Texas Securities Regulators Order Unregistered Broker to Pay Back His Victims
Securities fraud and stockbroker fraud are not just federal matters. Florida and other states utilize their own securities regulators who are charged with protecting the public from unregistered and unlicensed brokers who defraud investors. For example, on April 7, the Texas State Securities Board (TSSB) announced a plea agreement with Robert P. McGann, an unregistered broker who was previously cited twice for violating state securities laws. The TSSB said McGann “took money from investors who purchased interests in promissory notes.” The Board noted some of these investors were elderly.
On January 17, 2008, the TSSB cited McGann and at least five other individuals for offering unregistered, illegal securities to investors in Texas. McGann and his associates sold “bonded life contracts, also referred to as line of credit promissory notes with security agreements” which promised returns of 15% for up to seven years. One of the entities used by McGann’s co-defendant was previously the subject of a receivership in a Florida state court. This, along with other material information, was never disclosed to investors, as required by Texas securities law.
Seven months later, on August 25, 2008, the TSSB entered a second order against McGann and his limited liability company, SGL, for again selling bonded life contracts without first registering as a securities broker. Despite the fact the January order enjoined McGann from continuing to violate securities laws, the August order had to reiterate this injunction.
It appears two injunctions did not stop McGann, however. According to his April 2014 arrest record, McGann was charged with theft of property and money laundering. The TSSB said as part of his plea agreement, McGann would pay “full restitution of $141,234” to his victims. He is also required to surrender his license to sell insurance in Texas. McGann’s plea is considered a “deferred adjudication,” which means he entered a guilty plea but the court will not record a conviction so long as he stays out of further legal trouble for the next seven years. In effect, deferred adjudication is a form of probation.
Investors Must Always Do Their Due Diligence
In Florida, selling unregistered securities is a third-degree felony. Under 2012 legislation passed by the Florida legislature, a person faces up to five years in state prison for failing to properly register certain securities offered for sale to the public.
All Florida investors should do their due diligence before purchasing any investment product. You should check with the U.S. Securities and Exchange Commission or the Florida Office of Financial Regulation’s Division of Securities to ensure all required registration statements have been filed. You should never deal with a “broker” who is not properly registered in the state that you live or where you are located when making any securities transaction.
If you have been dealing with an unregistered broker or have purchased an unregistered securities offering such as a promissory note or bonded life contract, it is important you seek independent legal advice from an experienced Florida securities and stockbroker fraud attorney. Contact Gregory Tendrich, P.A., in Boca Raton today.