Phillip W. Offill, Jr. and Justin W. Herman

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26249 / February 19, 2025

Securities and Exchange Commission v. Phillip W. Offill, Jr. and Justin W. Herman, No. 3:22-CV-00121-N-BK (N.D. Tex. filed Jan. 19, 2022)

SEC Obtains Final Judgment in Penny Stock Fraud Scheme

On January 31, 2025, the U.S. District Court for the Northern District of Texas entered a final judgment dismissing the Securities and Exchange Commission’s claims against Phillip W. Offill, Jr. following Offill’s death. The Commission previously obtained a final judgment against Offill’s co-defendant, Justin W. Herman, who alongside Offill was charged with misappropriating and selling millions of shares of a penny stock company using forged documents and sham agreements.

The SEC filed its complaint against Offill and Herman on January 19, 2022, charging both 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 17(a)(3) of the Securities Act of 1933. The complaint alleged that Offill and Herman orchestrated a fraudulent scheme to misappropriate millions of shares of stock of a microcap company that belonged to the company’s former controlling shareholder and to then sell the stock and share the illicit proceeds between them.

On July 16, 2024, the Court entered a final judgment against Herman, permanently enjoining him from future violations of Section 17(a) of the Securities Act and Section 10(b) the Exchange Act and Rule 10b-5 thereunder and from participating in the issuance, purchase, offer, or sale of any security not for his own personal account. The Court also ordered Herman to pay disgorgement and prejudgment interest in the amount of $1,117,325, which the Court deemed satisfied by the criminal restitution ordered in a parallel criminal case.

The SEC’s investigation was conducted by Derek Kleinmann, Carol Stumbaugh, and Ty Martinez and supervised by B. David Fraser and Eric R. Werner of the SEC’s Fort Worth Regional Office. The SEC’s litigation was conducted by Tyson M. Lies and Matthew Gulde and supervised by Keefe Bernstein.