Lawyer Charged in $10 Million Securities Fraud

Federal prosecutors charged an ex-partner of the law firm McGuireWoods with fraud yesterday, claiming that he illegally obtained and sold shares of various companies for a profit of millions of dollars.

Louis W. Zehil, 41, was arrested, and a federal magistrate later set bail at $250,000.

Separately, the Securities and Exchange Commission filed a civil complaint against Mr. Zehil in Federal District Court in Manhattan.

Mr. Zehil, who worked at McGuireWoods’s offices in Jacksonville, Fla., and New York, resigned from the firm in January. His lawyer declined to comment.

Mr. Zehil represented seven companies between January 2006 and February 2007 in issuing their stock in private investments in public equity, or PIPE, transactions, according to the SEC.

In these PIPE transactions, investors buy restricted shares at a discount and can sell them in public markets after the shares have been registered with the S.E.C., according to the complaint.

Mr. Zehil invested in the seven companies through two entities he controlled, according to the complaint filed by the United States attorney’s office in Manhattan.

But Mr. Zehil told the stock transfer agent that the two companies he controlled were eligible to get shares without a restrictive legend and he sold those shares in the public market for a profit of about $10 million, according to the complaint.

The matter was reported to the S.E.C. by McGuireWoods, the government said, adding that the law firm was cooperating with its investigation.

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