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SEC Charges Current and Former Attorneys with Microcap Investment Fraud

November 16, 2020 Blog

The U.S. Securities and Exchange Commission (SEC) recently filed charges against a Florida attorney and a disbarred New York attorney who are accused of engaging in an investment fraud scam from December 2015 through July 2018. According to an SEC press release, the current and former attorneys, Thomas Craft and Richard Rubin are accused of engaging in, “a legal opinion letter scheme to fraudulently facilitate the sale of millions of shares of microcap securities to retail investors.”

Craft and Rubin are facing fraud charges under the Securities Act of 1933 and the Securities Exchange Act of 1934. The charges stem from allegations that they prepared and signed at least 128 fraudulent opinion letters that allowed microcap companies to sell securities to the public. Specifically, Craft is alleged to have prepared opinion letters without a license (while falsely claiming to be licensed), while Craft is accused of signing opinion letters which falsely stated that he had conducted a substantive review of the microcap companies’ securities offerings.

Fraudulent Opinion Letters Can Lead to Substantial Losses for Retail Investors

Attorney opinion letters play an important role in the regulation of the microcap securities market. When completed properly, they serve to ensure that investors have access to the information they need in order to make informed investing decisions. However, when an opinion letter is fraudulently prepared, this can (and often does) lead to investors wrongly assuming that the offering has been reviewed by an ethical and upstanding attorney. This, in turn, can cause investors to unknowingly make high-risk investments that can lead to substantial investment losses.

As stated by Richard R. Best, Director of the SEC’s New York Regional Office, “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.” As a result, acts such as that alleged to have been committed by Craft and Rubin cannot be tolerated, and those who are liable for investors’ fraudulent losses must be held fully accountable.

What Should You Do if You Have Concerns About Microcap Investment Fraud?

If you are concerned that you may have suffered fraudulent losses in microcap investments (or any other securities investments), what should you do?

Unfortunately, fraudulent scams such as the one discussed above are not uncommon. If you believe that your investment losses may be the result of fraud, you should consult with an attorney promptly. Despite the example that appears to have been set by Craft and Rubin, most securities lawyers are passionate about protecting investors, and an experienced attorney will be able to assess your legal rights and pursue all available legal remedies on your behalf.

Speak with an Investment Fraud Attorney at Zamansky LLC

If you have concerns about investment fraud, we encourage you to schedule a free, no-obligation consultation at Zamansky LLC. With offices in New York, we represent individual investors nationwide. To find out if you are entitled to financial compensation for investment fraud, call us at 212-742-1414 or contact us online today.

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