SEC Sues Group Accused of Scam
Regulators said Thursday that they had shut down a Ponzi scheme that allegedly bilked millions of dollars from religious investors who thought they would profit on coal mining and a “divinely guided” gold transaction that would yield a 100% return in 60 days.
The Securities and Exchange Commission filed a lawsuit this week against the defendants. At the agency’s request, U.S. District Judge Virginia A. Phillips in Riverside froze the defendants’ assets pending a hearing May 13.
One defendant was identified as Henry Jones, a Culver City entertainment entrepreneur. According to Jones’ website, his ventures include MIG Records, which announced in a news release last week that it had signed the rapper Coolio, known for his single “Gangsta’s Paradise.”
Jones’ Marina Investors Group Inc., with offices in Venice and Marina del Rey, is also a defendant. The suit said millions of dollars from investors were transferred to Marina’s bank accounts from Tri Energy Inc., a Nevada firm whose principals “made the majority of misrepresentations at issue in this case.”
Jones didn’t return calls. Several lawyers, including John Cotton of Los Angeles and Robert Chadwell of Seattle, said they had been contacted about representing defendants but none would discuss the case, saying they were unfamiliar with the details or hadn’t yet been retained.
Also listed as defendants in the securities fraud suit:
* H&J; Energy Co., a Nevada company the SEC said “purports to be in the coal mining business.”
* Lowell Decker of Placerville, Calif., a Tri Energy executive accused of setting up nightly conference calls during which investors were misled.
* Arthur Simburg of Los Angeles, a Tri Energy senior vice president who allegedly “solicited investors and lulled them with fraudulent statements.”
* Robert Jennings of Perris, Calif., president of Tri Energy and H&J; Energy, whom the SEC said had signed the documents used to solicit investors and had received investor funds.
The SEC’s suit, filed in federal court in Riverside, contends that the scheme fraudulently raised $12 million to $18 million, which SEC attorney Stephen L. Cohen called a “conservative estimate.”
The suit said the defendants posed as “religious entrepreneurs” who believed “deistically inspired” and “divinely guided” profits would enable investors to raise money to alleviate poverty in Africa and Appalachia.
The SEC said investors were told huge profits could be made by helping an Arabian prince move gold from Israel through Luxembourg to the United Arab Emirates.
Instead, the suit alleged, much of the investors’ money was transferred to accounts controlled by the defendants. Investors who did get money back were paid with other investors’ funds, not genuine profits, the suit alleged.
