U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21173 / August 7, 2009
Securities and Exchange Commission v. 2Randall Consulting Group, LLC and Brion Gary Randall, Defendants, Civil Action No. 3:09-CV-1465-O, United States District Court for the Northern District of Texas (Dallas Division)
SEC Halts Texas Financial Advisor's Fraudulent Scheme
On August 6, 2009, the United States Securities and Exchange Commission filed an emergency civil action in United States District Court in Dallas, Texas, against 2Randall Consulting Group, LLC ("2Randall"), and its principal, Brion Gary Randall. The Commission's complaint alleges that Randall and 2Randall operated an advisory program in which clients' funds purportedly were placed through a master account in an AllianceBernstein LP mutual fund and offered the opportunity to pool funds through 2Randall for investment in a small business loan participation program. At least six investors transferred approximately $3 million to Randall and 2Randall with the understanding that Randall would invest the money for them.
The complaint alleges that Randall emphasized the safety of investments in AllianceBernstein and promised investors that he would aggregate their funds in sub-accounts under 2Randall's master account at the firm. According to the complaint, however, neither 2Randall nor Randall has an account with AllianceBernstein. The complaint also alleges that Randall distributed bogus account statements to clients showing that their investments were earning returns, and distributed fake screen shots of "online banking" activity in an the alleged AllianceBernstein master account. The complaint also alleges that, instead of using investor funds as Randall represented, he and 2Randall misappropriated the funds for their own use.
The Commission's complaint charges that the defendants violated Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. In addition to seeking preliminary and permanent injunctive relief against all defendants, the Commission seeks orders requiring the defendants to pay civil monetary penalties and to disgorge all ill-gotten gains, plus prejudgment interest thereon.
U.S. District Judge Reed O'Connor granted the Commission's Motion for Emergency Relief and issued orders: 1) freezing the defendants' assets; 2) requiring an accounting; 3) preserving documents; 4) authorizing expedited discovery, and 5) appointing a receiver for the defendants.