A disbarred former U.S. Securities and Exchange Commission attorney and a licensed attorney have been charged with issuing phony attorney opinion letters to facilitate the offer and sale of microcap securities.

According to the SEC, Richard Rubin — who worked for the commission from 1969 to 1976, including as a trial attorney in the division of enforcement — collaborated with Thomas Craft, a Tequesta, Fla., attorney, in a scheme to provide the SEC and market participants with more than 120 false opinion letters that lasted from December 2015 to July 2018.

Rubin was disbarred in 1995 but allegedly continued to hold himself out as a practicing attorney with an office on Wall Street in New York. He drafted the opinion letters and either signed them himself or had Craft sign them, the SEC said in a civil complaint.

The letters signed by Craft included materially false statements that he had “performed substantive work to arrive at his purported opinions, when in fact he had not,” the complaint stated.

Both Rubin, 78, and Craft, 55, were arrested Wednesday on parallel criminal fraud charges.

“Rather than act as gatekeepers against fraud, the defendants used their positions as attorneys – albeit one of them disbarred – to actively carry out a fraud, working to generate dozens of attorney opinion letters containing false representations that brought false comfort to the investing public that certain legal work had been performed and certain information had been confirmed as accurate,” Audrey Strauss, Acting U.S. Attorney for the Southern District of New York, said in a news release.

Letters written by Rubin were allegedly filed on behalf of dozens of microcap issuers for the purposes of removing restrictive legends on share certificates or issuing share certificates without restrictive legends for more than 85 million shares.

Federal prosecutors identified one of the issuers as OWC Pharmaceutical Research, a medical marijuana company based in Israel.

As part of the scheme, “Craft merely served as a ‘rubber stamp’ on the letters in exchange for tens of thousands of dollars in monetary compensation,” even having his mother sign some of them on his behalf, authorities said.

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