Litigation Release No. 21676 / September 30, 2010

SEC v. Raymond Thomas and Strictly Stocks Investment Company, Inc., Civil Action No. 1:08-cv-02503-CAB (N.D. Ohio) (Boyko, J.)

The Securities and Exchange Commission ("SEC") announced that on September 23, 2010, the Honorable John R. Adams of the United States District Court for the Northern District of Ohio sentenced Raymond Thomas to 6 years in prison and ordered Thomas to pay almost $1 million in restitution in connection with his conviction for one count of mail fraud and one count of filing a false tax return. Thomas's conviction stemmed from his role in a fraudulent offering scheme that defrauded at least 26 investors. Thomas was charged on June 3, 2010 and pleaded guilty on July 6, 2010.

Previously, on October 22, 2008, the SEC filed a civil injunctive complaint alleging that Thomas and his company, Strictly Stocks Investment Company, Inc. ("Strictly Stocks") operated a fraudulent offering scheme that raised at least $620,000 from at least 26 investors, many of whom were retired police officers and firefighters, while acting as unregistered investment advisers. The complaint alleged that Thomas and Strictly Stocks told investors that their funds would be invested in stocks and options. The complaint also alleged that Thomas instead misappropriated the funds and, among other things, used the funds to support his own private business ventures, including a limousine company and a title company, and for his own personal use. The complaint alleged violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 ("Advisers Act").

On February 23, 2009, the Court entered a judgment against Thomas and Strictly Stocks. The Order permanently enjoined Thomas and Strictly Stocks from violating Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act. The Order further required Thomas and Strictly Stocks to pay disgorgement in the amount of $621,000, plus prejudgment interest of $95,406.67. Thomas and Strictly Stocks were also each ordered to pay a civil penalty in the amount of $130,000 and $650,000, respectively. Subsequently, on June 10, 2009, the SEC issued an administrative order barring Thomas from association with any investment adviser.

For additional information, see Litigation Release No. 20787 (October 22, 2008)


Last modified: 9/30/2010