CFP Imposes an Interim Suspension for Fraud of $23 Million
The Certified Financial Planner Board of Standards Inc. has imposed an interim suspension against Gregory K. Womack, a certified financial planner and broker, who was recently charged by the Securities and Exchange Commission for defrauding investors.
The Certified Financial Planner Board of Standards Inc. has imposed an interim suspension against Gregory K. Womack, a certified financial planner, who was recently charged by the Securities and Exchange Commission for defrauding investors.
On Aug. 8, 2022, the U.S. Securities and Exchange Commission filed charges against and announced a settlement with Womack and other defendants, including Womack’s firm Womack Investment Advisers Inc., which he owns.
The SEC’s complaint alleges that GreneCo LLC and its owners, Gene D. Larson and Womack, raised approximately $23 million from more than 250 investors in 2017 and 2018 through four unregistered securities offerings involving conservation easements. The offerings provided investors with multiple investment options, including an election to take charitable tax deductions if the real estate acquired with their investment funds was donated to a land trust for purposes of a conservation easement. Under the Internal Revenue Code, conservation easements allow real property to be donated to qualified organizations, which may generate federal and state tax deductions for the investor.
The SEC’s complaint further alleges that Womack and his investment adviser, Womack Investment Advisers Inc., failed to disclose compensation received from WIA clients who invested in GreneCo’s offerings. According to the SEC, Womack received approximately $6 million in management fees from the GreneCo offerings, a fact not disclosed to the eight WIA clients who invested in the offerings. The complaint also alleges that WIA’s annual disclosures falsely stated that it did not receive any compensation from GreneCo when it had received $160,000 in compensation, partly attributable to investments by WIA clients. As alleged, these fees and compensation created conflicts of interest that Womack and WIA, as fiduciaries, were required to disclose to their clients.
In the settlement, without admitting or denying the allegations, Womack consented to the findings that, beginning in March 2018, he and WIA engaged in transactions, practices, or courses of business that acted as a fraud or deceit upon over 250 investors by offering and selling $23.3 million in interests in four unregistered securities offerings that involved fake real estate investment opportunities such as GreneCo Offerings.
Womack also consented to findings that he and WIA failed to inform those investors that they would receive millions of dollars in management fees from investor funds and that they received at least $160,000 directly from GreneCo as a result of the GreneCo offerings. Instead, WIA filed Part 2B of its annual Form ADV on March 9, 2018, which misleadingly represented that the firm “receives no compensation from a client’s participation and does not charge the client a fee for this investment.” The settlement stated that as fiduciaries of their clients, Womack and WIA were required to disclose these conflicts of interest, and their failure to do so operated as a fraud or deceit upon one or more clients or prospective clients.
Additionally, the GreneCo offerings were securities, but Womack and his co-defendants failed to register their offerings with the SEC, and no registration exemption applied.
Womack and his co-defendants agreed to be permanently enjoined from violating these statutory provisions. Further, Womack agreed he is liable for disgorgement of $236,739, $48,170.00 in prejudgment interest and a civil penalty of $145,031. His firm is liable for disgorgement of $160,000, $32,609.00 in prejudgment interest and a civil penalty of $517,955.
GreneCo agreed it is liable for a civil penalty of $414,364 and GreneCo’s co-owner agreed he is liable for a civil penalty of $41,440. The U.S. District Court for the Western District of Oklahoma approved the settlement on Aug. 15, 2022.
A Hearing Panel of the DEC reviewed the matter, granted the motion and issued the Interim Suspension Order on Oct. 25, 2022, after determining that CFP Board Counsel demonstrated by a preponderance of the evidence that Womack’s conduct “posed a significant threat to the public or significantly impinges upon the reputation of the profession or the CFP certification marks.”
The Interim Suspension Order suspends Mr. Womack’s right to use the CFP marks pending the CFP board’s completed investigation and possible further disciplinary proceedings.
Certified Financial Planner Board of Standards is the professional body for personal financial planners in the U.S., sets standards for financial planning, and administers the CFP certification.
