A former SEC lawyer who was sentenced to eight years in prison for artificially inflating penny stocks has lost his bid to overturn his conviction. Phillip Windom Offill argued that the trial court abused its discretion by admitting the testimony of two government witnesses who were experts on securities law and who Offill said improperly drew legal conclusions about the case.  The U.S. Court of Appeals for the 4th Circuit rejected that argument, finding that the testimony was necessary to help the jury comprehend highly technical legal issues.

While experts are generally not allowed to offer legal conclusions, the court noted that such testimony can be admitted "when the legal regime is complex and the judge determines that the witness' testimony would be helpful in explaining it to the jury." "The jury in this case needed to understand not only federal securities registration requirements but also the operation of several obscure Texas code provisions and their relationship with the federal regime," the court wrote. Offill worked as an attorney for the SEC for 15 years before becoming a partner at the Dallas law firm Godwin Gruber.  In 2004, while at Godwin Gruber, prosecutors say that Offill and others encouraged investors to buy small stocks by issuing false press releases and tens of millions of "spam" e-mails.  Offill advised another securities lawyer, who represented penny stock companies, on how to issue stock without completing the securities registration process, according to the decision. The co-conspirators coordinated their own trades to drive up the market price of the stocks before dumping their shares on the public for millions of dollars in profits, the opinion said. The court also rejected Offill's claim that his sentence should have been based only on the profits he received rather than the gains the entire scheme generated. Without Offill's advice on avoiding securities registration requirements, the rest of the conspiracy could not have happened,  Judge William Traxler wrote. George Kostolampros, a lawyer at Venable who represented Offill pro bono alongside the federal public defender, said they were disappointed in the ruling and considering their options.  The Justice Department declined to comment on the litigation.  [Reuters 12/6/11]