A disbarred New York attorney and a Florida lawyer filed false legal opinion letters that fraudulently enabled the sale of millions of shares of microcap stock to investors, the SEC and DOJ told a federal court in Manhattan Wednesday.
Richard J. Rubin engaged in a scheme to submit at least 128 fake letters to the Securities and Exchange Commission despite being disbarred, the agency says in a complaint filed in the U.S. District Court for the Southern District of New York.
Thomas J. Craft “merely served as a ‘rubber stamp’ on” some of the letters, the Justice Department says in an indictment unsealed in the same court.
Craft “voluntarily self-surrendered this morning and looks forward to addressing the allegations of the indictment,” James D. Sallah, a Sallah Astarita & Cox LLC partner who represents Craft, told Bloomberg Law Wednesday.
Rubin was licensed in New York but disbarred in 1995, the agencies said. Craft was licensed to practice law in Florida during the time of the alleged scheme.
“Rubin signed at least 98 of the letters himself, fraudulently claiming to be an attorney,” the SEC complaint says. Craft falsely claimed to have “undertaken certain legal work in connection with” some of the letters, but really just signed his name to Rubin’s other letters “in exchange for tens of thousands of dollars in monetary compensation,” the indictment says.
"[R]ather than act as gatekeepers against fraud, the defendants used their positions as attorneys—albeit one of them disbarred—to actively carry out a fraud,” Audrey Strauss, the acting U.S. Attorney for the Southern District of New York, said. These letters “brought false comfort to the investing public that certain legal work had been performed.”
Craft “already consented to the entry of a permanent injunction in the SEC matter, without admitting or denying the allegations of the complaint,” Sallah said. Bruno & Degenhardt PC also represents Craft. the injunction hasn’t yet appeared on the civil docket.
The indictment charges Rubin and Craft with allegations of securities fraud and conspiracy to commit securities fraud.
Newark, N.J.-based John P. McGovern, who represents Rubin, declined to comment.