Risky Business

How did state representative Allen Fletcher, the chairman of a House subcommittee on white-collar crime, find his very own company tangled up in, well, a white-collar-crime investigation?
House Oversight: Fletcher, photographed on April 6, 2009, says he fell prey to financial con artists three times in two and a half years.

There is a proverb that Tomball state representative Allen Fletcher likes to put on brochures for the private security company he owns: “The man of integrity walks securely, but he who takes crooked paths will be found out.” Fletcher, who was elected last fall to represent District 130, in northwest Harris County, has made a career out of finding crooks. He founded his security company, Resource Protection Management, or RPM, after retiring from a thirty-year career in law enforcement, the high point of which was supervising a unit in the Houston Police Department that investigated public corruption and contracting fraud. All of which might explain why Fletcher had some difficulty during a two-hour interview in his office at the state capitol in April explaining how his own business became embroiled in a stock fraud investigation.

On December 18, 2007, two of Fletcher’s business associates, Lois Newman and her son-in-law Evan “Nick” Jarvis, had their homes raided by the U.S. attorney’s office, which seized more than $3 million in assets and bank holdings controlled by the pair. Jarvis was arrested on a robbery charge related to the alleged stock fraud. “When I agreed to run for this office, I did not have a clue—not a clue—that Nick Jarvis was fixing to get arrested in a few days,” Fletcher said. “And when I heard that, I thought, ‘Well, that’s some shit. I hope that doesn’t hit the front page.’ ” It didn’t hit the papers, and Fletcher’s association with Jarvis and Newman stayed off the radar through the primary season, during which Fletcher picked up a high-profile endorsement from Houston state senator Dan Patrick. It was still off the radar when he won the election and was assigned to the House Criminal Jurisprudence Committee, where his experience as an investigator earned him the chairmanship of the Subcommittee on White Collar Crime.

No criminal case has been filed in the alleged fraud, and an attempt to confiscate the assets and cash seized in the raid stalled in November 2008, at which time the money was returned. Federal authorities left themselves the option of trying again, however, and spokespersons for both the U.S. attorney’s office and the FBI have declined to describe the investigation as closed. A federal complaint filed in the case, obtained recently by Texas Monthly, together with other documents reviewed for this story, raises a question about the freshman legislator’s business dealings: How does a man like Allen Fletcher find himself in business with a group of alleged con artists?

Fletcher’s company, RPM, provides security guards and other security services and, until recently, sold burglar- and fire-alarm systems. In May 2007 Fletcher took on Newman as a business partner. Through her company, NuTech, she purchased half of RPM. Acting on a tip received that same spring, the Harris County district attorney’s office began investigating NuTech along with another company that Newman once helped direct, Grifco International, and began building a case that both companies were being used for a stock-manipulation scheme known as scalping. Investigators concluded that Newman and Jarvis, a stock promoter, and others were artificially inflating the prices of NuTech and Grifco stock and benefiting from sales of those stocks, which they did not disclose to shareholders. (This type of scam is also known as a pump and dump.) Both companies are penny stocks, which trade through brokerage vehicles commonly known as pink sheets, which operate

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