Failure to Disclose Financial Conflicts of Interest Leads to Reduced Returns
Robert Allen Gravette, 57, of Santa Clarita, California, on July 12, entered into an administrative SEC order for allegedly breaching his fiduciary duty to his clients by failing to disclose financial conflicts of interest when recommending investments.
Gravette was the president and owner of Criterion Wealth Management and Insurance Services, formerly an investment advisor registered with California and, before that, with the SEC. From November 2006 through 2020, he was also a registered representative with a firm registered with the SEC as a dual broker-deal and investment adviser.
According to the SEC, while acting as an investment adviser, Gravette did not disclose the compensation arrangements he negotiated with the fund managers of four private placement offerings he recommended to his clients. For two microcap funds, the undisclosed compensation arrangement meant reduced investment returns for his clients.
Gravette also signed and filed forms with the SEC that contained false statements and omitted required facts.
The SEC barred Gravette from associating with any dealer, broker, municipal security dealer, transfer agent, investment adviser, statistical rating organization, or transfer agent and from offering any penny stock.
Return Pump-and-Dump Offender Heads to Prison Again
Phillip W. Offill Jr., 64, of Dallas, Texas, was sentenced July 12 to six years in prison and ordered to pay $1.385 million in restitution to victims for defrauding more than 1,000 investors in a penny-stock scheme, the Dept. of Justice announced.
The DOJ said from November 2016 through October 2018, Offill and others conspired to misappropriate millions of shares of MCPI, a publicly traded company, by using fake paperwork and aliases. The MCPI shares were marketed through call centers that made false statements to potential investors and omitted vital information, such as the co-conspirators paying lofty commissions to the callers selling these stocks.
Offill and his allies also allegedly manipulated the market by pumping up demand to make MCPI stock appear to be trading more actively than it was. The co-conspirators published false press releases regarding millions of dollars in funding that would never happen. As a result, victim investors lost more than $1.3 million.
Assistant Attorney General Kenneth A. Polite, Jr., of the Justice Department’s Criminal Division, said, “This serial offender defrauded over 1,000 investors, including many who entrusted him with their retirement funds and life savings.”
Offill previously worked as an attorney for the SEC for more than 14 years. After leaving the SEC in 2010, he was convicted for participating in multi-million pump-and-dump stock manipulation schemes. He was sentenced to eight years in prison and three years of supervised release. During his supervised release, Offill committed the current MCPI stock offense, according to the DOJ.
U.S. Attorney Jessica D. Aber for the Eastern District of Virginia said, “This case is unique because of the defendant’s greed and disregard for the rule of law, even after serving a federal prison sentence for fraud.”
As part of the SEC case brought in 2011, the U.S. District Court for the Eastern District of Michigan permanently barred Offill from participating in penny stock offerings. Despite the ban, the DOJ said Offill continued his schemes. “The manipulation of investors seen in this case will not be tolerated, and we will continue to collaborate to put conspiracies like this one to an end,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division.
