A court has found in its favour against a notorious fraudster with Canadian connections. At the conclusiion of a trial against Guido Bensberg, the U.S. District Court for the Southern District of California granting the SEC’s request for US$16,593,396 in disgorgement and US$10,571,261 in civil penalties. The civil penalty is one of the largest penalties awarded in a case that has gone to trial.

The SEC describes Bensberg, as “a German financier and sometimes Canadian resident”, who was charged  with violating the principal antifraud provisions of the U.S. securities  laws. It says that Judge Rudi Brewster held that Bensberg participated in a fraudulent scheme to “lease” temporary physical possession of stock certificates representing millions of restricted shares of U.S. public companies, and one Canadian entity whose stock traded in the U.S.

Then Bensberg misrepresented that he owned the stock and pledged it as collateral to unwitting financial institutions, says the SEC, obtaining more than US$10 million in loans  that he refused to repay.  The defrauded parties were Lehman Bros. and Bank Leu, a Swiss private bank controlled by Credit Suisse First  Boston.

The judge stated that Bensberg “engaged repeatedly, in egregious acts and practices in violation of the antifraud provisions of the federal securities laws.”  The court noted that Bensberg has since attempted several other frauds. 

“Bensberg deserves the maximum penalty allowed under the penalty provisions of the Securities Act and the Exchange Act.The recidivist nature of the conduct, the lack of remorse or attempt to offer explanation and the potential for recurrence justify the maximum allowable penalty of $10,571,261.”