SEC charges Orange County men with conducting fraudulent investment scheme

The Securities and Exchange Commission has charged two alleged Orange County boiler-room operators and four salesmen with conducting a fraudulent green-energy investment scheme.

In a complaint filed Wednesday, the SEC said that investors were told the money would go to fund an environmentally friendly energy business, but out of $11 million collected, only about $315,000 went to American Environmental Energy Inc. in Costa Mesa. The rest of the money allegedly fueled lavish lifestyles for the company’s principals, Larry R. Crowder, 53, of Newport Coast and Joseph R. Porche, 51, of Aliso Viejo.

The SEC said Crowder and Porche ran the scheme between early 2008 and February 2009 through their company, Kensington Resources Inc., which was based in Costa Mesa. Investors were recruited through online solicitations and telemarketing, court documents said.

The SEC said in its complaint that Porche took more than $1.34 million of investor funds for himself and that Crowder took more than $644,000. The two men also misappropriated more than $3.48 million in investor money to pay for homes, furniture and other extravagances, including at least $46,000 for Crowder’s wedding in Italy and more than $343,000 for luxury cars, according to the complaint.

Also named in the SEC complaint were salesmen who worked the phones to bring in investors. The so-called boiler-room operators named were Konrad C. Kafarski, 40, of Trabuco Canyon; Carlton L. Williams, 51, of Coto de Caza; Gary K. Juncker, 47, of Rancho Santa Margarita; and Dale J. Engelhardt, 46, of San Clemente.

Crowder, Porche and Kafarski also falsely told investors that 80% of their money would go toward green businesses, and that commissions for salesmen and managers were limited to 10% of the funds raised, according to court documents. Instead, the SEC said, commissions of as much as 25% were paid.

Irving M. Einhorn, a lawyer representing Kafarski, said, “I expect my client will be settling with the court very shortly, and as a part of the terms we really can’t comment on this. He doesn’t have to admit that he did anything wrong and he doesn’t have to admit that he was innocent either.”

Stanley Greenberg, a Los Angeles lawyer representing Juncker, said, “Mr. Juncker’s position from the beginning is that his contact has been completely in compliance with the law and that remains his position.”

Attorneys for the other defendants declined to comment or could not be reached.

Crowder and Engelhardt have had previous run-ins with the SEC. In 1998, the commission charged Crowder and Engelhardt in connection with another investment fraud scheme. As a result of the 1998 judgment, Crowder was permanently barred from associating with any broker or dealer and Engelhardt was suspended for one year from associating with any broker or dealer, court documents said.