Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that GREGORY RORKE was arrested this morning on securities and wire fraud charges stemming from his alleged scheme to defraud investors in his company, Navagate, Inc. (“Navagate”), of approximately $3 million dollars. RORKE was presented today in Manhattan federal court before United States Magistrate Judge Gabriel W. Gorenstein.
U.S. Attorney Preet Bharara said: “As alleged, Gregory Rorke grossly misrepresented his character and financial stability to investors, whom he then defrauded of millions of dollars. I want to thank the Federal Bureau of Investigation and the Securities and Exchange Commission for their tireless work on this case.”
FBI Assistant Director-in-Charge George Venizelos said: “As alleged, Rorke bilked clients out of approximately $3 million based on lies and false representations of his and Navagate’s financial worth. The arrest of Rorke should serve as a reminder that lying to investors comes at a cost. The FBI will continue to aggressively pursue those who engage in securities fraud in an effort to prevent future victimization of unsuspecting investors and to protect the integrity of the financial market.”
According to the two-count Complaint unsealed today in Manhattan federal court:
From at least December 2009 through the present, RORKE engaged in a fraudulent scheme to mislead investors into making investments in a convertible debt offering (the “Navagate Offering”) in his company, Navagate. RORKE, a former adjunct professor at Columbia Business School, was the co-founder, chief executive, and principal owner of Navagate. RORKE solicited investments and was involved in the daily management and operation of Navagate.
RORKE solicited investor contributions to the Navagate Offering based on materially false and fraudulent misrepresentations. In particular, RORKE signed and provided to investors a personal guarantee supported by a financial statement. The financial statement falsely indicated that Rorke personally had at least $12 million in assets, including more than $1 million in cash, more than $5 million in “readily marketable securities” and a home worth more than $1 million. In truth, and as RORKE well knew, the majority of the pledged assets did not belong to RORKE.
In addition, in order to obtain access to funds invested by Navagate investors and maintained in an escrow account, RORKE signed a notarized affidavit indicating that he had paid monies owed to the Internal Revenue Service in satisfaction of Navagate’s tax liabilities. In truth, the tax liabilities had not been paid, remained outstanding, and were actually increasing.
Further, on November 28, 2012, after receiving multiple complaints from Navagate investors demanding repayment and/or threatening to sue RORKE, RORKE forwarded an email purporting to be from a representative of Hong Kong Shanghai Bank Corporation (“HSBC”), which falsely stated that HSBC had just signed a multimillion-dollar contract with Navagate when, in truth and in fact, the email appears to have been a complete fabrication.
As a result of his fraudulent scheme, RORKE raised approximately $3 million in investor money from more than 30 investors.
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RORKE, 60, was arrested this morning at his residence in Bronxville, New York. He is charged with one count of wire fraud and one count of securities fraud, each of which carries a maximum sentence of 20 years in prison. The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
In a separate action, the U.S. Securities and Exchange Commission (“SEC”) announced civil charges against RORKE and Navagate.
Mr. Bharara praised the work of the FBI, and thanked the SEC for its assistance. He added that the investigation is continuing.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Andrea M. Griswold and Eugene Ingoglia are in charge of the prosecution.
The allegations contained in the Complaint are merely accusations, and the defendant is
presumed innocent unless and until proven guilty.