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Boca Raton lawyer charged in securities scam

By Palm Beach Business.com

BOCA RATON — Federal authorities have charged a disbarred Boca Raton lawyer with securities fraud in connection with his involvement in a startup skin care company that planned to go public.

Prosecutors allege that William J. Reilly, 59, secretly controlled a Boca Raton startup called Caribbean Pacific Marketing, which planned to sell sun screen and other skin care products. The company had no patents or trademarks, no customers, no employees and no money in the bank.

The New York Bar Association revoked Reilly’s license to practice law and a federal judge sanctioned Reilly earlier this year for practicing securities law even though the Securities and Exchange Commission suspended his privileges in 2009. All of this should have been included in disclosure documents that Caribbean Pacific filed with the SEC, but none was.

Despite its rather skimpy resume, Caribean Pacific planned to go public by taking advantage of the so-called JOBS Act, passed by Congress to make it easier for certain small companies to register with the SEC and sell its shares to investors.

Caribbean Pacific planned to sell shares to the public at 15 cents a pop, hopefully raising between $65,000 and $140,000.

Prosecutors allege that Reilly arranged with stock promotion firms to publish press releases about Caribbean Pacific in order to pump up interest in the company just before the IPO. Prosecutors also allege that Caribbean Pacific failed to disclose Reilly’s involvement with the company, violating federal securities law.

Compounding Reilly’s legal problems, prosecutors allege that the Boca resident on two occasions sold shares of Caribbean Pacific to a buyer who happened to be a confidential source for the FBI working the penny stock scene in South Florida. Both sales allegedly took place before the IPO took place, violating federal securities law.