SEC Charges – Phillip W. Offill, Jr. – Justin W. Herman

SEC Charges Phillip W. Offill, Jr. and Justin W. Herman in Penny Stock Fraud Scheme

Securities and Exchange Commission v. Phillip W. Offill, Jr. and Justin W. Herman, 3:22-cv-00121-N (N.D. Tex. filed Jan. 19, 2022)

Washington, DC (STL.News) The Securities and Exchange Commission today charged securities fraud recidivist Phillip W. Offill, Jr. and Justin W. Herman with misappropriating and selling millions of shares of a penny stock company using forged documents and sham transactions.

The SEC’s complaint alleges that, within months of being released from federal prison on a previous penny stock fraud conviction, Offill (using the alias “Jim Jimerson”) started a new penny stock scheme to misappropriate millions of shares of a publicly-traded microcap company.  Over the next year, Offill and Herman allegedly fabricated a series of fraudulent documents, agreements, and transactions to cause the issuance and transfer of millions of shares of stock to Herman and an associate for the purpose of selling them to the public.  According to the complaint, the stock that the defendants misappropriated belonged to the former controlling shareholder of the microcap company, who never authorized any of the transactions.  The complaint alleges that Offill and Herman then directed the sale of the microcap company’s stock into the market, in return for more than $1.3 million in trading proceeds, which Offill and Herman shared.

Offill was convicted of securities fraud and other crimes in 2010, for which he was sentenced to 96 months in prison. See United States v. Offill, No. 1:09-CR-00134-001 (E.D. Va.).  In addition, the SEC previously charged Offill with securities registration violations for his roles in two other microcap frauds, where it obtained penny stock bars and other relief against him. See SEC v. Offill, et al., No. 3:07-CV-1643-D (N.D. Tex.) and SEC v. Fisher, et al., No. 2:07-CV-12552 (E.D. Mich.).

The SEC’s complaint, filed in the United States District Court for the Northern District of Texas, charges the defendants with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder and Sections 17(a)(1) and (a)(3) of the Securities Act of 1933.  The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and a penny stock bar against Herman.

The SEC’s investigation was conducted by Derek Kleinmann, Carol Stumbaugh, and Ty Martinez, and supervised by Barbara L. Gunn, Sarah S. Mallett, and Eric R. Werner of the SEC’s Fort Worth Regional Office.  The SEC’s litigation is being conducted by Nikolay V. Vydashenko and supervised by B. David Fraser.

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