Clarkston tax preparer sentenced for multi-year tax fraud and prohibited from preparing future returns
ATLANTA - Richard J. Randolph, III has been sentenced for securities fraud he committed while CEO of Randolph Acquisitions, Inc.
“Corporate executives, like Randolph, are expected to defend investors’ money, not take advantage of their position in a company to defraud them,” said Acting U.S. Attorney Kurt R. Erskine. “Instead, this defendant let his greed get the better of him and now he faces significant federal prison time.”
“Fraud is fraud, no matter how complicated,” said Special Agent in Charge Steven R. Baisel, U.S. Secret Service - Atlanta Field Office. “The defendant in this case employed multiple machinations in an effort to hide his criminal acts. Ultimately, his efforts failed under the scrutiny of the law enforcement professionals tasked with unraveling his schemes.”
According to Acting U.S. Attorney Erskine, the charges and other information presented in court: Richard Randolph was the CEO, Chairman of the Board of Directors, and majority shareholder of Randolph Acquisitions, Inc., a company headquartered in Atlanta, Georgia, that publicly filed its financials with the Securities and Exchange Commission. He also controlled Gallagher Management Group and other related entities. In 2017 and 2018, Randolph sold over $1 million in Randolph Acquisition stock to various investors.
In 2017, Randolph began preparing to merge Gallagher Management Group into Randolph Acquisitions and sold Randolph Acquisitions shares to multiple investors. Gallagher Management also engaged an accounting firm to audit its 2016 financial statements. In connection with this audit, Randolph provided false and fraudulent information regarding Gallagher Management Group’s assets which were then reflected on the balance sheet of the 2016 financial statements:
The audited financials included other misrepresentations:
Gallagher Management Group engaged a consultant to prepare a business valuation for the merger which relied upon Gallagher Management Group’s 2016 audited financial statements, additional false property valuation information provided by Randolph, and false projections provided by Randolph. The report valued Gallagher Management Group at $31.3 million on an enterprise value basis and $33.8 million on an equity value basis.
In connection with the proposed merger between Randolph Acquisitions and Gallagher Management Group, Randolph Acquisitions made multiple filings with the Securities and Exchange Commission that attached the false and fraudulent 2016 audited financial statements of Gallagher Management Group. Randolph directed investors to these filings.
In addition to these documents, Randolph made other false and fraudulent misrepresentations to prospective investors:
Using these misrepresentations, Randolph induced 14 victims to invest over $1.6 million in Randolph Acquisitions.
Richard J. Randolph, III, 40, of Atlanta, Georgia, was sentenced to six years, six months in prison to be followed by three years of supervised release and ordered to pay restitution in the amount of $1,602,200 to his victims. Randolph was convicted on these charges on April 9, 2021, after he pleaded guilty.
This case was investigated by the U.S. Secret Service, with assistance from the U.S. Securities and Exchange Commission. In a related civil matter, the U.S. Securities and Exchange Commission filed a complaint charging Randolph and he consented to entry of a judgment against him.
Assistant U.S. Attorney Christopher J. Huber, Deputy Chief of the Complex Frauds Section, prosecuted the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.