Gordon Grigg, ProTrust Financial and ProTrust Management – Fined $570,000 for (Say) Unethical Behavior?

Seemingly kicked out of one state some three years ago, it seems that action wasn’t enough for Gordon Grigg.   In a story I wrote several weeks back (read here) about an SEC investigation into the finacial actions of Gordon Grigg and ProTrust Financial, I stated that I would call him “mini-Madoff” as it seemed clear from published reports that Grigg was representing himself as a financial advisor, when it seems that all he was doing was operating a Ponzi scheme.  But, in our country all are innocent until proven guilty.  So, I began to explore whether there was any merit to what had been reported only days earlier.

Seems there is more…so here is the rest of the story – at least thus far.

On June 28, 2006 the State of North Dakota issued a Cease and Decist Order and fined Grigg, ProTrust Financial and ProTrust Management some $570,000 which, according to the State of North Dakota have not been paid to date.  Hum…seems that where there is smoke there is fire.  Let’s look further at the issues that the State of North Dakota felt warranted such a fine.

ISSUES:

  • From 1990 to 2005 ProTrust Financial was registered in Tennessee as an investment advisor.  ProTrust Financial was NEVER registered in the State of North Dakota as an investment advisor.
  • Likewise, ProTrust Management was NEVER registered in the State of North Dakota as an investment advisor.
  • And, of course, Gordon Grigg as – you guessed it – NEVER registered in the State of North Dakota as an investment advisor.
  • From June 2001 to August 2005, Grigg engaged in 30 transactions issued by ProTrust Management and affiliated with ProTrust Financial with a North Dakota resident.
  • Those securities were NEVER registered with the Securities Department within the State of North Dakota.
  • With respect to 13 of the securities sold, the State of North Dakota says that they were fraudulent in that they were described as CDs to the North Dakota investor.

THE OUTCOME:

Based on the investigation by the State of North Dakota, a civil penalty was assessed against Grigg, ProTrust Financial and ProTrust Management.

  1. $350,000 was required to be paid into the North Dakota Investor Restitution Fund for the purpose of reimbursing the complainant for losses incurred as a result of investments with Grigg.
  2. $220,000 was to be paid to the North Dakota Securities Department.

WHERE FROM HERE?

As I understand it, the SEC is busy with discovery.  The original report says that Grigg (mini-Madoff) had defrauded 27 investors of over $6.5 million.  From what I am finding there are many more than 27.   Likely the SEC (with egg on their face from the Madoff debacle) will do their do diligence – by dotting “i’s” and crossing “t’s” to bring this to an effective conclusion legally.  More than likely it will find its way into the hands of a federal criminal investigator and eventually Grigg will find himself spending time in prison.

But what about the investors?  Well, there may – I EMPHASIZE MAY – be some funds for restitution, but frankly, I doubt much.  Rarely do fraudsters keep excess funds around for a rainy day – say to make restitution.  But I suppose there is always hope.

PLEASE NOTE:  If you feel that you have been defrauded by Gordon Grigg, please contact me as I am actively working this story and would like to confidentially discuss with you how and when you were defrauded.   I can be reached at chuck@chuckgallagher.com.  Any communication will be confidential.

MORE TO COME…and your COMMENTS are welcome!

Chuck Gallagher is an international speaker, author and radio talk show host.  As a Business Ethics and Fraud Prevetion Expert, Gallagher works with companies, associations and universities sharing the message of choices and consequences.  For information about Gallagher’s work with fraud prevention, contact him via e-mail at chuck@chuckgallagher.com.  Information about his presentations can be found at http://www.chuckgallagher.com

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