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SEC DROPS CASE
AGAINST FORMER
THORNBURG EXECS
e U.S. Securities and Exchange
Commission (SEC) dropped its case against
two former executives of now-shuttered
ornburg Mortgage in early February,
ending a lawsuit brought in the aftermath of
the recession.
In papers filed in federal court in
Albuquerque, New Mexico, the SEC said it
would no longer pursue its civil case against
former ornburg CEO Larry Goldstone and
former CFO Clarence Simmons, which had
been set for a retrial on February 21.
e SEC's lawsuit, filed in 2012, accused
Goldstone, Simmons, and former ornburg
Chief Accounting Officer Jane Starrett of
hiding the company's fast-deteriorating
financial condition at the onset of the financial
crisis.
At the time, the SEC claimed that
Goldstone and Simmons defrauded investors
by overstating ornburg's income by more
than $400 million and falsely reporting a
profit rather than a loss for the fourth quarter
in its 2007 annual report.
e SEC, though, dropped that claim in
September following the initial trial.
A jury returned a mixed verdict last July
in the initial trial, and the decision to drop
the case represents a setback for the agency's
efforts to hold executives accountable for the
U.S. housing meltdown and financial crisis.
e jury found Goldstone and Simmons
not liable on five of 10 counts while
deadlocking on the other claims. e SEC
later in September dropped three remaining
claims and said it would no longer pursue
what the defense called its central allegation.
Randall Lee, a lawyer for Goldstone and
Simmons, said his clients were "thrilled"
to have been cleared of the charges. "We
always believed that the evidence in this case
demonstrated that our clients had acted in
good faith in attempting to navigate through
the early stages of the financial crisis," Lee
said in a statement.
ornburg, which specialized in making
jumbo home loans larger than $417,000
to borrowers with good credit, filed for
bankruptcy in May 2009 amid the U.S.
financial crisis.
Goldstone continued to face a claim based
on statements he made after ornburg's
annual report was filed. Both Goldstone
and Simmons also faced a claim that they
misrepresented or omitted facts to the
company's auditors. ey denied wrongdoing.
Starrett agreed in May to pay $25,000
to settle the lawsuit without admitting or
denying the allegations.
