UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC Admin Release 34-81461, IA Release 40-4755 / August 22, 2017: The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against Jeffrey Gainer ("Gainer"). The Division of Enforcement alleges that on July 15, 2016, Gainer pleaded guilty to one criminal count of sale of unregistered securities [15 U.S.C. §§ 77e(a) and 77e(c)] in Criminal Case No. 15-cr-231 (N.D. Oh.). The indictment filed against Gainer on June 24, 2015 stated that the unregistered securities sold by Gainer were the private investments in KGTA Petroleum, Ltd. The indictment also stated: GAINER negotiated to receive an undisclosed $10,000 monthly bonus for every $1,500,000 of investor money he brought to KGTA. In addition, GAINER requested and received approximately $9,000 of his fees in cash each month. In order to conceal the scheme from regulators, GAINER requested the remainder of his monthly fees be paid to nominees, including his wife, his children, and an entity registered to his wife called NATG, LLC. On May 29, 2014, the Commission filed a Complaint in the United States District Court for the Northern District of Ohio ("Court"). Gainer was among the numerous defendants. The Commission's Complaint alleged that from at least October 2012 through May 2014, Gainer and others solicited investors to invest in the securities of KGTA Petroleum, Ltd. ("KGTA"), purportedly a petroleum company that earned profits by buying and reselling crude oil and refined fuel products. In reality, the KGTA oil business was a sham and a Ponzi scheme. Gainer, in particular, was alleged to have recklessly offered and sold KGTA securities despite glaring red flags that KGTA was a scam. Further, Gainer sold the securities to investors, some of which were sold to his broker-dealer customers. Gainer was also alleged to have fraudulent concealed from investors that he was being paid enormous commissions - approximately $2 million. Gainer also did not disclose these investments or his KGTA sales activity to PrimeSolutions Securities, Inc. (PSSI). His KGTA commissions were hidden by routing the funds through an undisclosed entity controlled by Gainer and his wife, Nancy Gainer. Moreover, since KGTA was a Ponzi scheme, these commissions were misappropriated investor funds. Gainer was also alleged to have violated the registration provisions of the Securities Act of 1933.

Order

Bar (Permanent)

any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or NRSRO

Indefinite

7/12/2019

from participating in an offering of penny stock

Indefinite

7/12/2019

Securities Fraud

Dismissed

Sale of Unregistered Securities

Pled guilty

Conspiracy to Commit Wire Fraud and Securities Fraud

Dismissed

Wire Fraud

Dismissed

FINRA

RESPONDENT GAINER FAILED TO RESPOND TO FINRA REQUEST FOR INFORMATION.

LETTER

Bar (Permanent)

All Capacities

Indefinite

9/15/2014

PURSUANT TO FINRA RULE 9552(H) AND IN ACCORDANCE WITH FINRA'S NOTICE OF SUSPENSION AND SUSPENSION FROM ASSOCIATION LETTERS DATED JUNE 11, 2014 AND JULY 7, 2014, RESPECTIVELY, ON SEPTEMBER 15, 2014 GAINER IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY. GAINER FAILED TO REQUEST TERMINATION OF HIS SUSPENSION WITHIN THREE MONTHS OF THE DATE OF THE NOTICE OF SUSPENSION; THEREFORE, HE IS AUTOMATICALLY BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC LITIGATION RELEASE NO. 23097, SEPTEMBER 30, 2014: ON MAY 29, 2014, THE SECURITIES AND EXCHANGE COMMISSION FILED AN EMERGENCY ACTION CHARGING JEFFREY GAINER AND OTHERS WITH PARTICIPATING IN A FRAUD INVOLVING A SHAM OIL TRADING BUSINESS THAT RAISED OVER $20 MILLION FROM INVESTORS. THE SEC'S COMPLAINT ALLEGES THAT TWO INDIVIDUALS MARKETED THE SHAM OIL TRADING BUSINESS TO INVESTORS AS A PETROLEUM COMPANY THAT EARNS PROFITS BY BUYING AND RESELLING CRUDE OIL AND REFINED FUEL PRODUCTS. THE COMPLAINT FURTHER ALLEGES THAT THEY TOLD INVESTORS THAT THEY HAD RELATIONSHIPS WITH THIRD-PARTY PURCHASERS AND THAT THEY WOULD USE INVESTOR FUNDS TO BUY FUEL AT A DISCOUNT THAT WOULD THEN BE SOLD AT A SUBSTANTIAL PROFIT. THE COMPLAINT GOES ON TO ALLEGE THAT THE TWO INDIVIDUALS HELPED CONVINCE PROSPECTIVE INVESTORS TO INVEST BY PROMISING AN IMPORTANT SAFEGUARD: THE INVESTMENT FUNDS AND THE RETURNS WOULD FLOW THROUGH AN ESCROW ACCOUNT MONITORED BY AN ATTORNEY, WHO ACTED AS THE ESCROW AGENT. THE SEC'S COMPLAINT ALLEGES THAT THE OIL BUSINESS WAS A SHAM AND THE ESCROW SAFEGUARD WAS A MIRAGE. IN REALITY, THE COMPLAINT ALLEGES, THE TWO INDIVIDUALS OPERATED THE OIL BUSINESS AS A PONZI SCHEME, AND NEVER FOLLOWED THE PROMISED ESCROW PROCEDURES, AND THAT THE OIL BUSINESS DID NOT GENERATE REVENUE THROUGH THE PURCHASE AND RESALE OF OIL PRODUCTS. THE SEC'S COMPLAINT ALSO ALLEGES THAT TWO INDIVIDUALS SOLD THE FRAUDULENT INVESTMENTS THROUGH JEFFREY GAINER AND ANOTHER INDIVIDUAL - TWO REGISTERED REPRESENTATIVES WITH A CLEVELAND-BASED BROKER-DEALER. THE COMPLAINT ALLEGES THAT GAINER COMMITTED HIS OWN VIOLATIONS OF FEDERAL SECURITIES LAW INCLUDING SELLING AWAY AND SELLING UNREGISTERED SECURITIES. THE COMPLAINT ALSO ALLEGES THAT GAINER COMMITTED FRAUD BY RECKLESSLY SELLING INVESTMENTS DESPITE GLARING "RED FLAGS" THAT SIGNALED THAT THE OIL BUSINESS WAS A SCAM, AND BY HIDING FROM INVESTORS THE FACT THAT THEY WERE BEING PAID ENORMOUS FEES BY THE OIL BUSINESS TO SIGN UP INVESTORS. THE COMPLAINT ALLEGES THAT GAINER AND THE OTHER INDIVIDUAL RECEIVED OVER $6 MILLION FOR THEIR SALES EFFORTS. THE COMPLAINT GOES ON TO ALLEGE THAT THESE ILLICIT FEES WERE FUNNELED THROUGH ENTITIES OWNED BY GAINER'S WIFE AND THE OTHER INDIVIDUAL'S GIRLFRIEND. THE SEC ALLEGES THAT GAINER VIOLATED SECTIONS 5(A), 5(C), 17(A)(1), 17(A)(2) AND 17(A) (3) OF THE SECURITIES ACT, SECTION 10(B) AND 15(A)(1) OF THE EXCHANGE ACT, AND EXCHANGE ACT RULE 10B-5.

Judgment Rendered

Disgorgement

$1,661,214.00

Monetary Penalty other than Fines

Injunction