to halt the fraudulent sales of fictitious investment-related partnerships by Janet Waters’ husband, defendant Arnett Waters, and the defendant entities he controlled: broker-dealer A.L. Waters Capital and investment adviser Moneta Management, LLC. Janet Waters consented to the entry of the final judgment against her, and the judgment holds her jointly and severally liable with Arnett Waters and his entities for $839,000 in disgorgement of ill-gotten gains. Under the judgment, this disgorgement order is deemed satisfied by a restitution order of over $9 million in a related criminal proceeding against Arnett Waters.

In a related action, Janet Waters was barred from the securities industry in an Order issued by the Commission on September 2, 2015. That Order found that Janet Waters, who was her husband’s supervisor at the A.L. Waters Capital broker-dealer entity, failed reasonably to supervise Arnett Waters with a view to detecting or preventing his fraud.

The Commission’s May 2012 civil enforcement action alleged that from at least 2009-2012, Arnett Waters and the entities he controlled engaged in a fraudulent scheme through which they raised at least $780,000 from at least 8 investors, including $500,000 from the Waters’ church, by promising to use investor funds to purchase a portfolio of securities. In fact, the funds were instead spent on the Waters’ personal and business expenses. Janet Waters was named as a relief defendant in this action based on her receipt of investor funds to which she had no legitimate claim. On May 3, 2012, the Court entered a preliminary injunction order freezing the assets of Arnett Waters and his entities, as well as those of Janet Waters. 

The Commission’s civil action against Arnett Waters and his broker-dealer and investment adviser entities was previously resolved through the entry of final judgments by consent against them in December 2013. The Commission also previously barred Arnett Waters and A.L. Waters Capital from the securities industry in Orders issued in December 2012 and December 2013, respectively.

In addition to the Commission’s actions against the various parties, the U.S. Attorney for the District of Massachusetts brought criminal contempt charges against Arnett Waters in August 2012 and securities fraud and other criminal charges against Arnett Waters in October 2012. The criminal charges brought in October 2012 involved both the investment scheme that was the subject of the Commission’s civil action and a separate fraud involving a rare coin business. Arnett Waters pleaded guilty to the contempt and securities fraud and other criminal charges in October and November 2012, respectively. In April 2013, Arnett Waters was sentenced to 17 years in prison and ordered to pay over $9 million in restitution and forfeiture of assets.

The Commission acknowledges the assistance of the United States Attorney’s Office for the District of Massachusetts, the Federal Bureau of Investigation, and FINRA in this matter.

For further information, see Litigation Release No. 22356 (May 4, 2012) [Commission emergency enforcement action filed and preliminary injunction issued]; Litigation Release No. 22512 (October 18, 2012) [criminal charges filed against Arnett Waters]; Exchange Act Release No. 34-68334 (December 3, 2012) [Arnett Waters barred from securities industry]; Litigation Release No. 22558 (December 4, 2012) [Arnett Waters pleads guilty to criminal charges]; Litigation Release No. 22692 (April 30, 2013) [Arnett Waters sentenced in criminal matter against him]; Litigation Release No. 22885 (December 5, 2013) [Arnett Waters and his entities consent to final judgment in Commission’s civil action]; Exchange Act Release No. 34-71049 (December 11, 2013) [A.L. Waters Capital barred from securities industry] and Exchange Act Release No. 34-75819 (September 2, 2015 ) [Janet Waters failure to supervise action].

 

http://www.sec.gov/litigation/litreleases/2015/lr23333.htm


Modified: 09/03/2015