Boca Raton Attorney Arrested on Securities Fraud Charges
|U.S. Attorney’s Office October 25, 2012|
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Michael B. Steinbach, Acting Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, announced that defendant William J. Reilly, a resident of Boca Raton, Florida, was arrested yesterday based on a criminal complaint charging him with committing securities fraud. Reilly had his initial appearance in federal court yesterday in Miami and was released on a $200,000 personal surety bond.
Reilly had previously been sanctioned by the U.S. Securities and Exchange Commission for violating the federal securities laws and he was disbarred earlier this year from practicing law by the state of New York.
According to the affidavit filed in support of the criminal complaint, Reilly engaged in a scheme to fraudulently sell the stock of Caribbean Pacific Marketing, Inc. (Caribbean Pacific), an emerging growth company under the recently enacted Jumpstart Our Business Startups Act (commonly known as the JOBS Act), that had filed with the U.S. Securities and Exchange Commission to engage in an initial public offering of its stock. Reilly sold the stock to a confidential source (CS), who was cooperating with an ongoing FBI investigation targeting penny stock fraud in South Florida. The complaint alleges that Reilly sold the stock to the CS in two transactions ahead of Caribbean Pacific’s initial public offering (IPO), in violation of the registration provisions of the Securities Act of 1933.
The complaint further alleges that Reilly violated the antifraud provisions of the federal securities laws by causing Caribbean Pacific to file a false and misleading registration statement and prospectus with the SEC. More specifically, the complaint alleges that Reilly was secretly a control shareholder of Caribbean Pacific who had arranged with certain stock promotion firms to publish prearranged press releases around the time of Caribbean Pacific’s IPO to generate interest in Caribbean Pacific’s stock. The complaint alleges that Caribbean Pacific’s SEC filings were false and misleading because, in part, they failed to disclose that Reilly was a control shareholder who had previously been sanctioned by the SEC and who had been disbarred from the practice of law.
Mr. Ferrer commended the investigative efforts of the FBI in this and other cases targeting penny stock fraud in South Florida. Mr. Ferrer would also like to thank the U.S. Securities and Exchange Commission for its assistance in this matter. This case is being handled by Assistant U.S. Attorney Harold E. Schimkat.
A criminal complaint is only an accusation and the defendants are presumed innocent until proven guilty.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.