Monday, May 12, 2014
Texas State Securities Board: 2014 Enforcement Actions
The Texas State Securities Board, enforcement division and Dale Barron have been busy in 2014. Apparently cheating is not just a Kelly G Rogers thing. Look forward to seeing Rogers' name in the June edition.
A Bell County grand jury indicted Andrew Joseph Longoria April 16 on charges of securities fraud, theft, and money laundering for the alleged sale of investments in notes, mutual funds, and real estate projects through a company called LRS Investments.
Garry B. Smith of Garland was indicted by a Collin County grand jury March 25 on charges of theft, securities fraud, and money laundering for the alleged sale of fraudulent investments contracts in oil and gas drilling projects. A co-defendant, Robert James Nelson of Prosper, was indicted on the same charges. Smith and Nelson allegedly sold units of interest in a six-well venture in Archer County. The men failed to disclose that they used investor funds to pay for expenses unrelated to drilling and other costs. The indictment also alleges that Smith did not disclose to investors his history of regulatory sanctions, judgments, and orders of restitution from civil court lawsuits.
Derek A. Nelson of Edmond, Oklahoma, who allegedly stole $12 million from U.S. investors in a real estate investment program, was indicted March 25 in Collin County State District Court on charges of securities fraud, theft, and money laundering. According to the indictment, Nelson sold and offered for sale shares in a real estate-based program called CMHC Investment Program, but failed to disclose that CMHC was not earning sufficient profits from the buying, rehabilitating, renting, and sale of properties to make payments to investors.
Russell Erxleben of Dripping Springs was sentenced to seven and one-half years in prison on Feb. 24 in U.S. District Court in Austin. Erxleben pleaded guilty Dec. 18, 2013, to wire fraud and money laundering charges. According to a federal indictment, he raised more than $2 million from investors selling investments in German Government Gold Bearer Bonds from the 1920s and interests in an investment pool that would be used to acquire a painting by Paul Gauguin. In 1999, Erxleben was convicted of a $35 million foreign currency trading fraud and served five years in federal prison.
Leland Alan Dykes of Houston was sentenced to 15 years in state prison Feb. 24 for the fraudulent sale of nearly $1 million in “secured debt obligations.” Dykes, a former registered securities agent, pleaded guilty last year in Harris County State District Court to one count of misapplication of fiduciary property. Dykes falsely claimed the notes he sold were secure because they were backed by international insurers.
The indictment of Steven Patrick Jones and John Patrick Acord, executives at Intermodal Wealth Inc., was unsealed Feb. 27 in U.S. District Court in Houston. Jones and Acord (who also used the name “John Delano”) were charged with multiple counts of wire and mail fraud and one count of securities fraud. The indictment alleges the two men collected at least $5.5 million from investors in a fraudulent scheme involving investments in intermodal shipping containers.
David Kevin Lewis, the chairman of Richardson-based oil and gas company Always Consulting Inc. (ACI), was sentenced to 30 years in federal prison on Jan. 24 and ordered to pay $2.5 million in restitution. A U.S. District Court jury in Dallas in September 2013 convicted Lewis on one count of conspiracy to commit securities fraud and 23 counts of securities fraud. Lewis had a history of regulatory sanctions and in 2000 was convicted of federal fraud charges in a case involving oil and gas offerings. Lewis did not disclose those facts or that ACI did not have the funds for drilling.
Eddie Lacy Stivers III was sentenced to 85 years in state prison on Jan. 31 for engaging in the fraudulent sale of stock and promissory notes, with some sales to investors coming after Stivers was indicted by a Hood County grand jury on charges of first-degree securities fraud, first-degree theft, and second-degree securities fraud. Stivers sold investment contracts through a company called Life Style Protectors and Advisors LLC. The contracts supposedly would have given investors shares in two other companies. Stivers did not disclose his indictment to investors, according to an Affidavit for Evidentiary Search Warrant issued in Tarrant County.
William Paul Hudson of Plano was convicted of theft and sentenced to 10 years in state prison on Jan. 31 in Collin County State District Court. Hudson also received a sentence of 10 years, probated, on charges of securities fraud and money laundering and was ordered to pay restitution. Hudson stole approximately $600,000 from at least 50 investors in multiple oil and gas projects in Jackson, Gonzales, and Jim Wells counties. Hudson directed only a small fraction of investor funds to oil and gas programs, instead spending the majority of the money on personal expenses.