A New Rochelle man has to pay up nearly $700,000 for defrauding fellow members of a religious group.
U.S. District Judge Kenneth M. Karas ordered Evarist C. Amah on June 25 to disgorge $11,618 in ill-gotten gains and pay a $669,687 penalty for violating securities laws. He also found it necessary to permanently restrain Amah from violating securities laws.
“Defendant acted knowingly and intentionally in carrying out a complicated scheme to defraud,” Karas stated, and “perpetrated the scheme to defraud over a period of three years, failed to recognize his wrongdoing, and may be in a position in the future to have the opportunity to commit further violations.”
The U.S. Securities and Exchange Commission accused Amah in 2021 of defrauding members of the Grail Movement, an Austrian spiritual group inspired by the writings of a self-proclaimed messiah, Oskar Ernst Bernhardt (1875 – 1941).
Amah formed ECA Capital Management in New Rochelle and created a couple of investment programs, according to court records. He told clients that some of their profits would go to them and some would be donated to a Grail Movement settlement in Austria.
From 2016 to 2019, the SEC said, Amah told clients that he had achieved investment gains of 3% to 5% when actually he had lost 97% of their assets. He fabricated performance reports that showed, for instance, total assets of $439,751 when the actual balance was $4,907.
Most of his clients were from Nigeria and Italy. They wired funds to ECA Capital’s bank account in Pelham, and Amah transferred the funds to accounts in New York and Nebraska.
Last September, Karas granted a SEC motion for summary judgment, finding Amah liable for securities fraud.
The order to disgorge $10,000 was based on funds that Amah diverted to his personal accounts. Amah argued that disgorgement was unwarranted because he actually lost a substantial amount on his investments and he had paid more than $33,000 in expenses.
The fact that the scheme did not result in net profits does not diminish the fact that Amah kept money that clients sent to him, Karas said, and he is not entitled to offset losses incurred through a fraudulent scheme.
He said the $669,687 penalty is appropriate because the misconduct was egregious and the remedy deters future violations and furthers the goal of encouraging investor confidence in the securities industry.
While disgorgement restores a defendant’s original position without extracting a real penalty, Karas noted, in citing legal precedents, civil penalties accomplish the goal of punishment.
