An Oklahoma-based Internet company has been ordered by a federal judge to pay millions in a multi-layered case revolving around a Tulsa, Okla., investment advisor representative who the SEC says stole $4.7 million from clients to pay gambling and other expenses, according to court records.
Bartnet Wireless Internet Inc. was ordered to pay $3.6 million in the SEC case against Larry J. Dearman Sr., the Tulsa investment advisor.
The SEC complaint says Dearman, 40, funneled money from at least 30 clients into three businesses owned by Marya Gray, a friend of his. Instead of investing the money, he and Gray spent the money on gambling, personal expenses and payments to some investors in a Ponzi scheme, the complaint says.
Dearman was able to lure clients to invest money in the companies because he was well-known in the community and was a popular wedding singer, the SEC said.
According to the complaint, Dearman raised money between December 2008 and August 2012 by selling promissory notes in Bartnet, but failed to disclose he was receiving fees from Gray for each note sold, according to the SEC. Dearman falsely claimed Bartnet planned to use the funds to purchase transmission towers and other equipment with the money instead of fueling Gray's gambling habit, the SEC said.
In an earlier court ruling on the SEC charges, Dearman was ordered to pay $1.09 million and Gray was ordered to pay $3.57 million.
In additon to the SEC administrative charges, Dearman and Gray also were charged criminally for the scheme and were sentenced to prison earlier this year. In August Dearman pleaded guilty to charges of embezzlement, conspiracy and obtaining money under false pretenses, according to the Bartlesville (Okla.) Examiner-Enterprise. He was sentenced to 10 years in prison.
Gray pleaded guilty to similar charges and was sentenced to a total of 15 years in prison in October, according to the local newspaper.
The most recent action in the case was Thursday, when U.S. District Court Judge Gregory Frizzell ordered the multi-million dollar payment from Bartnet Wireless. Bartnet Wireless agreed to the order without admitting or denying the charges in the SEC complaint.