Licensed Attorney And Disbarred Attorney Charged For Roles In Fraudulent Opinion Letter Scheme
On December 2, 2020, the Securities and Exchange Commission (the “SEC”) charged disbarred attorney Richard J. Rubin and licensed attorney Thomas J. Craft with fraud for their roles in a legal opinion letter scheme to fraudulently facilitate the sale of millions of shares of microcap securities to retail investors.
The SEC’s complaint alleges that from December 2015 to July 2018, Rubin, who was disbarred in 1995, continued to fraudulently practice securities law by submitting at least 128 attorney opinion letters that allowed microcap stock issuers’ securities to be purchased by and sold to the investing public. The complaint alleges that Rubin signed certain letters, falsely claiming to be an attorney, and drafted other letters for Craft’s signature.
The complaint further alleges that From December 2015 to August 2018, Craft signed himself, instructed his mother to sign on his behalf, or consented to Rubin using Craft’s electronic signature, 30 attorney opinion letters that Craft did not draft, and for which he did not conduct any underlying due diligence.
Rubin began to work with Craft as early as 1996, and by at least 2014, Rubin regularly drafted attorney opinion letters for Craft to sign. These letters falsely represented that Craft had personal knowledge of the basis for his purported opinions, which he did not. At all relevant times, Craft knew that Rubin had been disbarred and was not authorized to practice law before the Commission or otherwise.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York filed criminal charges against Rubin and Craft.
The Indictment gives more information about the scheme. According to the Indictment, from at least in or about 2011 through at least in or about September 2018, Richard Rubin and Thomas Craft participated in a fraudulent scheme in which Craft falsely represented that he had undertaken certain legal work in connection with the Seller’s Representation Letters, OTC Markets Attorney Letters, and S-1 Opinion Letters, all of which enabled the relevant securities to be sold into the investing public. In fact, despite his disbarment, Rubin had undertaken all the legal work attested to in the letters; Craft merely served as a “rubber stamp” on the letters in exchange for tens of thousands of dollars in monetary compensation. Craft undertook the scheme knowing that Rubin had been disbarred.
According to the Indictment, the false representations were in letters pertaining to over a dozen companies, including OWC Pharmaceutical Research Corporation (OWCP).
Both defendants are charged with one count of Conspiracy to Commit Securities Fraud and two counts of Securities Fraud.
Connecting the Dots
On March 5, 2018, the SEC brought charges against Jeffrey O Friedland and several related entities for engaging in a nearly $7 million securities fraud scheme to conceal the nature of his interest in OWC Pharmaceutical Research Corp (OWCP), to allow him to unload his considerable holdings in OWCP stock into the market that he helped artificially inflate.
That very same day, March 5, 2018, the OTC Markets Group added attorney Richard J Rubin to its prohibited attorney list, citing Rubin’s disbarment from 1995. The move was obviously related to the SEC action against Friedland.
A judgment was reached in the Friedland case on December 4, 2019, with Friedland agreeing to a 10-year penny stock ban and disgorgement of $2,089.979.02, plus pre-judgment interest in the amount of $69,020.98, for a total of $2,159,000. Friedland was also ordered to pay a $2,000,000 civil penalty.
On February 21, 2020, the SEC brought an Administrative Action against Richard J Rubin, followed by an Administrative Action against Thomas J Craft on February 25, 2020.
In the Order against Rubin, the SEC cites his practicing as an attorney despite his disbarment, denying him from further appearing or practicing before the Commission.
In the Order against Craft, the SEC cites his relationship with Rubin, signing opinion letters drafted by Rubin for:
- a May 7, 2018 Opinion Letter for KinerjaPay Corp (KPAY) for its Form S-1 Registration Statement filed May 8, 2018;
- an April 11, 2017 Opinion Letter for eWellness Healthcare Corporation (EWLL) for its Form S-1 Registration Statement filed April 11, 2017; and
- a September 6, 2017 Opinion Letter for E-Qure Corp (EQUR) for its Form S-1 Registration Statement filed September 6, 2017.
The Order denied Craft from further appearing or practicing before the Commission.
Thomas J Craft joined his associate on the OTC Market prohibited attorney list the same day.
Besides the aforementioned opinion letters for KPAY, EWLL, and EQUR, our research shows that Thomas J Craft Jr filed opinion letters for Registration Statements done by American International Industries Inc on 3/9/2011, American International Holdings, Corp. (AMIH) on 4/15/2011, Triumph Ventures Corp on 4/10/2014, Data Call Technologies (DCLT) on 12/30/14, Global Technologies Corp on 3/26/2015, and ViewBix Inc (VBIX) on 8/5/2015 and previously provided legal services, in some cases including writing attorney letters, for Citrine Global Corp (CTGL), USA Equities Corp (USAQ), Suspect Detection Systems Inc (SDSS), and Icoa Inc (ICOA) during the relevant period.
We also found Richard J Rubin providing legal services for several public Issuers between 2014 – 2018 despite being a disbarred attorney, including Citrine Global Corp (CTGL) from 2014 – 2016, Smart Energy Solutions Inc in 2015, Samsara Luggage Inc (SAML) in 2015, ViewBix Inc (VBIX) between 2015 – 2016, KinerjaPay Corp (KPAY) in 2016, Exxe Group Inc (AXXA) in 2016, eWellness Healthcare Corp (EWLL) between 2017 – 2018, OWC Pharmaceutical Research Corp (OWCP) in 2016, Africa Growth Corp (fka AFGC) in 2016, and Nexien BioPharma Inc (NXEN) between 2017 – 2018.
Further research found that Craft and Rubin served as officers and controlling shareholders of Peregrine Industries Inc (PGID) between 2013 – 2019.
Robert Rubin and his son, Ivo Heiden, were also found together as officers in public Issuers going back to the early 2000s, including PGID, VBIX, NXEN, and ECDC (now revoked).
Ivo Heiden was a shareholder in OWC Pharmaceutical Research Corp (OWCP), having received shares for services, and is currently the CEO of Ecomat Inc (ECMT).
Thomas J Craft‘s problems don’t end with the SEC and DOJ’s actions. Craft was also the subject of an unrelated Florida Bar Complaint, which resulted in a Public Reprimand – with conditions on July 16, 2020. Craft was ordered to refund a couple $3,750, attend The Florida Bar’s Ethics School, and was placed on probation for two years.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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