SEC Bars Broker, and Pursues Monetary Sanctions.

[ by Melanie Gretchen ]

A resident of New Fairfield, CT, used at least $600,000 of would-be investor funds for personal and business expenses, a district court found.  The broker ​falsely representing that he would invest the funds of at least 12 victims, when in fact ​there were no actual investments

Federal Findings and Allegations. From 2002 to 2012, Stephen Blankenship operated a scheme through Deer Hill Financial Group, LLC in Danbury, Connecticut.  He told numerous investors that his investment opportunities were safe and would pay a consistent return to investors.  In addition to using the victims' funds for his own means, he used them for other investors to further his fraud.

Federal Sanctions. On 9/12/12, Blankenship pled guilty to to 1 count of Mail Fraud and 1 count of Securities Fraud brought by the United States Attorney’s Office in Connecticut.  As such, on 10/11/12, he was barred from the securities industry.

On 12/5/12, the United States District Court for the District of Connecticut sentenced Blankenship to 41 months imprisonment and 3 years of supervised release.  He was ordered him to pay a fine of $7,500, and restitution in the amount of $607,516.81.  Going forward, the Connecticut Department of Banking’s Securities Division has revoked Blankenship’s state license and barred Blankenship and Deer Hill from operating in Connecticut. 

SEC Sanctions. For its part, the SEC on 9/13/12 filed a complaint seeking the entry of a permanent injunction against future violations, disgorgement of ill-gotten gains plus pre-judgment interest and civil monetary penalties.  The SEC litigation is still pending.

The case: Securities and Exchange Commission v. Deer Hill Financial Group, LLC, et al., Criminal No. 12-cr-00197-VLB (District of Connecticut)

For further details, go to [SEC Litigation Release  22571, 12/14/12] and [SEC Litigation Release 22479, 9/13/12], and [Exchange Act Release No. 68038, 10/11/12].