RICHMOND — The State Corporation Commission (SCC) has imposed a maximum penalty of $10,000 for each of 3,743 violations of the Virginia Securities Act by Julius Everett Johnson, Walter Ray Reinhardt and several of their respective companies. The total penalty of $37.4 million will be waived if the defendants pay restitution of approximately $11.35 million to Virginia investors who were harmed by the illegal practices of the defendants.

The Commission found that Johnson of Richmond, Virginia, and Reinhardt of Kenner, Louisiana, sold over $11 million in securities that were unregistered and sold by unregistered agents. The offers contained material misrepresentations or omissions through business practices that operated as a fraud or deceit on the purchasers. The majority of the transactions occurred since 2005.

Based upon the record on which the SCC rendered its decision, the defendants took advantage of the purchasers after establishing a familiar, almost intimate business advisor relationship. In the hearing examiner’s report to the Commission, the senior hearing examiner who made recommendations to the Commission stated that the defendants were able to convince many conservative, risk averse, elderly investors to invest millions of dollars by cloaking themselves in respectability.

The defendants have one year to make restitution in order to avoid imposition of the penalty. They have 21 days from the date of the Commission’s order to respond to a recommendation to be permanently enjoined from transacting securities business in the Commonwealth.

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Case number SEC-2009-00075 – Julius Everett Johnson
Case number SEC-2009-00076 – Walter Ray Reinhardt
[Plus numerous other cases involving associated companies]