Attorney Played Ponzi on Clients, SEC Says

MANHATTAN (CN) – A New York attorney defrauded clients and investors of $2.1 million in a Ponzi scheme, the SEC claims in Federal Court. It claims Bruce S. Frank started his scam by taking $695,000 from a client he was representing in a previous SEC complaint, which accused the man of running a multimillion-dollar securities scam.




     Frank promised 10 to 15 percent returns from a “non-depletion account” in Switzerland, but used new money to pay off old investors and himself, and sent some of the money to Hong Kong, the SEC says in its new complaint.
     Frank, 54, of Blooming Grove, N.Y., “was the attorney for Novus Technologies, LLC and its principals, Ralph W. Thompson Jr. and Duane C. Johnson,” according to the complaint.
     Novus, of Utah, Thompson and Johnson are named in the complaint as “related parties,” but not as defendants in this case. They are, however, defendants in a 2007 SEC case alleging that they sold $4.8 million in unregistered securities to more than 50 investors.
     Frank was admitted pro hac vice as counsel for Novus, Thompson and Johnson in the Utah case, the SEC says. After the SEC froze the assets of Novus, Thompson and Johnson, “Frank offered Johnson an opportunity to invest in an investment program,” the SEC says.
     “Frank advised Johnson that these funds would be placed in a secure account overseas with no risk to the principal and Johnson would receive a guaranteed return. Relying on Frank’s representations, Johnson transferred $695,000 to Frank’s attorney client trust account. Frank did not notify the Court, the Commission or the Receiver about the transfer of funds,” the SEC says.
     The agency claims Frank proceeded to solicit another $1.5 million from another 12 investors, all of them associated with the defendants in the Novus case.
     “Frank knew that he should not promise investors that his law license could be used as a security of the investments he solicited,” the SEC says. It accuses Frank of securities fraud.

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