U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23075 / August 28, 2014
Securities and Exchange Commission v. Blake Richards, Civil Action No. 1:13-CV-1729 (N.D. Ga.)
Federal Court Grants SEC's Motion for Summary Judgment and Enters Final Judgment Against Atlanta-Area Registered Representative Blake Richards for Securities Fraud Violations
On August 26, 2014, the Honorable Willis B. Hunt, Jr. of the United States District Court for the Northern District of Georgia, granted summary judgment in favor of the Commission and entered a final judgment against Blake Richards of Buford, Georgia ordering him to pay disgorgement and prejudgment interest in the amount of $1,829,923.21 and a civil penalty in the amount of $80,000 within thirty (30) days from the date of the order. The order granting summary judgment adopted the material findings of fact submitted by the Commission with its motion for summary judgment. Richards had previously been permanently enjoined from further violations of the securities laws in connection with allegations that the registered representative misappropriated investor funds in an order dated August 20, 2013. In the earlier order, Richards was permanently enjoined from further violations of the antifraud provisions of the federal securities laws, 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 Section 206 (2) of the Investment Advisers Act of 1940 ("Advisers Act").
Since at least 2008, Richards, a registered representative of a broker dealer, misappropriated approximately $1.7 million from at least seven investors. The majority of the misappropriated funds constituted retirement savings and/or life insurance proceeds from deceased spouses. Richards then instructed investors to write out checks to entities under his control with the understanding that Richards would invest their funds in fixed income assets, variable annuities and/or common stock, and that none of these investments were made as represented. None of the investments appeared on the client's brokerage account statements, and Richards received no commission income from these investments. Richards then siphoned off the funds entrusted to him for his personal use.