SEC Charges Atlanta Resident with Offering Fraud and Misappropriating Funds

Lit. Release No. 25064 / April 1, 2021

Securities and Exchange Commission v. Richard J. Randolph, III, , Civ. Action No. 1:21-cv-1321 (N.D. Ga. Filed 4/1/2021)

The Securities and Exchange Commission today charged Atlanta, Georgia resident Richard J. Randolph, III with defrauding investors and misappropriating investor funds in connection with various purported real estate and business ventures.

The SEC’s complaint alleges that, since late 2015, Randolph raised more than $1.6 million from at least 14 investors whom Randolph persuaded to fund purported real estate and business projects. According to the complaint, Randolph fraudulently promoted these projects, including by using false financial statements based on fictitious assets and by making false claims about impending projects. The complaint alleges that most of the projects and business opportunities touted by Randolph did not exist, and that Randolph grossly inflated the value of the projects that did exist. The complaint further alleges that Randolph misappropriated a substantial amount of investor proceeds, including making over $400,000 in unauthorized cash withdrawals and using tens of thousands of dollars for personal expenses. According to the complaint, Randolph also routinely used investments in one business to fund the activities of other Randolph-controlled businesses in which investors had no interest.

The complaint charges Randolph with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Randolph has agreed to settle the charges against him by agreeing to be permanently enjoined from violating the charged provisions, acting as an officer or director of a public issuer, and participating in the issuance, purchase, offer, or sale of any security. Randolph also agreed to pay disgorgement, prejudgment interest, and civil penalties, the amounts of which will be determined by the court at a later date. The settlement is subject to court approval.

In a parallel action, the U.S. Attorney’s Office for the Northern District of Georgia today announced the filing of criminal charges against Randolph.

The SEC’s investigation was conducted by Douglas M. Dykhuizen in the SEC’s Atlanta Regional Office and supervised by Thomas B. Bosch. The litigation will be handled by W. Shawn Murnahan and supervised by Graham Loomis. The SEC appreciates the cooperation of the U.S. Attorney’s Office for the Northern District of Georgia, the United States Secret Service, and the Federal Bureau of Investigation.