LV broker in fund scandal sued again

Kevin Rademacher

Friday, Jan. 23, 2004 | 11:19 a.m.

A second class-action lawsuit is seeking damages from Las Vegas securities broker Daniel G. Calugar and his firm, Security Brokerage Inc.

Calugar in December was accused by the Securities and Exchange Commission of reaping $175 million through a mutual fund fraud scheme.

The new lawsuit lists only Doreen Lagoni as a defendant and seeks class action status on behalf of all investors in certain mutual funds managed by Alliance Capital Management and Massachusetts Financial Services. Like the previous case, the new lawsuit claims Lagoni and others were harmed by improper trades made by Calugar through Security Brokerage.

On Dec. 23, the Securities and Exchange Commission filed a lawsuit alleging that Calugar committed securities fraud by using his firm to execute improper trades in and out of the Alliance and Massachusets Financial mutual funds.

The SEC lawsuit said Calugar made $175 million in profit through $400 million to $500 million in "late" and "market timing" trades.

The new lawsuit mirrors a case filed in January by the New York firm of Milberg Weiss Bershad Hynes & Lerach LLP, which specializes in class-action fraud lawsuits.

Lagoni's lawsuit claims that Calugar and his firm committed "a fraudulent scheme and course of action which was intended to and indeed did benefit the defendants at the expense of the mutual fund investors."

Colin Murray, a San Diego attorney representing Calugar, said Wednesday that his client has not been served with either the Milberg Weiss lawsuit or the new suit and declined to comment.

Separately, a previously announced hearing for Calugar has been rescheduled for Monday. At that time, U.S. District Judge Robert C. Jones will consider the SEC's request for a permanent injunction against Calugar.

Nicolas Morgan, senior trial counsel for the SEC, said a temporary restraining order, which on Dec. 23 froze the assets of Calugar and Security Brokerage Inc., will remain in place until the new hearing, where the commission will seek a permanent injunction, disgorgement of ill-gotten gains and monetary penalties against Calugar

Federal regulators sought the temporary restraining order after learning that on Dec. 18 Calugar had transferred $50 million of the proceeds of his alleged scheme out of Massachusets Financial Services, an SEC statement said.

Calugar's firm, which is now closed, had an office at 3960 Howard Hughes Parkway in midtown Las Vegas. Nevada Securities Division records show that the firm voluntarily terminated its broker license on October. The company asked the SEC to terminate its license in September.