Former SEC lawyer gets 8 years in prison after conviction in pump-and-dump stock scheme

Ex-SEC lawyer gets 8 years for pump-and-dump fraud

ALEXANDRIA, Va. — A former enforcement attorney for the Securities and Exchange Commission was sentenced Friday to eight years in prison for his role in a a series of multimillion dollar pump-and-dump stock fraud schemes.

Dallas-based attorney Phillip Offill Jr., 51, was convicted by a jury earlier this year on 10 counts of wire fraud and conspiracy. He testified that he was acting within the law, but the jury rejected his defense, and so too did U.S. District Judge Liam O’Grady.

“Your testimony … was an affront to justice,” O’Grady told Offill at Friday’s sentencing hearing. “It was one of the biggest pack of lies I’ve ever heard.”

Offill, who worked at the SEC for 15 years before taking a job at the Godwin Gruber law firm in Dallas, aided schemes that by conservative estimates cheated more than 1,500 investors out of at least $2.4 million. The fraudsters would pump up the value of dubious penny stocks and then sell the shares at inflated prices to unwitting buyers.

Eight other coconspirators have already been convicted and sentenced in a case that has been under investigation for more than three years. Most of the illegal transactions took place in 2004.

The eight-year term imposed on Offill was one of the most severe. Prosecutor Ed Power said the tougher sentence was deserved because Offill lied on the witness stand and because his status as a respected attorney helped provide cover for the fraud.

“If anyone knew that these actions were wrong, this defendant did,” Power and prosecutor Patrick Stokes wrote in a sentencing memo.

Prosecutors had wanted the judge to impose a sentence within federal guidelines, which called for 14 to 17 years. The defense asked for no more than three years.

O’Grady said he would have imposed an even higher sentence except for the fact that many in the conspiracy received significantly lighter sentences after striking plea bargains.

One leading participant, Las Vegas blackjack dealer-turned-securities lawyer David Stocker, was sentenced last month to less than three years in prison. Nobody received more than 10 years in prison and several were sentenced to only a few months. Some of the conspirators earned as much as $9.5 million in the scheme — Stocker’s profit was significantly less than that.

Offill declined to speak at Friday’s hearing. His attorney, federal public defender Kevin Brehm, said Offill will appeal the conviction.

Offill was also ordered to pay about $30,000 in restitution to victims. In court Friday, prosecutors said that most of the identifiable victims of the scheme have already received restitution from other defendants, totaling several million dollars. It is highly unusual for victims of a fraud of this magnitude to receive full restitution, but in court papers prosecutors estimated that they were able to locate and verify only about 3,000 of the 24,000 investors who were ripped off by the various schemes.