The Securities and Exchange Commission (the “SEC”) brought a securities fraud enforcement action against an Oklahoma wedding singer and former investment adviser, Larry J. Dearman, Sr., and his special friend, Marya Gray in connection with fraudulent securities offerings that raised at least $4.7 million from more than 30 of Dearman’s advisory clients.
The SEC action, filed in the U.S. District Court in Tulsa, Oklahoma, alleges that Dearman recommended that his clients invest in various businesses that Gray owned in Bartlesville, Oklahoma.
According to the SEC complaint, Dearman and Gray misled investors about the safety of the investments that their funds would be used to purchase.
In addition to not warning about risks, the defendants also misled investors about how the funds they invested would be spent.
Dearman’s misrepresentations included telling the investors that their funds would be used to purchase equipment for one of Gray’s companies, Bartnet Wireless Internet, Inc. In reality, however, Gray and Dearman spent the investor funds on Ponzi payments and personal expenses including gambling and shopping.
Worse yet, many of the people Dearman targeted trusted him because they’d known him and his family since childhood and had participated in church activities with him. He’d sung at their weddings.
What Dearman did is known as affinity fraud, in which the fraudster appeals to people who share his background, interests, and beliefs.
When questioned by the SEC, Dearman asserted his Fifth Amendment rights.
The SEC complaint alleges that he stole roughly $700,000 from his clients through the fraudulent scheme.
Dearman and Gray are charged with violating or aiding and abetting violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and (2) of the Investment Advisers Act of 1940.
The SEC seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil monetary penalties from both defendants. In addition, the Commission has named as relief defendants three of Gray’s businesses, including Bartnet Wireless Internet, Inc., The Property Shoppe, Inc., and Quench Buds Holding Company, LLC, seeking to recover funds they derived from defendants’ fraud.
For further information about securities fraud, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, or visit www.securitieslawyer101.com
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Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 N
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855