Last week, the U.S. Attorney’s Office for the Southern District of New York charged disbarred attorney, Richard J. Rubin, and licensed attorney, Thomas J. Craft, with fraud for their roles in a legal opinion letter scheme spanning from 2011 to 2018.
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The indictment claims the two fraudulently wrote three different types of opinion letters that falsely assured investors about the legitimacy of dozens of companies’ securities offerings.
Rubin, a Brooklyn-based former U.S. Securities and Exchange Commission lawyer who was disbarred in 1995, is alleged to have submitted at least 128 attorney opinion letters that allowed microcap stock issuers’ securities to be purchased by and sold to the investing public. Being that he was disbarred, many of those letters needed Craft, the licensed attorney, to sign and stamp. In return, Rubin paid Craft tens of thousands of dollars for his participation.
The two allegedly fabricated S-1 opinion letters, part of a company’s mandatory process when registering a a securities offering with the SEC. A licensed attorney is the only person who can pen these letters, and according to the charges Craft was fully aware Rubin was disbarred and therefore could not. They also provided Seller’s Representation Letters, falsely confirming that specific privately held securities were exempt from needing to be registered to be sold to the public.
Rubin and Craft also wrote opinion letters for issuers of over-the-counter securities, who sought to be quoted by OTC Markets Group, prosecutors added.
Both Rubin and Craft have also been charged in a parallel civil suit by the SEC for alleged violations of the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Craft has agreed to a bifurcated settlement barring him from several investment activities, including participating in penny stock offerings.
“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 NY Regional Office. “We will continue to pursue gatekeepers who abuse their positions and cause harm to the marketplace.”
Both men have a hearing in New York federal court on Dec. 15.
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Source: https://www.law360.com/articles/1333834?sidebar=true
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