An Oklahoma adviser who was also a popular wedding singer defrauded about 30 clients out of $4.7 million of investments, and stole about $700,000 from clients outright over three and a half years, securities regulators have alleged.
The Securities and Exchange Commission said Larry Dearman Sr. and his friend Marya Gray gambled away, used for Ponzi payments and otherwise spent on themselves about $4.7 million that clients invested with Mr. Dearman from December 2008 through August 2012. He was registered as an investment adviser representative of the Focus Group Advisors in Bartlesville, Okla., during that period.
Mr. Dearman's clients thought they were investing in an Internet company, a real estate business and another firm that were controlled by Ms. Gray, according to a civil fraud suit filed Tuesday in U.S. District Court in Tulsa, Okla.
Mr. Dearman told clients the investments “bore little to no risk,” while little to none of the money went to build those businesses, the complaint said. He also failed to tell investors that he was being paid by Ms. Gray to bring in the funds, according to the SEC documents.
In an e-mail in May 2011, Ms. Gray told Mr. Dearman to “make something up” about why the Internet company Bartnet Wireless Internet Inc. wasn't paying interest to an investor, the complaint said. The suit also said Ms. Gray conceded that her real estate firm, The Property Shoppe Inc., “never conducted any business.”
The SEC complaint said the pair was able to “lure” clients into these investments “in part because many of them had known him and his family since childhood, thought of him as an active member of their church and knew him as a popular local wedding singer.”
News reports of investor lawsuits filed in December against Mr. Dearman and The Focus Group identified him as the former music minister at Barnsdall's Assembly of God Church and said that at least two of his clients were widows of preachers.
The fraud unraveled when a trustee for one of Mr. Dearman's clients e-mailed him in August 2012 questioning the suitability of two of the investments that Mr. Dearman had recommended. The trustee copied the e-mail to the SEC-registered firm where Mr. Dearman worked. Subsequently, he was fired and reported to the SEC by that firm, according to the complaint.
Mr. Dearman also was registered as a broker with Cambridge Legacy Securities LLC from February 2010 through May 2012, according to the Financial Industry Regulatory Authority Inc.'s BrokerCheck records.
Neither Mr. Dearman, who now lives in Tulsa, Okla., nor Ms. Gray, of Bartlesville, could be reached for comment. Calls to The Focus Group were not answered and the firm's attorney Gary Kessler in Dallas wasn't available for comment.