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UNITED STATES DISTRICT COURT
Plaintiff Securities and Exchange Commission ("SEC" or "Commission") alleges: NATURE OF THE ACTION 1. This case involves a one-day frenzy of illegal insider trading in the common stock of WLR Foods, Inc. ("WLRF"), the day before the September 27, 2000 public announcement that WLRF would be acquired by Pilgrim's Pride Corporation ("Pilgrim's Pride") for $14.25 per share (the "Acquisition Announcement") - more than double WLRF's closing stock price on the last trading day prior to the announcement. 2. The widespread illegal insider trading in WLRF started with Eric Patton, a corporate insider at WLRF, who breached his duty to the company and its shareholders by providing his brother, Steven Patton, with material, nonpublic information about an upcoming announcement of an acquisition of WLRF by Pilgrim's Pride. 3. By the end of the trading day on September 26, 2000, Eric Patton's tip of material, non-public information had spread to a web of tippers and/or traders who realized illegal profits in excess of $290,000. Armed with the details of the pending announcement of the WLRF acquisition, the tippees accounted for nearly 16% of all WLRF shares trading hands on September 26, 2000. 4. Shortly after being tipped by his brother, Eric, Steven Patton tipped Michael Nicolaou ("Nicolaou"), at the time his stockbroker at GBI Capital Partners Inc. ("GBI"), with material, nonpublic information about the announcement of the WLRF acquisition. 5. Nicolaou then tipped three people with material, nonpublic information about the announcement of the WLRF acquisition: (i) his cousin, Panayiotis Papaseraphim ("Papaseraphim"); (ii) his friend, John Tsiforis; and (iii) another friend, Konstantine Drakopoulos ("Drakopoulos"), who was also a registered representative at GBI. 6. After receiving the tip from Nicolaou, Papaseraphim purchased 700 shares of WLRF while in possession of material, nonpublic information, and earned a profit of $5,297. 7. Nicolaou's second tippee, John Tsiforis, in turn tipped material, nonpublic information about the announcement of the WLRF acquisition to three more people, all of whom purchased WLRF securities that day while in possession of material, nonpublic information: (i) his sister, Sandra Tsiforis; (ii) his cousin's husband and business partner, Constantine Stamoulis ("Stamoulis"); and (iii) his friend, Konstantinos Orfanakos ("Orfanakos"). John Tsiforis' three tippees traded a total of 11,500 shares of WLRF securities for profits in excess of $67,000. 8. Nicolaou's third tippee, Drakopoulos, while in possession of material, nonpublic information, purchased 2,000 shares of WLRF in the brokerage account of his sister, relief defendant Kathy Drakopoulos, at National Discount Brokers Corporation ("NDB"), from which he realized post-announcement profits totaling $14,209. Drakopoulos then kicked back $500 of his trading profits to Nicolaou as payment for the successful tip. 9. Drakopoulos, in turn, tipped material, nonpublic information about the WLRF acquisition announcement he obtained from Nicolaou to three of his friends: (i) Dimitrios "Jimmy" Kostopoulos ("Kostopoulos"), at the time a broker at NDB; (ii) Lampros Moumouris ("Moumouris"), a friend and former client; and (iii) Angelo Rigas, a friend and current client. 10. Kostopoulos, while in possession of material, nonpublic information he learned from Drakopoulos, purchased 200 shares WLRF stock and realized profits in excess of $1,400. 11. Moumouris, while in possession of material, nonpublic information he learned from Drakopoulos, purchased 11,100 shares of WLRF stock and realized profits of $74,330. 12. Angelo Rigas, while in possession of material, nonpublic information he learned from Drakopolous, purchased 3,000 shares of WLRF stock and realized profits of $18,039. 13. Angelo Rigas and Drakopoulos then tipped Gregory Rigas (defendant Angelo Rigas' father), George Rigas (defendant Angelo Rigas' brother) and Antonia Bregianos (defendant Angelo Rigas' sister) with material, nonpublic information about the announcement of the WLRF acquisition. Gregory Rigas, while in possession of material, nonpublic information concerning the announcement of the WLRF acquisition, purchased 10,000 shares of WLRF stock - 5,000 in an account in the name of his wife, relief defendant Eugenia Rigas, and 5,000 in a joint account with her - from which he realized profits of $65,514. George Rigas, while in possession of material, nonpublic information concerning the announcement of the WLRF acquisition, purchased 5,000 shares of WLRF stock in the account of his wife, relief defendant Maria Rigas, from which he realized profits of $31,151. Antonia Bregianos, while in possession of material, nonpublic information concerning the announcement of the WLRF acquisition, purchased 3,000 shares of WLRF stock from which she realized profits of $18,039. 14. By engaging in insider trading as described herein, all of the defendants, except the relief defendants, violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. The SEC seeks injunctive relief, disgorgement, prejudgment thereon, civil penalties and other appropriate relief with respect to each of the defendants, with the exception of the relief defendants, from whom it seeks disgorgement and prejudgment interest thereon. JURISDICTION AND VENUE 15. This Court has jurisdiction over this action, and venue is proper, pursuant to Sections 21(d) and (e), Section 21A and Section 27 of the Exchange Act [15 U.S.C. §§ 78u(d) and (e), 78u-1 and 78aa]. 16. Unless restrained and enjoined by this Court, THE defendants will continue to engage in acts, practices, and transactions similar to those described herein. 17. The defendants, directly or indirectly, singly or in concert with others, made use of the means or instruments of transportation or communication in interstate commerce, or of the mails, in connection with the acts, transactions, and practices alleged herein, many of which took place in the Eastern District of New York. DEFENDANTS 18. Eric Patton, age 43, resides in East Greenville, Pennsylvania, and in September 2000 was the Director of Manufacturing within the turkey division at WLRF prior to the merger with Pilgrim's Pride. 19. Steven Patton, age 42, resides in Watsontown, Pennsylvania, and is the owner of Watsontown Trucking, Inc. 20. Michael Nicolaou, age 32, resides in Queens, New York, and, during the relevant time, was a registered representative at GBI, a broker-dealer registered with the Commission. 21. Konstantine "Gus" Drakopoulos, age 26, resides in Queens, New York, and was a registered representative with GBI from 1996 to October 2001, when the company merged with Ladenburg Capital Management Inc. ("Ladenburg"). He is currently a registered representative at Ladenburg. 22. Dimitrios "Jimmy" Kostopoulos, age 26, resides in Queens, New York, and was a registered representative at NDB from 1998 until his termination on February 23, 2001. 23. Lampros Moumouris, age 42, resides in Austin, Texas, and is a partner or manager of male entertainment clubs in the Austin and Corpus Christi areas. 24. John Tsiforis, age 32, resides in Queens, New York, and is a small businessman. 25. Konstantinos "Chris" Orfanakos, age 31, resides in Queens, New York, and is a real estate broker. 26. Panayiotis "Pete" Papaseraphim, age 36, resides in Queens, New York, and works as a pastry chef. 27. Constantine "Gus" Stamoulis, age 36, resides in New Hyde Park, New York, and is the owner of Nesa Roofing, Inc. 28. Angelo Rigas, age 30, resides in Queens, New York, and is president of Arc Mechanical in Brooklyn, New York. 29. Gregory Rigas, age 67, resides in Queens, New York. He is married to relief defendant, Eugenia Rigas, and is the father of defendants Angelo Rigas, George Rigas and Antonia Bregianos. 30. George Rigas, age 40, resides in Queens, New York, and is the brother of defendant Angelo Rigas. George Rigas is married to relief defendant Maria Rigas. 31. Antonia Bregianos, age 32, resides in Queens, New York, and is the sister of defendant Angelo Rigas and daughter of defendant Gregory Rigas. RELIEF DEFENDANTS 32. Kathy Drakopoulos, age 38, resides in Jackson Heights, New York, and is the sister of defendant Konstantine Drakopoulos. 33. Eugenia Rigas, resides in Queens, New York, is married to defendant Gregory Rigas and is the mother of defendant Angelo Rigas. 34. Maria Rigas, age 37, resides in Queens, New York, is married to defendant George Rigas and is the sister-in-law of defendant Angelo Rigas. OTHER RELEVANT ENTITIES 35. WLRF was, prior to its acquisition by Pilgrim's Pride in January 2001, a Virginia-based poultry producer whose common stock traded on the NASDAQ National Market System. 36. National Discount Brokers Corporation is a broker-dealer registered with the Commission pursuant to Section 15 of the Exchange Act. NDB has been a subsidiary of Ameritrade Holding Corporation since September 2001. During the relevant time, NDB was an online, retail brokerage that focused on internet and telephone trading through its website. 37. GBI Capital Partners Inc. was a full-service broker-dealer registered with the Commission pursuant to Section 15 of the Exchange Act. GBI was headquartered in Bethpage, New York, and, in October 2001, it merged with Ladenburg and is now known by that name. CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] 38. Paragraphs 1 through 37 are realleged and incorporated herein by reference. Eric Patton Received Material, Nonpublic Information About the Acquisition of WLRF 39. Eric Patton, an employee of WLRF since 1988, was promoted to the position of Director of Manufacturing within the turkey division for WLRF's Franconia, Pennsylvania facility in February 2000. 40. Due to his status as a senior employee, WLRF considered Eric Patton a company "insider" and he was required to sign a confidentiality agreement prohibiting him from trading while in possession of inside information concerning WLRF - or tipping others with such information. Eric Patton signed this agreement on November 15, 1999. 41. On September 1, 2000, as a precondition of receiving information about a possible acquisition of WLRF, Eric Patton signed another, more specific, confidentiality agreement that expressly designated him as a company "insider" and prohibited him from disclosing any information he learned about "possible business transactions to which WLR Foods, Inc. may become a party." 42. The September 1, 2000 Agreement specifically prohibited Eric Patton from speaking to anyone about "negotiation[s] with the company." The Agreement further provided that, "[I]f the undersigned [Eric Patton] chooses to make the Information available to unauthorized persons, such as household members, the undersigned assumes the same liability for that person's willful or negligent breach of confidentiality with respect to the Information..." as would be the case if Eric Patton, himself, breached the confidentiality agreement. 43. After he executed the September 1, 2000 confidentiality agreement, Eric Patton learned that WLRF had entered into negotiations with Pilgrim's Pride concerning a possible acquisition of WLRF. 44. As a consequence of his status as a senior employee at WLRF, and his execution of the two confidentiality agreements, Eric Patton owed a fiduciary or other duty of trust and confidence to WLRF and its shareholders to keep confidential all material, nonpublic information about potential business transactions concerning WLRF. 45. On or about September 6, 2000, Eric Patton gave a tour of the Franconia plant to executives of Pilgrim's Pride - including the CEO and Chairman of the company - during which he discussed WLRF's operations and products. 46. Eric Patton subsequently learned the details of Pilgrim Pride's proposed acquisition of WLRF, including the timing of the public announcement and that WLRF would be acquired for approximately $14 per share. Eric Patton Breached His Fiduciary or Other Duty of Trust and Confidence by Tipping His Brother Steven Patton 47. On or before September 26, 2000, Eric Patton tipped his brother, Steven, about the upcoming announcement of the WLRF acquisition, as well as the proposed price and time frame of the anticipated acquisition. 48. Eric Patton knew, should have known, or was reckless in not knowing that the information he communicated to his brother was nonpublic, and that his communication of that information to his brother was improper and in breach of the fiduciary or other duty of trust and confidence he owed his employer and its shareholders and in contravention of the confidentiality agreements that he had signed. 49. Eric Patton knew, or was reckless in not knowing, that his brother would either (1) effect transactions in the securities of WLRF, or (2) disclose the information to others who were likely to effect such transactions. 50. By tipping Steven Patton, Eric Patton conferred a gift of confidential information to his brother and benefited thereby. Steven Patton Tried to Buy WLRF Stock and Tipped Nicolaou 51. On or about September 26, 2000, Steven Patton called his broker, defendant Nicolaou, and told him that he wanted to purchase WLRF stock in his own brokerage account. 52. Steven Patton communicated to defendant Nicolaou material, nonpublic information he learned from his brother, Eric Patton, concerning the announcement of the acquisition of WLRF - including that the announcement would be made in two to three days, the acquisition would be made at a price of $14 per share, and that he had learned this information from his brother, Eric. 53. Nicolaou, who knew from prior conversations with Steven Patton that defendant Eric Patton was an insider at WLRF, then advised Steven Patton not to purchase WLRF stock because the trade would appear to be based on inside information. Steven Patton then asked Nicolaou how he could purchase WLRF securities. Nicolaou told Steven Patton he (Steven Patton) could trade WLRF securities in someone else's account. Thereafter, Steven Patton did not buy WLRF stock through Nicolaou. 54. Steven Patton knew, should have known, or acted in reckless disregard of the fact that the information he received from Eric Patton concerning the announcement of the acquisition of WLRF was nonpublic, and that Eric Patton had disclosed the information in violation of a fiduciary or other duty of trust and confidence. 55. Steven Patton knew, or was reckless in not knowing, that Nicolaou would either (1) effect transactions in the securities of WLRF, or (2) disclose the information to others who were likely to effect such transactions. Nicolaou Tipped Papaseraphim, John Tsiforis and Drakopoulos 56. After receiving the tip from Steven Patton, Nicolaou communicated material, nonpublic information concerning the announcement of the acquisition of WLRF to Papaseraphim, John Tsiforis and Drakopoulos. 57. Nicolaou knew, should have known, or acted in reckless disregard of the fact that the information he received from Steven Patton concerning the announcement of the acquisition of WLRF was nonpublic, and that the information had been disclosed in violation of a fiduciary or other duty of trust and confidence. 58. Nicolaou knew, or was reckless in not knowing, that his tippees would either (1) effect transactions in the securities of WLRF, or (2) disclose the information to others who were likely to effect such transactions. Nicolaou Tipped Papaseraphim Who Then Traded on the Tip 59. On or about September 26, 2000, Nicolaou communicated material, nonpublic information about the announcement of the acquisition of WLRF to his cousin, Papaseraphim. 60. On September 26, 2000, while in possession of material, nonpublic information about the announcement of the acquisition of WLRF, Papaseraphim purchased 700 shares of WLRF stock. 61. On September 28, 2000, after the Acquisition Announcement, Papaseraphim sold his WLRF stock and realized profits of $5,297 by trading while in possession of material, nonpublic information. 62. Papaseraphim knew, should have known, or acted in reckless disregard of the fact that the information he received from Nicolaou concerning the announcement of the acquisition of WLRF was nonpublic, and that the information had been disclosed in violation of a fiduciary or other duty of trust and confidence. Nicolaou Tipped John Tsiforis Who Then Tipped Sandra Tsiforis, Stamoulis and Orfanakos 63. On September 26, 2000, Nicolaou telephoned John Tsiforis three times at Tsiforis' place of work - the last call occurring at 2:10 p.m. Nicolaou tipped John Tsiforis, his high school friend, with material, nonpublic information concerning the announcement of the acquisition of WLRF, including that the deal would be announced within two to three days at a price of approximately $14 per share. 64. John Tsiforis knew, should have known, or acted in reckless disregard of the fact that the information he received from Nicolaou concerning the announcement of the acquisition of WLRF was nonpublic, and that the information had been disclosed in violation of a fiduciary or other duty of trust and confidence. 65. Nevertheless, on or about September 26, 2000, within twenty-three minutes of Nicolaou's last call to John Tsiforis, Tsiforis tipped three people with material, nonpublic information about the announcement of the acquisition of WLRF: Sandra Tsiforis (his sister); Constantine Stamoulis (his friend and business partner); and Konstantinos Orfanakos (his high school friend). 66. Tsiforis knew, or was reckless in not knowing, that his tippees would either (1) effect transactions in the securities of WLRF, or (2) disclose the information to others who were likely to effect such transactions. Sandra Tsiforis, Stamoulis and Orfanakos Buy WLRF Stock 67. At 2:33 p.m., Sandra Tsiforis, after receiving the tip from her brother, John Tsiforis, placed a "day" order at the market to purchase 1,000 shares of WLRF stock. 68. Sandra Tsiforis sold her WLRF stock on September 28, 2000, the day after the Acquisition Announcement, and earned a profit of $5,286. 69. At 2:20 p.m., Stamoulis, after receiving the tip from John Tsiforis, placed a "day" order at the market to purchase 5,000 shares of WLRF stock, in an account he owned or controlled, while in possession of material, nonpublic information. At 2:23 p.m., Stamoulis, while in possession of material, nonpublic information, caused a market order purchase of 5,000 shares of WLRF stock in an account owned or controlled by his father. 70. Stamoulis knew, should have known, or acted in reckless disregard of the fact that the information he received from John Tsiforis concerning the announcement of the acquisition of WLRF was nonpublic, and that the information had been disclosed in violation of a fiduciary or other duty of trust and confidence. 71. Stamoulis sold his WLRF stock on September 28, 2000, the day after the Acquisition Announcement and realized profits of $59,380 by trading while in possession of material, nonpublic information. 72. John Tsiforis profited by tipping Stamoulis. Within weeks of his illegal trading, Stamoulis utilized some of the proceeds from his trading in WLRF stock to fund the opening of a new business venture - a "dollar" store in which John Tsiforis was his new partner. Stamoulis contributed all of the capital to fund the new business venture. 73. At 2:14 p.m., Orfanakos, after receiving the tip from John Tsiforis, placed a "day" order at the market to purchase 500 shares of WLRF stock while in possession of material, nonpublic information. 74. Orfanakos knew, should have known, or acted in reckless disregard of the fact that the information he received from John Tsiforis concerning the announcement of the acquisition of WLRF was nonpublic, and that the information had been disclosed in violation of a fiduciary or other duty of trust and confidence. 75. Orfanakos sold his WLRF stock on September 28, 2000, the day after the Acquisition Announcement, and realized profits of $3,172 by trading while in possession of material, nonpublic information. Nicolaou Tipped Drakopoulos Who Then Traded on the Information 76. After receiving the tip from Steven Patton about the announcement of the acquisition of WLRF, Nicolaou, on or about September 26, 2000, communicated material, nonpublic information to Drakopoulos, a friend and fellow broker at GBI. 77. Nicolaou told Drakopoulos he had learned from a client that there would be an announcement within two to three days that WLRF would be acquired for about $14 per share. Nicolaou also identified the source of the tip as an insider at WLRF who was the brother of Nicolaou's client. 78. Nicolaou profited financially by tipping Drakopoulos. At the time of the tip, Nicolaou told Drakopoulos that he expected a reward for the information, and Drakopoulos later kicked back $500 in cash to Nicolaou as payment for the successful tip. 79. Drakopoulos knew, should have known, or acted in reckless disregard of the fact that the information he received from defendant Nicolaou concerning the announcement of the acquisition of WLRF was nonpublic, and had been disclosed in breach of a fiduciary or other duty of trust and confidence. 80. On the morning of September 26, 2000, after being tipped by Nicolaou, Drakopoulos called Kostopoulos - a friend who was also Drakopoulos' sister's broker at NDB - to purchase WLRF securities. 81. Drakopoulos, while in possession of material, nonpublic information about the announcement of the acquisition of WLRF, directed Kostopoulos to purchase 2,000 shares of WLRF for him in the NDB brokerage account belonging to his sister, relief defendant Kathy Drakopoulos. Since Kathy Drakopoulos lacked sufficient funds for the purchase, Drakopoulos directed Kostopoulos to liquidate his sister's holdings in another security to finance his purchase of WLRF stock. 82. On September 28, 2000, the day after the Acquisition Announcement, Drakopoulos called Kostopoulos and directed him to sell the 2,000 shares of WLRF stock in Kathy Drakopoulos' account, which he did for a profit of $14,209. 83. In connection with the SEC's nonpublic investigation into the unlawful insider trading in Kathy Drakopoulos' account, the staff issued subpoenas to Konstantine Drakopoulos and Kathy Drakopoulos requiring them to testify and produce documents. Konstantine and Kathy Drakopoulos refused to do either, choosing instead to assert their privilege against self-incrimination under the Fifth Amendment to the United States Constitution. Drakopoulos Tipped Kostopoulos Who Then Traded on the Information 84. After being tipped by Nicolaou, Drakopoulos, on or before September 26, 2000, tipped his friend, Kostopoulos, with material, nonpublic information concerning the announcement of the acquisition of WLRF. 85. Drakopoulos knew, or was reckless in not knowing, that Kostopoulos would either (1) effect transactions in the securities of WLRF, or (2) disclose the information to others who were likely to effect such transactions. 86. At 9:55 a.m., September 26, 2000, Kostopoulos, while in possession of the material, nonpublic information about the announcement of the WLRF acquisition, purchased 200 shares of WLRF stock for his own account. 87. Kostopoulos knew, should have known, or acted in reckless disregard of the fact that the information he received from Drakopoulos regarding the announcement of the WLRF acquisition was nonpublic, and had been communicated in breach of a fiduciary or other duty of trust and confidence. 88. Kostopoulos sold his WLRF stock on September 28, 2000, the day after the Acquisition Announcement, and made a profit of $1,437 by trading while in possession of material, nonpublic information. 89. In response to a subpoena from the SEC requiring him to testify and produce documents, Kostopoulos refused to do either, choosing instead to assert his privilege against self-incrimination under the Fifth Amendment to the United States Constitution. Drakopoulos Tipped Moumouris who then Traded on the Information 90. On or before September 26, 2000, Drakopoulos communicated material, nonpublic information about the announcement of the WLRF acquisition to Moumouris, his friend and former client, including that WLRF would be bought soon by another company. 91. Drakopoulos knew, or was reckless in not knowing, that Moumouris would either (1) effect transactions in the securities of WLRF, or (2) disclose the information to others who were likely to effect such transactions. 92. On September 26, 2000, after speaking with Drakopoulos, Moumouris bought a total of 11,100 shares of WLRF stock while in possession of material, nonpublic information. 93. Moumouris sold his WLRF stock on September 28, 2000, the day after the Acquisition Announcement, and realized profits of $74,330 by trading while in possession of material, nonpublic information. 94. Moumouris knew, should have known, or acted in reckless disregard of the fact that the information he received from Drakopoulos concerning the announcement of the acquisition of WLRF was nonpublic, and that the information had been disclosed in violation of a fiduciary or other duty of trust and confidence. Drakopoulos Tipped Angelo Rigas who then Traded on the Information 95. During the relevant time period, Drakopoulos was the registered representative for Angelo Rigas at GBI. 96. After he was tipped by Nicolaou, Drakopoulos, on or about September 26, 2000, communicated material, nonpublic information concerning the announcement of the WLRF acquisition to Angelo Rigas. 97. Drakopoulos knew, or was reckless in not knowing, that Angelo Rigas would either (1) effect transactions in the securities of WLRF, or (2) disclose the information to others who were likely to effect such transactions. 98. On September 26, 2000, Angelo Rigas purchased 3,000 shares of WLRF in the securities brokerage account he maintained at GBI with defendant Drakopoulos, while in possession of material, nonpublic information concerning the announcement of the acquisition of WLRF. 99. Angelo Rigas sold his WLRF stock on September 28, 2000, the day after the Acquisition Announcement, and realized profits of $18,039 by trading while in possession of material, nonpublic information. 100. Angelo Rigas knew, should have known, or acted in reckless disregard of the fact that the information he received from Drakopoulos was nonpublic, and that the information had been disclosed in violation of a fiduciary or other duty of trust and confidence. 101. In connection with the SEC's nonpublic investigation into the unlawful insider trading in WLRF securities, the staff issued subpoenas to defendant Angelo Rigas, requiring him to testify and produce documents. He refused to do either, choosing instead to assert his privilege against self-incrimination under the Fifth Amendment to the United States Constitution. Angelo Rigas and Drakopoulos Tipped George Rigas, Gregory Rigas and Antonia Bregianos 102. On or about September 26, 2000, Angelo Rigas and Drakopoulos communicated material, nonpublic information about the announcement of the WLRF acquisition to George Rigas, Gregory Rigas and Antonia Bregianos. 103. Angelo Rigas and Drakopoulos knew, or was reckless in not knowing, that George Rigas, Gregory Rigas and Antonia Bregianos would either (1) effect transactions in the securities of WLRF, or (2) disclose the information to others who were likely to effect such transactions. 104. At 9:40 a.m., on September 26, 2000, Gregory Rigas placed an unsolicited order to purchase 5,000 of WLRF securities in the NBG Securities brokerage account of his wife, relief defendant Eugenia Rigas, while in possession of material, nonpublic information about the announcement of the WLRF acquisition. 105. Gregory Rigas placed a second unsolicited order for WLRF stock the morning of September 26, 2000, while in possession of material, nonpublic information about the announcement of the WLRF acquisition. He purchased 5,000 shares of WLRF in a joint brokerage account he maintained with his wife, relief defendant Eugenia Rigas, at the firm of Janney Montgomery ("Janney"). The trade was unsolicited and a "day" order. 106. On September 26, 2000, following Gregory Rigas' order to purchase WLRF stock at Janney, George Rigas called and placed an unsolicited, "day" order at Janney to purchase 5,000 WLRF shares in his wife's account, relief defendant Maria Rigas, while in possession of material, nonpublic information concerning the announcement of the WLRF acquisition. 107. On September 26, 2000, Antonia Bregianos placed an order to purchase 3,000 shares of WLRF in the securities brokerage account she maintained at GBI with defendant Drakopoulos, while in possession of material, nonpublic information concerning the announcement of the WLRF acquisition. 108. Gregory Rigas, George Rigas and Antonia Bregianos each sold their WLRF positions on September 28, 2000, the day after the Acquisition Announcement. Gregory Rigas realized profits of $64,514, while George Rigas and Antonia Bregianos realized profits of $31,151 and $18,039, respectively, all by trading while in possession of material, nonpublic information concerning the announcement of the WLRF acquisition. 109. Gregory Rigas, George Rigas and Antonia Bregianos each knew, should have known, or acted in reckless disregard of the fact that the information each received from Drakopoulos and Angelo Rigas concerning the announcement of the WLRF acquisition was nonpublic, and that the information had been disclosed in violation of a fiduciary or other duty of trust and confidence. 110. In connection with the SEC's nonpublic investigation into the unlawful insider trading in WLRF securities, subpoenas were issued to defendants George Rigas, Gregory Rigas and Antonia Bregianos, as well as relief defendants Eugenia Rigas and Maria Rigas, requiring them to testify and produce documents. They refused to testify, or produce documents, choosing instead to assert their privilege against self-incrimination under the Fifth Amendment to the United States Constitution. 111. By their conduct described above, the defendants (except the relief defendants), in connection with the purchase or sale of securities, by the use of means or instrumentalities of interstate commerce or of the mails, directly or indirectly, (a) employed devices, schemes, or artifices to defraud; (b) made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or (c) engaged in acts, practices, or courses of business which operated as a fraud or deceit upon other persons. 112. By reason of the foregoing, the defendants (except the relief defendants) violated Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. PRAYER FOR RELIEF WHEREFORE, the Commission respectfully requests that this Court: I. Permanently restrain and enjoin the defendants (except the relief defendants) and their agents, servants, employees, attorneys-in-fact, and assigns and those persons in active concert or participation with them, and each of them, from violating Sections 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] promulgated thereunder. II. Order each defendant who purchased and sold WLRF stock to disgorge his/her trading profits from each illegal trade, including prejudgment interest thereon. III. Order each defendant to disgorge all profits, including prejudgment interest thereon, realized by (i) the persons to whom that defendant unlawfully communicated material, nonpublic information, and (ii) the persons who traded while in possession of material nonpublic information learned as a result of that defendant's unlawful communication of material nonpublic information. IV. Order the defendants to disgorge all profits, including prejudgment interest thereon, realized by the persons on whose behalf the defendants traded securities or otherwise caused the purchase of securities while in possession of material, nonpublic information, and to pay prejudgment interest thereon. V. Order defendants Drakopoulos and Kostopoulos to disgorge all commissions they earned on transactions made by any of the defendants (or relief defendants) in WLRF stock while in possession of material, nonpublic information, and to pay prejudgment interest thereon. VI. Declare and impose a constructive trust on the accounts of relief defendants Kathy Drakopoulos, Eugenia Rigas and Maria Rigas, and require them to disgorge the profits they realized as a result of the illegal conduct alleged herein, and to pay prejudgment interest thereon. VII. Order each of the defendants (except the relief defendants) to pay civil penalties pursuant to Section 21A of the Exchange Act [15 U.S.C. § 78u-1]. VIII. Grant such other relief as this Court may deem just and appropriate. Dated: April 30, 2002 Respectfully submitted, ______________________ Robert Kaplan (Trial Counsel) Attorneys for Plaintiff http://www.sec.gov/litigation/complaints/complr17495.htm
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