Microcap Attorney Jaclin fights SEC fraud case by Blaming Everyone Else

A veteran microcap deal lawyer is trying to blame the young lawyers who worked for him for his alleged role in a Shell Factory scheme that spanned nearly a decade. I am reporting for Growth Capitalist today on the continued saga of the once well-respected attorney, Gregg Evan Jaclin, who plans to the fight the SEC enforcement action brought down on him in May. Jaclin has since been removed from his New Jersey-based law firm Szaferman, Lakind, Blumstein & Blader and some of the lead associates under his wing are now employed at a competitive New Jersey firm called Lucosky Brookman LLP.

According to the SEC, Jaclin worked with a L.A. based man, Imran Husain, to take fake start-up companies public so that they could later be sold for a ransom fee to real microcap companies that wanted to avoid the high cost of going public by doing what’s called a reverse merger. When in reality what was being filed with the SEC were shell companies (not real businesses) and Jaclin is now in trouble because he issued what the SEC considers ‘false opinion’ letters vouching that these deals were legit. This was done over and over from 2006 to at least 2013.

Jaclin’s motion to dismiss the SEC case is the first time we are hearing from the now disgraced lawyer who ironically admits in court documents that the companies in the SEC complaint were in fact shell companies. This is important because Jaclin signed documents that told the SEC when he first began filing the companies legal documents to be approved to go public that they were legitimate businesses with real CEOs and a diverse investor base. Having a diverse investor base is one of the parameters that allows stock in reverse merger deals to be unrestricted to trade right away. With the shell companies Jaclin allegedly co-created only a few people actually owned the stock and the public didn’t know this. This is bad because it allows the stock to be easily manipulated for pump and dumps which is exactly what happen with one of the shells in a company called YESdtc/PR Complete. The CEO of YESdtc plead guilty to criminal charges related to stock manipulation in 2014.

To top off the odd legal logic in his response Jaclin also says he didn’t really supervise his associates who drafted the SEC filing so of course the SEC can’t charge him. I call utter hogwash on the notion that the head of a law firm’s capital markets practice didn’t supervise the lawyers under him. And lets not forget that I was first to report on a secret plea deal his co-conspirator, Husain, made with the Dept. of Justice back in 2014 that says Jaclin was wide-eyed involved in the scheme. So much so that he helped Husain find a former SEC enforcement lawyer, Mark Hunter, to represent one of the puppet CEOs when the SEC started to investigate who was actually running these companies. And according to Husain coached him on how to lie to the SEC and destroy emails.

Husain has since plead guilty to one count of criminal conspiracy for basically interfering with an SEC investigation. Attorney Mark Hunter of NYC-based Hunter Taubman Fisher & Li has now agreed to be co-counsel in defending Jaclin in the SEC case.

During my reporting on this story I heard some industry players say Jaclin had been given office space in his former protegé’s law firm Lucosky Brookman LLP and that there could be fee-sharing going on. Joe Lucosky and Seth Brookman, the firm’s founders, said that’s absolutely not true. I was able to find Jaclin’s new office phone number through a person that was answering phones in Joe Lucosky’s New Jersey office though. A GPS search shows the new office number, 609-245-0732, is somewhere near the Princeton NJ area. I also learned after the SEC case was announced Jaclin, who hasn’t lost his law license, is still taking meetings with players in the microcap space and apparently trying to still practice emerging growth companies. It’s not clear what clients stuck with him but we did confirm a recent equity crowdfunding deal that was all set to go public on the OTC Markets, BeautyKind, had to not only fire Jaclin as their SEC lawyer but also pulled the whole deal while it was closing. I reported for Growth Capitalist BeautyKind has since said in SEC filings they hope to redo the deal and list on the NASDAQ this time.

We’ll be watching to see if Jaclin backs down and settles with the SEC or if the DOJ brings criminal charges against him like they did his co-conspirator.

*The names of the former Jaclin associates hired by Lucosky Brookman LLP are Steven Lipstein and Jason Ye.