Securities Recidivist Took $22 Million, SEC Says
DALLAS (CN) - A Brit last seen in Texas headed a ring that ripped off hundreds of investors for $22 million in a cold-call boiler room operation, the SEC claims in court.
Leon Ali "Alex" Parvizian, 47, "through entities he controls and salespersons he directs, convinced at least 380 investors in 32 states to invest over $22 million, luring them with the incentive of suggested returns on investment to be achieved through his claimed expertise in managing oil and gas well enterprises," the lawsuit states.
Parvizian's "entities" were defendants Arcturus Corp., and Aschere Energy LLC.
Also sued are his alleged henchmen Alfredo Gonzalez, 39, a Chilean citizen who lives in Dallas; his company AMG Energy LLC, which shared an office with Parvizian; Robert J. Balunas, 66, of Port St. Lucie, Fla., and his company, R. Thomas & Co. LLC.
Parvizian paid Gonzales and Balunas 12 percent "finder's fees" of all the money they raked in selling the so-called "joint ventures," which the SEC says are securities.
This is not Parvizian's first rodeo. His company Amerest Securities closed in June 2010 "amid regulatory troubles," and that year he agreed to be barred from the securities industry for 5 years - a demand from the Texas State Securities Board - and to a permanent bar from association with any member of the Financial Industry Regulatory Authority.
Parvizian et al. raked in $22 million by selling interests in six so-called drilling projects, none of them registered with the SEC. His telemarketers made 200 to 300 cold calls a day, the SEC says in the 32-page complaint.
"Parvizian marked up the estimated well costs by 33 to 78 percent to determine the total offering amount," the SEC says. "This markup shifted the entire cost to drill and complete the wells, and all of the risk, to the investor and gave Parvizian a potential $8.7 million profit on just four projects, even if the wells were dry holes."
He spent just 36 percent of the money - $7.6 million - on leases and drilling, the SEC claims. He spent $4.1 million of it on sales commissions and promotions, $1.4 million on legal and accounting expenses, $608,000 on meals, entertainment, cars, and stuff, and gave himself more than $720,000, according to the lawsuit.
"Parvizian's misapplication of funds is material to investors because, among other reasons, it has been so extensive that Arcturus and Aschere have not had sufficient funds to complete the various states of oil and gas drilling work contemplated in the offering materials," the complaint states.
The SEC seeks disgorgement, injunctions and penalties.