The Securities and Exchange Commission today charged two California-based lawyers with executing fraudulent legal opinions in a pump-and-dump scheme.
Lawyers Albert Rasch Jr., 63, and Kathleen Novinger, 38, of Albert J. Rasch & Associates
in Costa Mesa, Calif., executed at least 24 bogus legal opinion
letters, effectively lifting restrictive legends on unregistered shares
of Mobile Ready Entertainment Corp, according to the FEC complaint.
(Mobile Reality markets software applications for mobile devices.)
Sandra Masino and her company 144 Opinions, is charged with preparing
the letters.
The SEC alleges that the opinions allowed the sale of more than 22
million shares of Mobile Ready in violation of Rule 144, which governs
the conversion of restricted stock that otherwise cannot be publicly
sold.
"The market relies on lawyers to act as gatekeepers who exercise
their function in good faith," said Katherine Addleman, director of the
SEC's Atlanta Regional Office, in a statement.
"These defendants disregarded the investing public by operating a legal
opinion mill of fraudulent letters that misrepresented critical facts
and cited to non-existent documents."
The opinions contained false statements about the securities’
origins, the company, and agreements between the company and the
shareholders, among other things, according to the complaint, which was filed in U.S. District Court for the Northern District of Georgia.
Rasch and Novinger could not immediately be reached for comment.
According to the firm’s Web site, Albert J. Rasch & Associates
specializes in legal, wealth planning, tax, financial, insurance and
investment management services. Darryl Sheetz, a solo practitioner based in Tustin, Calif., is representing Rasch; Thomas Gourde, of Ray & Gourde, also in Tustin, is representing Novinger; Sheldon Jaffe, a solo practitioner in Los Angeles, is representing Masino and 144 Opinions. Sheetz, Gourde, and Jaffe declined to comment.
The SEC previously charged
Mobile Ready and two of its officers in connection with the
pump-and-dump scheme. In the most recent complaint, the SEC is seeking
disgorgement of ill-gotten gains, pre-and-post judgement interest,
civil monetary penalties, penny stock bars, and a permanent injunction
against future violations.