SEC Obtains Asset Freeze Against Former CEO Charged with Misappropriating Investor Funds
Litigation Release No. 24373 / December 14, 2018
Securities and Exchange Commission v. Thomas H. Laws, et al., Civil Action No. 18-cv-01063-JB-SCY (D.N.M., filed November 15, 2018)
The Securities and Exchange Commission today announced charges against Thomas H. Laws, the former CEO of Santa Fe Gold Corporation, for the misappropriation of investor funds. The SEC also obtained an asset freeze against Laws.
The SEC’s complaint, unsealed on December 6, 2018, alleges that, from at least August 2016 through February 2018, Santa Fe Gold, a public mining company based in Albuquerque, New Mexico, transferred approximately $1.1 million in investor funds to Laws and THL Financial Services Corporation, an entity controlled by Laws, for various corporate purposes, including the purchase of a silver mine and mining equipment and for third party services. According to the complaint, Laws misappropriated the funds and attempted to hide his theft from the company and its independent auditor by fabricating documents, including vendor invoices, agreements, bank records, and communications.
The SEC’s complaint charges Laws with violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, the books and records provision of Section 13(b)(5) of the Exchange Act and Rules 13a-14, 13b2-1, and 13b2-2 thereunder, and aiding and abetting Santa Fe Gold’s violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. The court granted the SEC’s requests for an asset freeze, expedited discovery, the prohibition on the alteration or destruction of documents, and an accounting of investor funds and other assets. The SEC seeks disgorgement of the alleged ill-gotten gains, prejudgment interest, civil monetary penalties, an officer and director bar, and a penny stock bar. The SEC named THL as a relief defendant.
The SEC’s investigation was conducted by Michael J. Cates and supervised by Ian S. Karpel and Kurt L. Gottschall in the Denver Regional Office. The SEC’s litigation is being led by Stephen C. McKenna.