Florida Attorney Pleads Guilty To Securities Fraud In Connection With Fraudulent Opinion Letter Scheme

 

 Damian Williams, the United States Attorney for the Southern District of New York, announced that THOMAS CRAFT, a licensed attorney, pled guilty in Manhattan federal court to securities fraud.  CRAFT’s guilty plea results from his involvement in a fraudulent scheme in which he falsely represented that he had undertaken certain legal work in connection with attorney opinion letters, when in truth and in fact, he merely rubber-stamped the opinion letters that had been prepared by his co-defendant, Richard Rubin, who was a disbarred attorney. 

CRAFT was arrested on December 2, 2020, and pled guilty today before U.S. District Judge Paul A. Engelmayer.  As part of his plea agreement, CRAFT agreed to relinquish his law license in Florida. 

U.S. Attorney Damian Williams said: “As an attorney, Craft was supposed to act as a gatekeeper against fraud in the securities markets.  Instead, as he admitted today, Craft falsely represented that he had carried out certain work in attorney opinion letters, giving false comfort to the investing public that the relevant securities rules had been satisfied.  Now he stands guilty of securities fraud and awaits sentencing for his crime.”

As alleged in the Indictment filed against CRAFT, as well as his co-conspirator Rubin, and other statements made in open court: 

Securities Registration Requirements and SEC Rule 144

Under the Securities Act of 1933 (the “Securities Act”), anyone seeking to sell a security must first register that security unless an exemption applies.  This registration requirement protects investors by promoting disclosure of information pertinent to informed investment decisions. 

A company registering new securities must complete a registration statement known as U.S. Securities and Exchange Commission (“SEC”) Form S-1 before the securities can be listed on a national exchange and publicly traded.  SEC Form S-1 contains information pertinent to informed investment decisions, including, among other things, information on the company’s business operations, the company’s financial condition, and a description of the company’s management.  In connection with SEC Form S-1, the company is required to file an opinion letter (the “Form S-1 Opinion Letter”) from a licensed attorney attesting that the statements in the SEC Form S-1 are true and correct.  A company’s SEC Form S-1 and the Form S-1 Opinion Letter are available to the public on the SEC’s Electronic Data Gathering, Analysis, and Retrieval System (“EDGAR”).

“Restricted securities” refers to securities acquired in unregistered, private sales from the issuing company or from an affiliate of the issuer, with “affiliate” meaning a person who directly or indirectly controls, or is controlled by, or is under common control with, an issuer.  Affiliates can also include an executive officer or a director or large shareholder who is in a relationship of control with respect to the issuing company.  Restricted securities bear a legend indicating that the securities may not be resold in the marketplace unless they are registered with the SEC or are exempt from such registration requirements.

Securities Act Rule 144 (“Rule 144”), codified at 17 C.F.R. § 230.144, provides a registration exemption for restricted securities.  Specifically, it permits the public resale of restricted securities if a number of conditions are met, including conditions relating to how long the securities are held, the way in which they are sold, the public information available to investors about the securities, and the amount that can be sold at any one time.  Pursuant to Rule 144, however, even if these conditions are met, the sale of restricted securities to the public is still not permitted until a transfer agent removes the “restricted” legend from the security. 

The term “transfer agent” refers to a company that keeps track of individuals and entities that own the stocks and bonds of a given company that has publicly traded securities.  Among other things, transfer agents issue and cancel certificates to reflect changes in ownership, serve as the company’s intermediary for payouts, exchanges, or mailings, and handle lost, destroyed or stolen certificates.  Transfer agents also, when appropriate, remove the “restricted” legend from securities. 

A Rule 144 Seller’s Representation Letter, or “Seller’s Representation Letter,” is a letter from an affiliate seller (that is, a seller in a relationship of control with the issuer, such as an executive officer, a director, or a large shareholder) of restricted securities to a transfer agent to establish certain facts underlying a legal opinion that the securities at issue can be sold publicly pursuant to Rule 144.  The issuer’s consent to the removal of a legend typically comes in the form of an opinion letter from the issuing company’s attorney, the Seller’s Representation Letter, indicating that the securities at issue satisfy the conditions of Rule 144.  Seller’s Representation Letters contain multiple attestations that are required by law prior to the restricted legend being removed.  The transfer agent relies on the Seller’s Representation Letter in determining whether to remove the restricted legend from a security.

Over-the-Counter Securities and OTC Markets Group

Over-the-counter (“OTC”) securities are securities that are traded between two counterparties outside of a formal securities exchange.  OTC Markets Group (“OTC Markets”) is a securities market headquartered in New York, New York, that provides price and liquidity information for OTC securities.

OTC Markets requires issuers seeking to be listed on OTC Markets to hire a licensed attorney to review company records and submit a letter to OTC Markets (an “OTC Markets Attorney Letter”) regarding whether information publicly disclosed by the issuer is in compliance with the condition in SEC Rule 144 governing the public information available to investors about the issuer.  OTC Markets relies on the OTC Markets Attorney Letter to determine whether an issuer’s security may be listed on OTC Markets.  OTC Markets Attorney Letters are available to the public on the OTC Markets website. 

The Scheme to Defraud

From at least in or about 2011 through at least in or about September 2018, CRAFT and Rubin participated in a fraudulent scheme in which CRAFT falsely represented that he had undertaken certain legal work in connection with Seller’s Representation Letters, OTC Markets Attorney Letters, and S-1 Opinion Letters, all of which enabled the relevant securities to be sold to the investing public.  The false representations were in letters pertaining to over a dozen companies.

CRAFT, 56, of Tequesta, Florida, pled guilty to one count of securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5, and 18 U.S.C. § 2, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

CRAFT will be sentenced on February 24, 2022, at 10:30 a.m.  CRAFT’s co-defendant, Richard Rubin, was sentenced on November 2, 2021, to one year’s probation, 200 hours of community service, and a $1,000 fine.  Rubin was also ordered to forfeit $117,068.15 in crime proceeds.        

Mr. Williams praised the investigative work of the Office of Inspector General of the SEC and also thanked the SEC Division of Enforcement for its assistance. 

Governor Hochul Announces Partnership to Expand Solar Development Support for Puerto Rico and Virgin Islands

 

Effort Would Expand 2019 Program to Train and Place Workers in Solar-Plus-Storage, Construction, and Other Supportive Services

Reinforces New York State's Commitment to Growing a Clean Energy Workforce Pipeline and Ensuring an Equitable Clean Energy Transition

 During a tour of Concilio de Salud Integral de Loiza in Loiza, Puerto Rico, Governor Kathy Hochul today announced New York State will work with community partners to expand ongoing solar deployment and workforce development support in Puerto Rico and the Virgin Islands. The State will provide new curriculum and permitting and financing expertise that will support the development of solar industries on the Islands. This effort further strengthens New York's long-standing commitment to support Puerto Rico's reconstruction and recovery from Hurricanes Irma and Maria, and helps reinforce New York State's commitment to ensuring a growing clean energy workforce pipeline and an equitable clean energy transition. 

"Climate change is the crisis of our time, and it takes each and every one of us to pave the path for a cleaner, greener future," Governor Hochul said, "The number one obstacle we must overcome is our over reliance on fossil fuels and we must do so equitably so no community is left behind. New York and Puerto Rico have a historically close relationship and this partnership is an important step to creating more sustainable jobs and boosting green energy."

Today's announcement builds on the $4.5 million Puerto Rican Solar Business Accelerator, Workforce and Small Business Development Program established in 2019 with support from the U.S. Economic Development Administration. The Puerto Rican Solar Business Accelerator, Workforce and Small Business Development Program is a joint, public-private effort between the New York State Energy Research and Development Authority, The Interstate Renewable Energy Council, and PathStone Corporation, Inc. to train and place workers in solar-plus-storage and construction, develop innovative solar financing options, and to provide technical assistance to solar businesses.

56 Days and Counting

 

I'm down here in Puerto Rico with my good friends from the Bronx for Somos. State Senator Jamaal Bailey, you are the Bronx Democratic Party Leader, can I count on the Bronx Democratic Party to endorse me in my bid for governor next year. The Bronx Democratic Party endorsed me in my re-election bid for mayor in 2017, and I am the best candidate for governor.

David Patterson, I mean Kathy Hochul forced her way onto the stage election night to congratulate my successor Mayor Elect Eric Adams. She said that she will work with the new mayor on matters important to the city. Well she didn't say that to me, and has been unfriendly to me and New York City just like her old boss Andrew Cuomo. Plus she picked Brian Benjamin over you Jamaal to be her Lieutenant Governor. 

RIKERS ISLAND INMATE INDICTED FOR ASSAULTING DOC OFFICER

 

Defendant Threatened DOC Officer With 8-Inch Metal Shank

 Bronx District Attorney Darcel D. Clark today announced that a Rikers Island inmate has been indicted on second-degree Assault and additional charges for attacking a Department of Correction Officer in the jail. 

 District Attorney Clark said, “The defendant allegedly held a makeshift weapon to a DOC Officer’s neck. Thankfully other Officers intervened, and the victim was not seriously injured. With our partners at the Department of Correction, we are doing all we can to stop the relentless violence in Rikers Island and end these attacks against DOC staff who are simply doing their jobs.”

 New York City Department of Correction Commissioner Vincent Schiraldi said, “The details of this alleged assault on one of our correction officers are disturbing, and D.A. Clark has my deep gratitude for her efforts to hold this and other individuals who assault our officers as well as other incarcerated people accountable. I’d also like to thank our Correction Intelligence Bureau team, who work tirelessly and conducted the investigation that led to this arrest.” 

 District Attorney Clark said the defendant, James Hawkins, 30, an inmate in Rikers Island, was arraigned on two counts of second-degree Assault, first and second-degree Promoting Prison Contraband, first and second-degree Unlawful Imprisonment, fourth-degree Criminal Possession of a Weapon, second-degree Menacing and third-degree Assault on November 3, 2021 before Bronx Supreme Court Justice Efrain Alvarado. Bail was set at $75,000 cash/$75,000 bond and the defendant is due back in court on February 4, 2022.

 According to the investigation, on October 13, 2021, at approximately 1:12 p.m. in the George R. Vierno Center of Rikers Island, the defendant allegedly approached the victim brandishing a sharp metal object, several inches in length and held the weapon to the Officer’s neck. Correction Officers rushed to help the victim and deployed their pepper spray. The defendant removed the weapon from the victim’s neck but continued to hold the Corrections Officer by his neck and eventually released him when he left the area. Hawkins hid the weapon, and Officers searched and recovered the eight-inch sharpened metal shank that had a cloth handle. The victim received medical attention but did not sustain any serious injuries.

 District Attorney Clark thanked Lourdes Galindez, Community Coordinator in the Rikers Island Prosecution Bureau. District Attorney Clark also thanked the DOC Correction Intelligence Bureau, specifically CIB Investigators Daniel Monaco and Walter Holmes, for their assistance in the investigation.

 An indictment is an accusatory instrument and not proof of a defendant’s guilt.

Governor Hochul Updates New Yorkers on State's Progress Combating COVID-19 - NOVEMBER 5, 2021

 

74,268 Vaccine Doses Administered Over Last 24 Hours  

32 COVID-19 Deaths Statewide Yesterday

New State Website Providing Helpful Info About Child Vaccination 

 Governor Kathy Hochul today updated New Yorkers on the state's progress combating COVID-19.  

"With our newly released guidance today for medical professionals and website with resources for parents and guardians, we are not wasting any time in helping administer the vaccine to children five to 11 years old," Governor Hochul said. "We must work together to finally beat this pandemic by wearing our masks, washing our hands, and getting our shots, so that we can all enjoy a happy and healthy holiday season."

Today's data is summarized briefly below:

• Test Results Reported - 189,162
• Total Positive - 4,775
• Percent Positive - 2.52%
• 7-Day Average Percent Positive - 2.37%
• Patient Hospitalization - 1,861 (-27)
• Patients Newly Admitted - 225
• Patients in ICU - 396 (-17)
• Patients in ICU with Intubation - 230 (-11)
• Total Discharges - 209,373 (+222)
• New deaths reported by healthcare facilities through HERDS - 32
• Total deaths reported by healthcare facilities through HERDS - 45,728

The Health Electronic Response Data System is a NYS DOH data source that collects confirmed daily death data as reported by hospitals, nursing homes and adult care facilities only.

• Total deaths reported to and compiled by the CDC - 58,181

This daily COVID-19 provisional death certificate data reported by NYS DOH and NYC to the CDC includes those who died in any location, including hospitals, nursing homes, adult care facilities, at home, in hospice and other settings.

• Total vaccine doses administered - 27,542,110
• Total vaccine doses administered over past 24 hours - 74,268
• Total vaccine doses administered over past 7 days - 512,283
• Percent of New Yorkers ages 18 and older with at least one vaccine dose - 84.6%
• Percent of New Yorkers ages 18 and older with completed vaccine series - 76.9%
• Percent of New Yorkers ages 18 and older with at least one vaccine dose (CDC) - 88.0%
• Percent of New Yorkers ages 18 and older with completed vaccine series (CDC) - 79.0%
• Percent of all New Yorkers with at least one vaccine dose - 71.7%
• Percent of all New Yorkers with completed vaccine series - 65.1%
• Percent of all New Yorkers with at least one vaccine dose (CDC) - 74.7%
• Percent of all New Yorkers with completed vaccine series (CDC) - 67.0%

MAYOR DE BLASIO UNVEILS FIRST MONTHLY UPDATE ON NEW BLUEPRINT TO COMABT EXTREME WEATHER IN NEW YORK CITY

 

In less than four weeks, New York City has put into action new strategies to guard against severe weather

 Mayor Bill de Blasio today released the first monthly update to “The New Normal: Combatting Storm-Related Extreme Weather in New York City,” a landmark report that provides New York City with a new blueprint to prepare for and respond to extreme weather. Based on report findings, New York City has already enhanced outreach to vulnerable areas, launched new emergency communications protocols, taken action to protect New Yorkers in basement apartments, and started key infrastructure improvements.  

A copy of the monthly update can be found here. 

 

“We know that climate change is happening now, and we have the blueprint we need to act,” said Mayor Bill de Blasio. “Since Hurricane Ida, we’ve made drastic improvements to infrastructure, data collection, emergency communications systems, and basement apartments. We are on the right path when it comes to responding to the climate crisis and keeping New Yorkers safe.” 

 

“We promised New Yorkers that we would protect them from the threat of severe weather and we’re delivering on that promise,” said Extreme Weather Coordinator, Deputy Mayor for Administration, and Chief of Staff Emma Wolfe. “Through targeted investments, better storm tracking, and new ways to get information to the public, we’re ensuring our residents are safe as we face this new reality and the impacts of climate change.” 

 

 The Report also highlights how these new improvements improved response on October 25/26^th to an instance of heavy rainfall in the city. 

 

Key progress in the month since Hurricane Ida include:

 

• New Emergency Communications plan

• Releasing RFP for “Rainboots on the Ground” program

• 100 warning signs installed on flood prone roadways for drivers 

• Finished fixing drainage on a community driveway in East Elmhurst, expanding to 40 total locations

• 13 Flood Net Sensors installed and expansion imminent

• Increasing frequency of cleaning catch basins

• Providing 10,000 sandbags to residents 

• New NYPD protocols for basement unit evacuations

• New working group for Basement Apartment Conversion Program

 

“While we can’t control the weather, we can be proactive and innovative in how we adapt and respond to it,” said Jainey Bavishi, Director of the Mayor’s Office of Climate Resiliency. “That’s exactly what we’re doing in New York City. By modernizing our buildings and infrastructure, utilizing green solutions, raising awareness around flood risk, and leveraging the latest science and technology, we can protect residents, businesses, and communities from the threat of extreme weather while continuing our ongoing fight against climate change.”

Senator Biaggi's Week in Review: 11/1/21-11/5/21

 

Dear Community,

I want to draw your attention to a powerful op-ed written by Shams DaBaron, aka “Da Homeless Hero,” this week regarding the lack of Wi-Fi accessibility in homeless shelters and the impact it had on him when he was homeless. Shams, a housing justice activist, recounts his experiences in the shelter system, where he consistently felt dehumanized and degraded, especially when denied access to basic necessities such as internet access in shelters. 

Currently, homeless shelters in New York are not required to provide Wi-Fi to their residents, resulting in these homeless individuals being denied access to all of the information and resources that the internet provides. This perpetuates a digital divide which shuts homeless individuals out of gaining access to important opportunities such as housing, employment, and education, further trapping them in a cycle of homelessness. 

As mentioned in the op-ed, I have a bill to change that. My bill, S9030A, would require all homeless shelters in New York to provide internet access to residents, ensuring that our homeless population has an equal opportunity to access housing, education, government services and all of the resources that having an internet connection provides. 

I am grateful to Shams for shining a light on this crucial issue, and am hopeful that we will be able to work together to ensure that my bill is passed in the following session. New York has a responsibility to end the cycles of homelessness, and it is only by providing access to basic necessities such as Wi-Fi that we can do so.

With Gratitude,

State Senator Alessandra Biaggi

Estonian Man Sentenced To 10 Years In Prison For Conspiring To Import Fentanyl Into The United States

 

 Damian Williams, the United States Attorney for the Southern District of New York, announced today that AMID MAGERRAMOV was sentenced to 10 years in prison for conspiring to import massive quantities of carfentanil and fentanyl into the United States.  MAGERRAMOV pled guilty on May 4, 2021, before U.S. District Judge J. Paul Oetken, who imposed today’s sentence.   

U.S. Attorney Damian Williams stated: “Amid Magerramov conspired to import into the U.S. large quantities of fentanyl and carfentanil – an opioid so potent that its legitimate use is as an elephant sedative.  Appropriately, he has now been sentenced to prison for conspiring to add fuel to the fire that is the opioid crisis in this country.”

According to the Complaint, Indictment, and other filings in the case:

Between approximately October 2017 and August 2018, MAGERRAMOV conspired to import large quantities of carfentanil and fentanyl into the United States.  Carfentanil is a fentanyl analogue approximately 1,000 times more potent than heroin, and is used commercially to sedate large animals such as elephants.  During that period, MAGERRAMOV participated in a series of recorded meetings and telephone communications with an individual he understood to be affiliated with an international drug trafficking organization, for the purpose of arranging to import narcotics into the United States.  That individual was, in fact, a confidential source (the “CS”) working with the U.S. Drug Enforcement Administration (“DEA”).  MAGERRAMOV and his co-conspirators prepared and distributed a total of over five kilograms of substances containing carfentanil for importation into the United States. 

In mid-October 2017, MAGERRAMOV met together with the CS in Estonia.  During the meeting, the CS informed MAGERRAMOV that the CS was a member of a Colombian drug cartel that distributed narcotics in the United States and laundered the resulting proceeds. 

Throughout late 2017 and early 2018, the CS also participated in a series of meetings with MAGERRAMOV and his co-conspirators to discuss narcotics transactions.  During the meetings, MAGERRAMOV agreed to provide the CS with fentanyl in Denmark, with the understanding that the fentanyl would be transported to the United States, mixed with heroin and other controlled substances, and sold to the cartel’s customers in New York City, among other places.

In May 2018, MAGERRAMOV coordinated the delivery of samples of carfentanil to the CS in Denmark.  On May 9, 2018, MAGERRAMOV and his co-conspirators delivered three samples of narcotics to an agreed-upon location in Denmark.  The three samples were seized by law enforcement, tested in a laboratory, and found to contain approximately 550 grams of mixtures and substances containing carfentanil.  The CS later informed MAGERRAMOV that the three samples had been transported to the United States, that the purported cartel was satisfied with the quality of the narcotics, and that the CS wanted to purchase additional carfentanil from MAGERRAMOV and his associates.

In late May 2018, MAGERRAMOV arranged to have additional carfentanil delivered to the CS for importation into the United States.  On May 30, 2018, one of MAGERRAMOV’s co-conspirators delivered a package of narcotics to an agreed-upon location in Denmark.  The package was seized by law enforcement, tested in a laboratory, and found to contain approximately 5.2 kilograms of mixtures and substances containing carfentanil.  The CS subsequently reported to MAGERRAMOV that the carfentanil had been transported to the United States.     

During June and July 2018, the CS continued to meet and communicate with MAGERRAMOV about arranging additional narcotics transactions in the future and payment for the carfentanil that had been delivered.

MAGERRAMOV, 40, of Estonia, pled guilty to one count of conspiring to import fentanyl and carfentanil into the United States.  In addition to the prison term, MAGERRAMOV was ordered to forfeit $38,500.

Mr. Williams praised the outstanding efforts of the DEA’s Special Operations Division, the DEA’s Country Office in Copenhagen, Denmark, the Estonia Central Criminal Police, the Estonia Office of the Prosecutor General, and the U.S. Department of Justice’s Office of International Affairs.