Nearly 14 years ago, James Dickey, current RPT State Chairman, got into serious trouble with the Securities and Exchange Commission (SEC). When this information recently came to light, some have questioned the validity or relevance of the information, given that the incident took place so many years ago. But others have maintained that it is very relevant since it gives a window into Dickey’s character. If Dickey lied to investors 14 years ago, resulting in investors losing of millions of dollars, can he be trusted to tell us the truth today? That’s an important question since he’s currently running for election at the June 14-16 Republican State Convention in San Antonio.
- According to information obtained from the SEC’s website relevant to the issue (sec.gov/litigation/litreleases/lr19631.htm), on 6/16/2004 the SEC filed a complaint against James Dickey, and his partner, for fraudulently offering and selling investment securities from three Texas-based hedge funds to investors from July 1998 through October 2001. Although the hedge funds were losing significant amounts of money (up to 90% of the funds invested), Dickey marketed the securities to investors as if the hedge funds were gaining, even after he knew that was not the case. Additionally, to gain the confidence of investors, he misrepresented that he and his partner had well-known and prominent brokerage firms as a prime broker, when in fact the funds never had a prime broker.
- Before the case went to trial in the Northern Texas Federal District Court, Dickey consented to a permanent injunction, without admitting or denying the allegations, but agreeing to an order to pay disgorgement of $85,052 plus $18,952 for prejudgment interest for a total of $104,004, representing monies received by Dickey from the hedge fund fraud. He pled poverty to the court so the repayment amount was dropped to $35,000 (He agreed to pay $10,000 within 10 days of the final judgment and $1000/month for 25 months to the Court-appointed Receiver for the case). The federal court entered the final judgment on 3/6/2006.
- Dickey’s partner did not settle with the SEC and subsequently lost in a jury trial and on appeal to the 5th Circuit so a federal district court has established the underlying facts of the charges comprising the SEC complaint which Dickey cannot deny. Part of his partner’s defense in the jury trial was that the losses were a result of the tragic events of 9/11. The court found nearly all of the fraudulent activity (all the way back to June 2000) occurred prior to 9/11.
- Dickey is not prohibited from talking about the case (as he has alleged publicly), but the court agreement that Dickey signed forbids him from denying the allegations or even hinting that they are false. Otherwise, the SEC may petition the Court to vacate (cancel) the Final Judgment and restore the case to its active docket. Some have questioned if Dickey’s actions to encourage his supporters to make such statements publicly have already violated the Final Judgment to which he agreed. (see link: http://tommechler.com/wp-content/uploads/2018/05/Dickey-consent-to-final-judgment.pdf)
Here’s the original complaint with the facts of the case as filed by the SEC: www.sec.gov/litigation/complaints/comp18749.pdf. Here’s the final judgment: http://tommechler.com/wp-content/uploads/2018/05/Dickey-final-judgment-of-perm-injunction.pdf
Tom Mechler served as Republican Party of Texas State Chair just prior to James Dickey. He holds a Bachelor of Science degree in Mechanical Engineering from Texas A&M University and an MBA from the Wharton Business School in Finance.
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