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SEC Files Misappropriation Charges Against Ex-Santa Fe Gold CEO Thomas Laws

Thomas LawsPublicly available records provided by the Securities and Exchange Commission (SEC) on December 14th, 2018 indicate that the SEC has filed charges against Thomas Laws, formerly the CEO of Santa Fe Gold Corporation, alleging he misappropriated investor funds. According to an SEC press release, the agency has also obtained an asset freeze against Mr. Laws.

A complaint released by the SEC alleges that from 2016 until 2018, Mr. Laws’ company, Santa Fe Gold, transferred about $1.1 million in its investors’ funds to Mr. Laws and an entity under his control. (Santa Fe Gold is a described in the complaint as a public mining company based in Albuquerque.) The transferred funds were used “for various corporate purposes,” according to the complaint, such as buying a silver mine and mining equipment for other services. The SEC alleges that Mr. Laws “misappropriated the funds” and tried to conceal this act from the company and its auditor “by fabricating documents” such as invoices from the company’s vendors, banking documents, correspondence, and other agreements.

The complaint states that when Santa Fe Gold became aware of “a portion” of Mr. Laws’ alleged theft, the company confronted him, and he failed to give an explanation for his acts but agreed to repay the misappropriated funds. The SEC states that he drew up a promissory note for $930,000 to the company, which has since matured, though the SEC states he has only repaid $375,000 of the promised $930,000. Following the execution of the note, according to the SEC, Santa Fe Gold “identified approximately $170,000 of additional misappropriated investor funds, bringing the total at issue to at least $1.1 million.” However, as of the filing of the charges, Mr. Laws has neither repaid nor accounted for at least $725,000 of those funds.

In connection with these allegations, the SEC has charged Mr. Laws with violations of the “antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, the books and records provision of Section 13(b)(5) of the Exchange Act and Rules 13a-14, 13b2-1, and 13b2-2 thereunder, and aiding and abetting Santa Fe Gold’s violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder.”

The SEC has also been granted an asset freeze against Mr. Laws, expedited discovery, a prohibition of alteration or destruction of documents, and “an accounting of investor funds and other assets.” The commission seeks disgorgement, prejudgment interest, civil penalties, and other sanctions in the complaint, which remains pending.

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