SEC charges FOGFuels, owner Paul Marshall with securities fraud

By The U.S. Securities and Exchange Commission | September 19, 2013

Earlier this month the Securities and Exchange Commission filed an emergency action seeking a temporary restraining order and other emergency relief in federal court in the Northern District of Georgia, charging Paul Marshall (Marshall), a state-registered investment adviser representative, and three Atlanta-based companies that he owned and controlled—Bridge Securities LLC, Bridge Equity Inc. (collectively, the Bridge Entities) and FOGFuels Inc.—with violations of the federal securities laws for misappropriating client funds.

According to the commission's complaint, since at least 2011, Marshall, an investment adviser representative of the Bridge Entities, misappropriated at least $2 million from advisory clients. In its complaint, the commission alleges that Marshall instructed clients, some of whom were elderly, to transfer funds to bank accounts under his control for purported investment in various securities, including mutual funds. Instead, Marshall used those client funds to pay personal expenses, including luxury vacations and private school tuition for his children. The complaint further alleges that Marshall concealed his fraud by providing advisory clients with fabricated account statements.

Additionally, the commission's complaint alleges that Marshall, currently the majority owner and managing director of purported alternative fuel company FOGFuels, misappropriated $100,000 from an advisory client who invested in that company.

The commission's complaint alleges that, through their misconduct, Marshall, the Bridge Entities, and FOGFuels violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that Marshall and FOGFuels violated Section 17(a) of the Securities Act of 1933. Finally, the complaint alleges that Marshall and the Bridge Entities violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.

On Sept. 11, the Honorable Timothy C. Batten, Sr., United States District Judge for the Northern District of Georgia, granted the commission's request for emergency relief, issuing an order temporarily restraining Marshall, the Bridge Entities and FOGFuels from further securities laws violations, freezing their assets, preventing the destruction of documents, requiring an accounting, and expediting discovery. The court also set a hearing date of Sept. 20 for the commission's request for a preliminary injunction. The commission's complaint also seeks a permanent injunction, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties. Those claims will be adjudicated at a later date.

 
 
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