The
Securities and Exchange Commission on Monday charged former
LPL Financial broker Kerry L. Hoffman with fraudulently selling $3.3 million of unregistered securities with the help of a childhood friend who had previously been convicted of stealing money from investors,
according to the SEC's complaint.
The SEC's complaint
alleges that between July 2015 and July 2018, Mr. Hoffman, of Chicago, and his friend, Thomas V. Conwell, raised more than $3.3 million from approximately 46 investors through the sale of unregistered GT Media, Inc. securities.
Mr. Conwell, of Fort Meyers, Fla., was also charged with fraud by the SEC.
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In January 2006, Mr. Conwell pleaded guilty to charges of wire fraud, bank fraud and obstructing an SEC investigation and he was sentenced to 48 months in prison, according to the SEC's lawsuit.
According to the complaint, Mr. Conwell, who was previously enjoined by the SEC and criminally convicted for stealing money from investors, made numerous false representations to investors, including that two Fortune 500 companies were seeking to acquire GT Media and that GT Media would soon conduct an initial public offering.
Mr. Hoffman was a broker with LPL from October 2010 to October 2018 and then was registered at Union Capital Co.,
according to his BrokerCheck report. He voluntarily resigned from LPL after facing allegations that he had an agreement to act as a consultant to a company without disclosing or obtaining prior approval from LPL, and had assisted some family members and a few clients with investing in the unnamed company, according to BrokerCheck.
"Mr. Hoffman was registered with LPL and we separated affiliation last year," wrote a company spokesman in an email.
A message was left for Mr. Hoffman, 60, on Wednesday at his current broker-dealer, Union Capital, but he did not respond to comment. He has been working in the securities industry since 1982.
Mr. Conwell,
who was barred from the securities industry by the SEC in 2000, did not respond to a request for comment made through LinkedIn.
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The SEC complaint also alleges that Mr. Conwell took $161,500 from investors, which he used to pay his personal expenses.
According to the complaint, Mr. Hoffman solicited certain of his advisory clients to invest in GT Media securities without disclosing his financial conflicts of interest, including his compensation from GT Media and short-term loans he made to GT Media that were repaid using investor funds.
The SEC separately instituted a settled cease-and-desist proceeding against GT Media.
