The Securities and Exchange Commission today charged disbarred attorney, Richard J. Rubin, and licensed attorney, Thomas J. Craft, with fraud for their roles in a legal opinion letter scheme to fraudulently facilitate the sale of millions of shares of microcap securities to retail investors.
The SEC’s complaint alleges that from December 2015 to July 2018, Rubin, who was disbarred in 1995, continued to fraudulently practice securities law by submitting at least 128 attorney opinion letters that allowed microcap stock issuers’ securities to be purchased by and sold to the investing public.
The complaint alleges that Rubin signed certain letters, falsely claiming to be an attorney, and that he drafted other letters for Craft’s signature. The complaint alleges that Craft signed or permitted the use of his name and signature on at least 30 letters that falsely stated he had performed substantive work to formulate the opinions in those letters.
“Retail investors rely on gatekeepers like lawyers to help ensure that the issuers of the securities they are purchasing and selling comply with the federal securities laws,” said Richard R. Best, Director of the SEC’s New York Regional Office. “We will continue to pursue gatekeepers who abuse their positions and cause harm to the marketplace.”
The SEC’s complaint, filed in federal court for the Eastern District of New York, charges Rubin and Craft with violations of the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, and seeks injunctive relief, civil penalties, and penny stock bars.
Without admitting or denying the SEC’s allegations, Craft consented to a bifurcated settlement that, subject to court approval, permanently enjoins him from similar violations and permanently prohibits him from participating in any offering of a penny stock.
The proposed judgment reserves the issue of any additional remedies, including civil penalties, for determination by the court upon motion of the SEC. The SEC’s litigation against Rubin will proceed in federal district court.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today filed criminal charges against Rubin and Craft.
The SEC’s investigation has been conducted by Hane L. Kim and Michael Paley. The litigation will be handled by Dugan Bliss and Ms. Kim. The case is being supervised by Lara S. Mehraban. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York and the Office of the Inspector General of the SEC.