AUSTIN, Texas (CN) - The SEC froze the assets of a Texas company it accuses of running an $18 million Ponzi scheme in "supposed purchases" of oil and gas royalties.
The SEC claims in Federal Court that lead defendants Robert A. Helms and Janniece S. Kaelin promised they would invest the $18 million they, but spent "the vast majority" of it on Ponzi payments and themselves and their many defendant businesses.
"Helms and Kaelin [both of Austin] pretended to be in the oil and gas business when they were really in the business of fattening their own wallets," the SEC's Fort Worth Region director David Woodcock said in a statement.
"They lied to investors about the use of offering proceeds, spent investor funds on personal expenses, and made Ponzi payments to give investors the false impression that they were earning returns in a profitable venture."
The 16-page federal lawsuit also charges Deven Sellers of Arvada, Colo., and Roland Barrera of Costa Mesa, Calif., with illegally selling investments for Helms and Kaelin without being registered with the SEC, and with lying about their sales commissions and referral fees.
"In the course of the scheme, Helms and Kaelin misrepresented and omitted to
disclose material facts to investors," the SEC said in the lawsuit. "They grossly understated bank-loan payments made with offering proceeds. They concealed Vendetta Partners' imminent bank-loan default. And they represented that there were no material legal proceedings pending against them or Vendetta Partners when, in fact, they and Vendetta Partners were defendants in a civil case alleging they defrauded the plaintiff of $1.2 million, and were subject to other legal proceedings.
"In addition, Helms and Kaelin paid combined commissions totaling $423,500 to defendants David Sellers and Roland Barrera, who sold Vendetta Partnership securities to an investor for $3,050,000. Sellers and Barrera falsely represented to the investor that they would receive only 'small' commissions in keeping with Vendetta Partners offering documents stating that promotional expenses would not exceed $50,000when their actual commission was nearly 14% of the purchase price.
"After Vendetta Partners, Helms and Kaelin launched two more fraudulent
offerings, Vesta Royalty Partners, LP ('Vesta Partners') in 2012 and Iron Rock Royalty Partners LP ('Iron Rock Partners') in 2013. For each of these limited partnerships, they control the general partner, Vesta Royalty Management, LLC ('Vesta Management') and Iron Rock Royalty Management, LLC ('Iron Rock Management'), respectively. In the Vesta Partners offering, they have touted potential investment returns ranging from 300% to 500% to be achieved in just five to seven years. In reality, their return projections are baseless."
All those companies are named as defendants.
In addition to freezing accounts, the SEC filed a restraining order and demands protection of documents, an accounting, expedited discovery, restitution and penalties.
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