Boca Raton lawyer hit with fines for alleged stock scam
BOCA RATON — A Federal judge in New York has slapped a Boca Raton lawyer with more than $230,000 in fines and penalties for his role in role in a scam that the Securities and Exchange Commission said took investors for hundreds of thousand of dollars.
William Reilly of Boca Raton was one of three men that the SEC sued in federal court in New York for a scam involving a penny stock called Forest Management Resources Corp.
Reilly and the other two, Chaim Justman and Pinchus Gold, both of Brooklyn agreed to settle the SEC’s allegations without admitting or denying the allegations against them.
In imposing the penalties, federal Judge Jed S. Rakoff found that Justman, Gold, and Reilly had "engaged in an elaborate fraudulent scheme over the course of six months that manipulated a publicly traded stock, resulting in the eventual collapse of the stock price."
The SEC sued Reilly, Justman and Gold alleging they lied to Forest's transfer agent in order to obtain millions of restricted shares without the required restricted legend.
A transfer agent is the firm that maintains lists of a company’s shareholders and handles transfers of stock. Restricted stock is shares that are not registered with the SEC and can’t be be sold publicly. The SEC alleged that Reilly, Justman and Gold sold the shares to public investors anyway by lying and withholding critical information.
All three men agreed to a court order barring them from future violations of federal securities law; Reilly and Justman are barred from serving as an officer or director of any public company.
Reilly was ordered to forfeit more than $84,500, the money he made through the stock sales, plus more than $18,000 in interest. Rakoff also imposed a civil fine of $130,000 on Reilly and the other two.