Amerifirst reciever seeks civil action in fraud case
Company officers, lawyer allegedly hid assets subject to freeze
07:35 AM CDT on Tuesday, September 25, 2007
By ERIC TORBENSON / The Dallas Morning News
etorbenson@dallasnews.com
Phillip Offill, a former Securities and Exchange Commission lawyer in Fort Worth who's being sued by the SEC in an alleged pump-and-dump stock scam, has been accused of scheming to violate a court order in an unrelated investment fraud case.
The court-appointed receiver of troubled Dallas-based Amerifirst Funding Inc. asked a federal judge Monday to hold Mr. Offill and the company's officers in civil contempt for allegedly hiding hundreds of thousands of dollars in assets that were subject to a freeze order, including a Picasso painting that turned out to be a fake.
In early July, the SEC said Amerifirst raised $55 million, much of it from local seniors, while promising high returns in investments insured by companies such as Lloyd's of London.
The SEC accused the company and principals Jeffrey Bruteyn and Dennis Bowden of breaking multiple securities laws and moved to freeze their assets.
Multiple attempts to reach Mr. Offill, Mr. Bruteyn and Mr. Bowden by phone and e-mail were unsuccessful Monday.
The motion asks the court to incarcerate them for failing to surrender cash, homes and a BMW driven by Mr. Bruteyn that the complaint said were acquired with investor funds.
The motion was filed by the court-appointed receiver, William Brown of Weaver & Tidwell LLP, who is working to collect any assets that can be returned to victims in the form of cash.
Millions short
Mr. Brown, in a report to the court, says Amerifirst is short $15.5 million owed investors because the money was illegally diverted to buy real estate, pay child support and buy exotic cars, among other purposes.
According to the motion filed Monday, Mr. Bruteyn, Mr. Bowden and others met with Mr. Offill on July 5 in Mr. Offill's office, three days after the court ordered the asset freeze.
In the meeting, the motion contends, Mr. Offill conspired to turn the supposed Picasso painting into cash that would be used to pay his retainer of $80,000 and pay living expenses for Mr. Bruteyn.
Ownership of the painting wasn't clear; in some financial statements, Mr. Bruteyn claimed it, while in others it was listed as property of his mother, Lois Whitcraft.
Sale details
In a complicated transaction that the motion contends was crafted by Mr. Offill, the painting was purchased by a related company of Mr. Bruteyn's for $431,000 on the promise that it eventually would be bought back for $550,000.
Along with Mr. Offill's retainer, the sale provided $150,000 to a criminal lawyer for Mr. Bruteyn and another $150,000 to pay down the mortgaged value on Ms. Whitcraft's home, the filings said.
Ms. Whitcraft, who lives in Leola, Pa., declined to comment Monday.
The Picasso, allegedly acquired in an art auction in 1972 by Mr. Bruteyn's father and titled Hands With Flowers in some court papers and Hands With Bouquet in another, isn't original and has little value, according to C. Van Northrup, an appraiser for Geolat & Associates Inc.
A Dallas securities lawyer, Mr. Offill spent 15 years with the SEC, going after stock scammers who were defrauding investors.
In June, the SEC sued Mr. Offill, the two principals of a Michigan company, and an Arizona securities lawyer, seeking to put them out of the penny stock business and get them to turn over their profit.
Investors lost
Regulators accused Mr. Offill of helping devise a scheme to pump up the stock price of a defunct company, sell the shares to unsuspecting investors and funnel profit back to company executives through a series of bogus investment firms. Investors who bought in lost hundreds of thousands of dollars, the SEC said.
Mr. Offill, who recently left the downtown law firm Godwin Pappas Ronquillo, did not return calls for comment about that case.
He has denied wrongdoing in lawsuits involving other stocks.
Car sought
In the Amerifirst case, Mr. Brown, the court-appointed receiver, also wants the deed to the Whitcraft home at 6717 Lakewood Blvd. in Dallas, where Mr. Bruteyn is said to be living, as well as a 2002 BMW 745Li driven by Mr. Bruteyn.
Amerifirst ran a "grossly mismanaged" auto finance business, according to Mr. Brown.
Investors were told their money would be used to back high-quality car loans as part of "secured debt obligations."
Instead, the SEC has alleged, much of the money went to buy Ferraris and real estate in Honduras and to pay for upkeep on an aircraft.
The motion for civil contempt was supported by a statement from Gerald Kingston, who helped sell the Amerifirst investments and co-owned with Mr. Bruteyn a company called United Financial Markets Inc.
Stock sold
On July 3, the day after the freeze order, United Financial sold $495,000 worth of stock in InterFinancial Holding Corp., a company controlled by Mr. Bruteyn, according to the statement.
Mr. Kingston attended the July 5 meeting in Mr. Offill's office, according to the statement.
The money from the stock sale held by United Financial allegedly was used to "buy" the Picasso under the thinking that it wasn't part of the court's freeze order.
Under the terms of the stock sale, Mr. Bruteyn's other company, Hess Financial Corp., was entitled to 95 percent of the proceeds, Mr. Kingston said.
"I distinctively remembered that Offill clapped his hands and stated this would work," Mr. Kingston said in the filing.
Mr. Bruteyn, 37 when the SEC filed its original complaint in July, had previously been barred by the National Association of Securities Dealers and fined over consumer complaints. |
