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WASHINGTON — Clients of Gordon B. Grigg and his firm ProTrust Management Inc. were allegedly defrauded out of $6.5 million through a bogus claim that their money would be invested in the federal government’s Troubled Asset Relief Program and other securities that do not exist.On Jan. 28, the SEC alleged that Grigg obtained control over funds of at least 27 clients since 2007 and falsely claimed to have invested their money in securities described as “private placements.” Grigg created fraudulent account statements reflecting his clients’ ownership of these nonexistent securities, the SEC said. He also began falsely claiming in December that ProTrust had the ability to invest client funds in government-guaranteed commercial paper and bank debt as part of the TARP program. Grigg also falsely claimed to have partnerships and other business relationships with several of the nation’s top investment firms.Katherine Addleman, regional director of the SEC’s Atlanta regional office, said “Grigg and ProTrust preyed upon investors’ desire for safety by claiming associations with reputable investment firms and the government’s TARP program. In this case, not only were such claims false, but there is in fact no program in which investors can buy debt guaranteed by the TARP program.”After the SEC’s complaint was filed, Grigg and ProTrust consented to the emergency relief sought by the SEC, and Judge William J. Haynes Jr. of U.S. District Judge for the Middle District of Tennessee issued a temporary restraining order to prevent the defendants from further violations and freezing their assets.–msamaad@cutimes.com

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