Broker-Dealer Litigation - Greenberg Traurig LLP

sentenced to three years of probation and 150 hours of community service and ordered to pay
$300,422 in restitution. The criminal indictment alleged that Garcia executed a scheme to
defraud his firm by means of false and fraudulent pretenses and to deprive his firm of the right to
honest services of its employees in connection with registered securities of issuers. The
Commission barred Garcia from association.
In re Suarez, Release No. 65981, 2011 SEC LEXIS 4415 (Dec. 15, 2011).
Q.1.c(ii)
The Commission accepted an offer of settlement from Suarez, a securities lending
representative of a registered broker-dealer. In a related criminal proceeding in federal district
court, Suarez pleaded guilty to two counts of conspiracy to commit securities and wire fraud. He
was sentenced to five years of probation and ordered to pay $391,187 in restitution. The
criminal indictment alleged that Suarez executed a scheme to defraud his firm by means of false
and fraudulent pretenses and to deprive his firm of the right to honest services of its employees
in connection with registered securities of issuers. The Commission barred Suarez from
association.
Q.1.c(ii)
In re Lindsey, Release No. 64219, 2011 SEC LEXIS 1286 (Apr. 6, 2011); In re Capital Fin.
Serv., Inc., Release No. 65998, 2011 SEC LEXIS 4438 (Dec. 16, 2011); In re Capital Fin. Serv.,
Inc., Release No. 66000, 2011 SEC LEXIS 4440 (Dec. 16, 2011).
The Commission accepted offers of settlement from Capital Financial, a former
registered broker-dealer (the “Firm”), Boppre, the president and a registered principal of the
Firm, and Lindsey, a registered representative, senior vice president, and due diligence officer of
the Firm. The Commission alleged that the Firm, through Boppre and Lindsey, who together ran
the Firm’s due diligence process, failed to perform reasonable due diligence on numerous oil and
gas private placement offerings prior to recommending them to customers. Specifically, the
Commission alleged that the Firm never independently investigated the information in the
offering materials that the issuer provided to it and never received audited or unaudited financial
statements. The Commission’s complaint alleged that Boppre and Lindsey knew that the
offering materials stated that selling broker-dealers would receive a due diligence fee, which
misleadingly suggested that the Firm was conducting independent due diligence. It further
alleged that Boppre and Lindsey acted at least with severe recklessness by approving the
offerings without first obtaining appropriate due diligence and by not acting on red flags brought
to their attention through third party due diligence reports. The Firm received over $5 million in
sales commissions and over $600,000 in due diligence fees in connection with the offerings,
many of which involved classic Ponzi schemes and offering frauds.
The Commission ordered Respondents to cease and desist from violating the
antifraud provisions of the federal securities laws. It further barred Boppre and Lindsey from
association and from participating in any offering of a penny stock, with the right to reapply after
two years, and ordered each of them to pay, in specified installments, a $25,000 civil penalty.
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