Ex-SEC lawyer accused of stock scam
Federal regulators say Dallas attorney helped set up pump-and-dump deal
By Michael Grabell
The Dallas Morning News
June 15, 2007
Dallas lawyer Phillip Offill spent 15 years with the U.S. Securities and Exchange Commission, going after stock scammers who were defrauding unsuspecting investors. Now the SEC alleges that Mr. Offill is one of those stock scammers.
The commission filed a lawsuit Thursday against Mr. Offill, the two principals of a Michigan company, and an Arizona securities lawyer, seeking to put them out of the penny stock business and get them to turn over their profit.
The investigators accuse Mr. Offill and the other lawyer of devising a scheme to pump up the stock price of a defunct company, sell the shares to unsuspecting investors and funnel profit back to company executives through a series of bogus investment firms. Investors who bought in lost hundreds of thousands of dollars, the SEC said.
Mr. Offill, who recently left the downtown law firm Godwin Pappas Ronquillo, could not be reached for comment. He has denied wrongdoing in lawsuits involving other stocks.
"The purpose of one of these pump-and-dump scams is to let the insider of the company dump their stock. So they need someone like these lawyers to come up with a subterfuge so they can secretly dump their shares," said Marc Fagel, head of enforcement for the SEC's San Francisco regional office, which conducted the investigation.
Thursday's action names only one penny stock, but a much larger SEC investigation into a Dallas-based investment network reported by The Dallas Morning News in March has requested trading records on dozens of companies in which Mr. Offill was either an officer or corporate counsel or helped set up an investment firm.
Mr. Offill was also involved with several companies whose trading was suspended in an SEC crackdown on e-mail stock promotions called Operation Spamalot.
Thursday's announcement represents the first government action against Mr. Offill.
"If true, that's a horrible indictment, because Mr. Offill used to work for the SEC," said Randy Johnston, an attorney representing an Addison businessman suing Mr. Offill. "I just hate the idea of anyone learning all about the system and then leaving government service to go out and exploit it."
According to the SEC lawsuit announced Thursday, Peter Fisher and his son, Tyler Fisher, of Canada incorporated AVL Global Inc. in April 2004 to make a GPS tracking device for companies that repossess automobiles.
Usually, companies that want to sell stock to the public must register with the SEC and disclose financial information. But the Fishers used a legal shortcut that allows a company to make a limited offering to certain investors.
Those shares usually are labeled "restricted," meaning they cannot be immediately resold to the public and have to be held as a long-term investment. But Arizona securities lawyer David Stocker drafted a legal opinion that asserted the stock wasn't restricted, giving the investment firms millions of free-trading shares.
The SEC says that legal opinion was false and a scheme to get around securities laws.
Mr. Stocker didn't return a call for comment to his law office.
"Full and accurate public disclosure of AVL Global's business operations in 2004 would have revealed that the company was failing and a poor investment opportunity," the SEC said in its lawsuit.
Mr. Stocker and Mr. Offill then set up two investment firms in Dallas Lake Tahoe Ski Rental Inc. and Collective Thought Holdings Inc. The companies pretended to be longtime investors, promising in contracts that they had no intention to sell the shares, according to the lawsuit.
Days after buying millions of shares, the companies transferred them to other investors who transferred them back to the Fishers, their companies and their friends and business associates, the lawsuit alleges.
In June or July 2004, after AVL Global's stock went public, the Fishers traveled to Orlando, Fla., to meet with a stock promoter. There they devised a plan to send millions of unsolicited faxes and press releases that the SEC says contained false and misleading statements, the lawsuit says.
In a news release distributed in December 2004, AVL Global said its GPS devices were being tested by the Botswana Department of Defense and could result in an order of 3,000 to 5,000 units.
But months before, the company's distributor had realized that Botswana didn't have the satellite coverage to support the GPS devices and sent the test units back to AVL Global, the SEC says.
In a press release in February 2005, AVL Global reported "a dramatic increase for its tracking devices since the beginning of the new year." But by then, the SEC says, business was so bad that AVL Global had closed it manufacturing plant, moved into a 100-square-foot office in a strip mall and had only one employee Tyler Fisher.
As the stock rose, his father, Peter Fisher, dumped his shares and netted $160,000, according to the lawsuit, and the Florida stock promoter dumped his shares for a profit of about $419,000.
Without admitting or denying wrongdoing, Tyler Fisher has settled the SEC's charges against him by paying a $25,000 civil fine and agreeing not to serve as an officer or director of a penny stock company for five years.
The allegations made by the SEC against Mr. Offill and the others are similar to those made by an Addison video producer, Consolidated Sports Media Group Inc.
The company which made Girls Gone Wild-style videos at NASCAR races accused Mr. Offill in an August 2005 lawsuit of using a legal loophole that gave business associates and legal clients millions of freely tradable shares, arranging for a junk fax touting the stock and then selling the shares.
That lawsuit recently settled for confidential terms.
Another person named in the Consolidated Sports lawsuit, Colleyville investor Doyle Mark White, wasn't named in Thursday's SEC action, but Texas Secretary of State records list him as the sole director for Lake Tahoe Ski Rental.
Mr. White, a former Irving stockbroker who was barred from the U.S. securities industry last year, didn't return calls for comment Thursday. In a deposition in the Consolidated Sports lawsuit, Mr. White said he didn't know why he was listed as an officer of Lake Tahoe Ski Rental.
An SEC press release in January said its investigation into the Dallas-based investment network was progressing.
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