In the first six months of 2018, the Texas State Securities Board continued its national leadership role in protecting investors from fraudulent cryptocurrency-related investment products.
Texas Securities Commissioner Travis J. Iles entered nine administrative orders against some of the most notorious promoters of cryptocurrency investments, almost all of whom were fraudulently using online advertisements, social media, and other solicitations to attract Texas investors.
In December 2017, Texas became the first state securities regulator to issue an administrative order against a company selling illegal investments tied to cryptocurrency.
Texas also spearheaded a coordinated investigation of cryptocurrency-related investments undertaken by U.S. state regulators and Canadian regulators in May. The investigations led to nearly 40 pending or completed enforcement actions.
In criminal enforcement, State Securities Board attorneys and financial examiners helped secure prison sentences and indictments in cases ranging from oil and gas fraud to the sale of millions of dollars of worthless notes in an internet company.
“The State Securities Board’s enforcement actions reflect the breadth and complexity of the investment schemes that try to defraud Texas investors,” Commissioner Iles said. “We are committed to preventing fraud and punishing unscrupulous promoters through both criminal and administrative actions.”
The State Securities Board assisted in the prosecution of Timothy Lloyd Booth, a former pastor in McKinney who was sentenced to 68 years in state prison after his conviction in Collin County on first-degree felony charges of theft and securities fraud.
Booth stole approximately $23 million from individuals who invested in Stamedia Inc., an internet advertising company with no revenue. Many of Booth’s victims were elderly individuals who had invested significant portions of their retirement accounts.
Promoters of fraudulent oil and gas schemes continue to present a danger to Texas investors.
The State Securities Board assisted in the prosecution of James Dean French, a Tarrant County man who was sentenced to eight years in state prison after pleading guilty to securities fraud in connection with the sale of investments in a West Texas oil and gas project.
In other cases, attorneys and investigators also helped secure indictments in state courts of five individuals accused of fraud in the sale of oil and gas-related investments.
In administrative actions, the Securities Commissioner entered an Emergency Cease and Desist Order against two Dallas men who were soliciting $4.4 million for an oil and gas project without disclosing their histories of unpaid tax liens and previous allegations of fraud.
Another emergency action was taken against a Midland promoter for the illegal sales of investment interests in an oil and gas venture.
In addition to criminal prosecutions, the State Securities Board conducts compliance examinations of investment advisory firms and can impose administrative penalties that include fines, suspensions, revocation of securities licenses, and cease and desist orders.
In enforcement actions taken against individuals registered to sell securities, the Securities Commissioner entered a Disciplinary Order that suspended Jason N. Anderson, a Beaumont investment adviser representative, for charging unreasonable fees to clients.