Merrill Scott & Associates, Ltd., et al.

On January 15, 2002, the SEC obtained temporary restraining orders against Merrill Scott & Associates, Ltd., several of its subsidiaries and affiliates, Patrick M. Brody, who controlled all of the companies, David E. Ross II, general counsel, and Michael Licopantis. The SEC alleged that Merrill Scott obtained cash and securities from clients who were seeking tax advantages through offshore investments. According to the SEC's complaint, however, Brody through its subsidiaries and affiliates actually operated a giant Ponzi scheme, misappropriated approximately $9.5 million, and made unauthorized speculative investments. For more information about the SEC's action, you can read Litigation Release Nos. 17316 (Jan. 15, 2002) and 17342 (Jan. 25, 2002).

The Court appointed David K. Broadbent as Receiver to collect the assets of the Merrill Scott companies and to distribute funds to defrauded investors. To date, the Receiver has recovered nearly $18 million and is pursuing other assets. In 2005, the SEC submitted a proposed plan of distribution. There were a number of objections filed to the plan. The Court has not yet set a hearing date to resolve those objections or approve the plan. For the latest information on the Receivership, including the Receiver’s 23rd report, you can visit the Receiver's website.

http://www.sec.gov/divisions/enforce/claims/merrscott.htm