SEC Obtains Final Judgments Against Operators of a Ponzi Scheme

On October 8, 2015, the Securities and Exchange Commission (SEC) announced that the Court entered final judgments on September 28, 2015, against Garfield Taylor, Jeffrey King, Garfield Taylor, Inc. (“GTI”), Gibraltar Asset Management Group, LLC (“Gibraltar”) and The King Group, LLC (“TKG”), for their involvement with a multi-million dollar Ponzi scheme in the Washington area.

The SEC filed a complaint on November 18, 2011, claiming that Gibraltar’s and GTI’s former Chief Executive Officer, Garfield Taylor, conducted a Ponzi scheme that he designed to target investors in the Washington, D.C. metropolitan area. The complaint stated that the scheme, directed by Taylor with the help of King and others, defrauded more than $27 million from about 130 investors from 2005 to 2010, before eventually collapsing in 2010.

On September 17, 2012, the Court granted the SEC’s motion for default judgment as to GTI, Gibraltar, King and TKG, and on December 13, 2012, the Court granted the SEC’s motion for summary judgment on all of the charges toward Taylor that were imposed by the SEC regarding the Ponzi scheme. On March 28, 2013, before deciding the appropriate relief against Taylor and the defaulting defendants, the Court granted Taylor’s motion to hold the case in abeyance because of the pending federal criminal charges against him at the time.

Taylor pleaded guilty in March 2014 to securities fraud.  In May 2015, he was sentenced to 13 years in prison and was ordered to pay over $28.6 million in restitution for the funds he received during his involvement with the Ponzi scheme.  In July 2015, the Court in the civil matter lifted the stay and ruled on the SEC’s pending motions seeking remedies against Taylor, King, Gibraltar, GTI and TKG.  On September 28, 2015, the Court ordered the following relief against the defendants:

• Garfield Taylor was permanently enjoined from violating Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”), Rule 10b-5 promulgated under the Exchange Act, and Sections 5 and 17(a) of the Securities Act of 1933 (“Securities Act”).  He was also ordered to pay disgorgement of about $23.6 million and prejudgment interest of about $4.3 million, for a total of about $27.9 million.

• Jeffrey King was permanently enjoined from violating Sections 10(b) and 15(a)(1) of the Securities Exchange Act, Rule 10b-5 promulgated under the Exchange Act, and Section 17(a) of the Securities Act.  He was ordered to pay disgorgement of $137,641, prejudgment interest of $14,480 and a civil penalty of $150,000, for a total of $302,121.

• Gibraltar Asset Management Group, LLC was permanently enjoined from violating Sections 10(b) of the Exchange Act, Rule 10b-5 promulgated under the Exchange Act, and Sections 5 and 17(a) of the Securities Act.  Gibraltar was also ordered to pay disgorgement of about $9.4 million, prejudgment interest of $826,460 and a civil penalty of $725,000, for a total of about $10.9 million.

• Garfield Taylor, Inc. was permanently enjoined from violating Sections 10(b) of the Exchange Act, Rule 10b-5 promulgated under the Exchange Act, and Sections 5 and 17(a) of the Securities Act.  Gibraltar was also ordered to pay disgorgement of about $14.2 million, prejudgment interest of about $2.9 million and a civil penalty of $725,000, for a total of about $17.9 million.

• The King Group, LLC, a relief defendant wholly owned and controlled by King, was ordered to pay disgorgement of $65,801 and prejudgment interest of $14,409, for a total of $80,210.

For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com.    Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com