U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20873 / January 28, 2009
Securities and Exchange Commission v. Gordon B. Grigg and ProTrust Management, Inc., et al., Civil Action No. Civil Action No. 3 09 0087 (January 28, 2009) (MDTN)
SEC Seeks Temporary Restraining Order and Asset Freeze to Halt Ongoing Fraudulent Offering Involving the Troubled Asset Relief Program.
On January 28, 2009, the Securities and Exchange Commission ("Commission") filed a Complaint for Emergency Injunctive and Other Relief ("Complaint") in the United States District Court for the Middle District of Tennessee, Nashville Division, against Gordon B. Grigg ("Grigg") and ProTrust Management, Inc., d/b/a ProTrust Management Group, LLC d/b/a ProTrust Management Group, Inc. d/b/a ProTrust Management Group, Inc. LLC d/b/a ProTrust Corporation (collectively "ProTrust"). The Complaint alleges that ProTrust, a Tennessee corporation with offices in Nashville, is engaged in on-going securities fraud. The Complaint further alleges that Grigg is a purported financial planner and an investment adviser who controls ProTrust.
From approximately 2007 to the present, according to the Complaint, Grigg and ProTrust defrauded at least 27 clients out of approximately $6.5 million by obtaining such funds from them and claiming to have invested them in securities that do not exist. Specifically, the Complaint alleges that the defendants have: (1) obtained control over client funds and falsely claimed to have invested such funds in fictitious securities that were described as "Private Placements;" (2) created false and fraudulent account statements reflecting the clients' ownership of non-existent securities; (3) falsely claimed that the defendants had the ability to invest client funds in government-guaranteed commercial paper and bank debt as part of the U.S. government's Troubled Asset Relief Program ("TARP"), and that they did invest client funds in the TARP program; and (4) falsely claimed to have partnerships and other business relationships with several of the nation's top investment firms.
The Complaint alleges that the defendants have violated the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
On January 28, 2009, Grigg and ProTrust consented to the entry of an order granting the Commission's requests for (i) a temporary restraining order; (ii) an asset freeze; (iii) an accounting of all funds raised; and (iv) an order expediting discovery and preventing the destruction of documents. The Commission's Complaint also seeks (i) preliminary and permanent injunctions against future violations; (ii) disgorgement of ill-gotten gains plus prejudgment interest; and (iii) imposition of civil penalties.
The Commission would like to acknowledge the assistance of the Special Inspector General of the Troubled Asset Relief Program and look forward to continued coordination in this matter.