Award possible in fraud case

Brianna BaileyThe Oklahoman(TNS)
Award possible in fraud case

The U.S. Securities and Exchange Commission has declared the case involving a local wedding singer and a businesswoman who raised an estimated $4.7 million through various illegal schemes eligible for a whistleblower award— a monetary reward for people who provided information in the case.

In August 2013, the SEC filed a civil suit against Larry J. Dearman Sr., 41, of Tulsa, a former Oklahoma investment adviser and wedding singer, and his friend and business associate Marya Gray, 51, of Bartlesville, accusing the pair of blowing investors’ money on gambling and personal expenses, as well as to pay early investors.

Dearman, formerly of Barnsdall, was accused and convicted, along with Gray, of defrauding local investors, including several Osage County residents.

The Bartlesville-based wireless service provider Bartnet Wireless and northwest Oklahoma convenience store chain Quench Bud’s also were named as defendants in the lawsuit, as well as shell company The Property Shoppe Inc.

In November the SEC won a $3.6 million judgment against Bartnet in the case, making it eligible for a whistle-blower award.

However, the SEC has agreed to not pursue the money as part of a settlement with Bartnet’s estate and creditors and investors in the company, said Mark Sanders, an attorney for Bartnet’s bankruptcy trustee.

The Bartnet estate has only about $442,000, and investors and creditors would be unable to recover most of their money, Sanders said.

“That’s all of the money that is left in the bankruptcy estate,” Sanders said.

The company Bartnet continues to operate, providing wireless service to remote parts of northeast Oklahoma, but has different ownership, Sanders said.

The SEC’s whistle-blower program was established by the Dodd-Frank Wall Street Reform Act of 2010 and created a system of awards for people whose inside information and tips on illegal activity leads to at least $1 million in sanctions.

Whistle-blowers can be eligible for 10 percent to 30 percent of the monetary sanctions collected by the SEC, paid from the agency’s Investor Protection Fund.

The SEC gives whistle-blower awards based only on the amount of money it actually collects from foiled investment scams, the agency said.

Over several years, Dearman solicited $1.7 million from 17 investors in Bartnet, which was controlled by Gray, the lawsuit says. Dearman allegedly told investors that the wireless company needed to buy transmission towers and other equipment. In reality, Bartnet was losing money and Dearman knew the firm would not be able to repay the promissory notes given to investors, the SEC claimed.

Dearman stole an additional $700,000 from some of his clients “through various ruses,” the SEC claimed.

“Dearman and Gray were able to lure these clients in part because many of them had known him and his family since childhood, thought of him as an active member of their church and knew him as a popular local wedding singer,” the SEC claims.

In October, Gray pleaded guilty to six counts of conspiracy in Washington County District Court for her role and was sentenced to 15 years in prison.

Dearman pleaded guilty to charges of embezzlement, conspiracy and obtaining money by false pretense in August and was sentenced to 10 years in prison.