U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23799 / April 5, 2017
Securities and Exchange Commission v. Thomas J. Connerton and Safety Technologies LLC, No. 3:16-cv-00882 (D. Conn. filed June 8, 2016)
United States v. Thomas J. Connerton, et al., No. 17-cr-47-SRU (D. Conn. filed March 9, 2017)
Court Enters Final Judgment Against Connecticut Man and His Company for Scheme to Defraud Investors in Unregistered Securities Offering
On April 4, 2017, the U.S. District Court for the District of Connecticut entered a final judgment by consent against Thomas Connerton and Safety Technologies LLC ("Safety Technologies") for defrauding investors by misleading them to invest in a purported glove manufacturing company and then diverting their money for Connerton's personal use. Connerton's victims include several women he met through an online dating website and their friends and family.
The SEC's complaint against Connerton and Safety Technologies, filed on June 8, 2016, alleged that Connerton told investors that his company was developing a material to make surgical gloves better resistant to cuts or punctures. Connerton claimed that several major glove manufacturers wanted the technology and Safety Technologies was on the brink of imminent deals that would result in large payouts for investors in his company. But, the SEC alleged, no deals were ever anywhere close to materializing, and Connerton emptied the company's bank account by writing a series of checks to himself and using investor funds for his own expenses. According to court documents filed by the SEC, among Connerton's improper spending of investor funds was $20,000 for an engagement ring for his latest online date turned investor. On June 9, 2016, the SEC obtained an asset freeze against Connerton and, on September 12, 2016, the court issued an order continuing the asset freeze and imposing a preliminary injunction.
Connerton and Safety Technologies consented to entry of the judgment. The judgment enjoins both parties from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder; requires them jointly and severally to disgorge ill-gotten gains of $1,586,000, plus prejudgment interest in the amount of $146,978.88; and imposes a conduct-based injunction that permanently restrains and enjoins Connerton and Safety Technologies from directly or indirectly participating in the issuance, purchase, offer, or sale of any security. The judgment also requires Connerton to pay a civil penalty in the amount of $160,000.
In a parallel criminal proceeding, Connerton and his fiancé, Jean Erickson, were indicted on March 7, 2017, on multiple counts of securities fraud, wire fraud, money laundering, money laundering conspiracy, and with making a false statement to a federal agent. The criminal charges against Connerton and Erickson arise from the same conduct alleged in the SEC's complaint. The indictment also alleges that Connerton and Erickson tried to conceal the nature and source of funds received from the fraudulent sale of Safety Technologies securities in an attempt to prevent the authorities and regulators, including the FBI and the SEC, from locating the funds. The criminal case remains pending before the U.S. District Court for the District of Connecticut.