Fraud Disgorgement Order Relied on ‘Gibberish,’ Group Argues (1)

A federal judge shouldn’t have relied on a penny stock operator’s internal accounting system to assign disgorgement amounts to five alleged participants and liability to two of them, the group told the First Circuit Tuesday.

Balances in fugitive businessman Frederick Sharp’s Q system were “gibberish,” said Maranda Fritz, a New York-based attorney for one defendant in the Securities and Exchange Commission’s civil enforcement suit.

“It’s impossible to determine what went into anyone’s pocket,” Robert Silverblatt of K&L Gates LLP, who represents another defendant, told the US Court of Appeals for the First Circuit. The district court expressly found that the ...