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Home Restorer Admits Securities Fraud

Friday, November 22, 2013

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A former executive of a publicly traded Louisiana-based construction and restoration company has admitted to lying about millions of dollars’ worth of contracts in an effort to defraud investors, according to authorities.

Brian Marshall, 49, of Tampa, FL, pleaded guilty to one count of securities and commodities fraud on Nov. 14—the day his trial was set to begin in a Texas federal court, according to an announcement by U.S. Attorney Sarah R. Saldaña.

Brian Marshall
Hillsborough County Sheriff's Office / Bizjournals.com

If his plea agreement is accepted, Brian Marshall, 49, may only spend 60 months behind bars for his role in a scheme designed to defraud investors.

He was indicted in May 2012.

Marshall faces a maximum sentence of 25 years in prison and a $250,000 fine in the case; however, the parties have agreed to a maximum sentence of 60 months.

That plea agreement is subject to judge approval, prosecutors said. His sentencing has not yet been scheduled.

Second Exec Charged

Marshall was the former vice president and member of the board of Home Solutions of America Inc., a NASDAQ-traded company that was based in Dallas before relocating to New Orleans in July 2008.

Marshall is the second executive at the now defunct Home Solutions to be charged with securities fraud.

Frank J. Fradella of Covington, LA, who served as the CEO of Home Solutions, pleaded guilty in June 2012 to securities fraud and conspiracy to bribe a City of New Orleans official in the Eastern District of Louisiana, according to an annoucement from prosecutors there.

Saldaña said Fradella has not yet been sentenced.

Hurricane Katrina Damage
Mark Wolfe / FEMA

Home Solutions Inc. specialized in new construction and restoration projects following natural disasters, such as Hurricane Katrina.

Home Solutions Inc. specialized in new construction and restoration following natural disasters, such as Hurricane Katrina.

The company conducted some of its business through its largest subsidiary, Fireline Restoration Inc., which was based in Tampa and owned by Marshall.

The Securities and Exchange Commission named Fradella, Marshall and several of their business associates in a fraud lawsuit brought November 2009, seeking injunctive relief.

A shareholder class action against Home Solutions and its executives also settled in 2009 for $5.1 million.

The Scheme

According to the Northern District of Texas court documents, Marshall admitted that between December 2006 and August 2007 he engaged in a scheme to defraud public investors by fabricating false and fictitious revenue, operating income and costs in connection with a series of construction contracts in Tampa.

Marshall entered Fireline into construction contracts with private companies that he wholly or partially owned, including a $4 million contract for the construction of his personal residence, prosecutors said.

He said he recorded bogus revenue and income on the contracts but little, if any, work was actually performed.

Securities and Exchange Commission Building
AgnosticPreachersKid / Wikimedia Commons

The false financials were reported to public investors in Home Solutions' second quarter SEC filing in 2007, according to prosecutors.

Despite knowing the revenue, costs and income on the construction projects were fictitious, Marshall caused Home Solutions to report those figures to public investors in Home Solutions’ second quarter SEC report in 2007, the U.S. Attorney said.

Judgment Owed to Brother

Local Tampa news reports indicate that Marshall has faced a number of civil lawsuits claiming that he had failed to pay subcontractors for work done for Fireline Restoration, which is also no longer in business.

“One of the judgments against him is for more than $2 million owed to his brother on a project,” the Tampa Bay Business Journal reported.

Fraud Task Force

This case is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.

Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants.

For more information on the task force, visit www.stopfraud.gov.

The investigation was conducted by the FBI and the FDIC Office of Inspector General, with substantial assistance from the Enforcement Division staff of the Securities and Exchange Commission.

Assistant U.S. Attorneys J. Nicholas Bunch and Andrew Wirmani are in charge of the prosecution.

   

Tagged categories: Business management; Business matters; Construction; Criminal acts; Enforcement; Laws and litigation; Lawsuits

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