Recidivist Ran $11 Million Ponzi, SEC Says

      LOS ANGELES (CN) – A recidivist securities crook led a four-man wrecking crew who took $11 million from hundreds of people in a boiler room Ponzi scheme, the SEC says. Jerry Aubrey used some of the money he stole to pay for his criminal defense in a previous scam for which he is serving 5 years in a Florida prison, the SEC says.



     Jerry L. Aubrey, of Moreno Valley, his brother and cohorts pushed the fraud as oil and gas investments in Progressive Energy Partners, the SEC says.
     The SEC sued Jerry and Tim Aubrey, Brian Cherry and Aaron Glasser in Federal Court. Jerry Aubrey was the principal of Progressive Energy Partners LLC, or PEP, which is not named as a defendant.
     The SEC says the Aubreys swiped more than $3.2 million and blew it on high living.
     “Both Jerry and Tim Aubrey misappropriated investor funds for their personal use to pay for, among other things, box seats at Lakers basketball games, trips to Hawaii and Las Vegas, and personal attorney’s fees, as well as taking direct distributions by cash or check,” according to the 20-page complaint.
     The complaint states: “According to Tim Aubrey, Jerry Aubrey used investor funds to do ‘all kinds of things … limo rides … to [Staples Center] for Lakers game[s] … Vegas … strip clubs and just being a high roller.’ Jerry and Tim Aubrey spent investor 19 funds on such items as:
     “” Rent for the Aubrey family’s lavish house in Orange County, California. The Aubreys paid as much as $7,100 per month for a three story, approximately 4,000 square foot house, equipped with large screen televisions, a pool table, giant fish aquariums with exotic fish, a hot tub, a pool, and a tennis court.
     “” Personal attorney’s fees, including fees for the defense of Jerry Aubrey’s criminal securities fraud case in Florida.
     “” Box seats at Lakers basketball games and limousine rides to Lakers games.
     “” Family vacations, which included two trips to Maui, Hawaii.
     “” Vacations for Jerry Aubrey, Tim Aubrey, PEP salespeople, and administrative staff, which included trips to Las Vegas, Palm Springs, and Big Bear.
     “” A Lexus car and jewelry for Jerry Aubrey’s girlfriend.
     “” Trucks, cars, and Harley Davidson motorcycles.
     “” Expensive fish, including miniature sharks, and fish aquariums.” (Brackets and parentheses in complaint.)
     The SEC says the crew “fraudulently offered and sold” unregistered securities to victims “nationwide and in Canada.” The men “claimed the investors’ money would be used to develop and support oil and gas wells. In fact, the bulk of the money was used to line the defendants’ pockets, fund lavish lifestyles, and make Ponzi-like payments intended to perpetuate the fraud,” according to the complaint.
     Jerry Aubrey is serving a 5-year prison sentence for running a fraudulent body-scan imaging business in Florida. When he gets out, he faces 25 years probation and an order to pay $5,796,923 million in restitution, the SEC says. He hasn’t paid Dime One in restitution, the agency adds.
     Jerry Aubrey has been under the SEC’s radar since the late 1990s, when he was ordered to pay a $5,500 civil penalty in an offering fraud in which he sold interests in a nonexistent cruise ship.
     “Many state securities agencies have obtained cease-and-desist orders against Jerry Aubrey for his involvement with PEP and other companies,” the SEC says.
     The SEC says Tim Aubrey “played a key role in orchestrating PEP’s fraud,” as a manager and salesman, and that Cherry and Glasser – who was criminally charged with check forgery and sale of a controlled substance – worked as cold callers.
     According to the complaint: “Defendants misrepresented that investors could expect a greater than 50 percent annual return on investment, failed to disclose that investor funds would be used to pay up to 35 percent sales commissions, and falsely represented that PEP used a CPA firm assist with investor distributions.”
     The SEC says only 8 percent of the $11 million, or roughly $887,000, was actually invested in oil and gas wells.
     “During the almost five years PEP was in operation, PEP only had $169,439 in total revenue, and PEP had no profits,” the complaint states.
     Jerry Aubrey used $2 million to make Ponzi payments, the SEC claims, took $500,000 for himself, doled out $2.7 million to himself, his brother, and – how nice – to their mother and to another Aubrey company.
     “A portion of the $2.7 million in cash and checks were alleged salary and sales commissions paid to Jerry and Tim Aubrey, even though PEP’s legitimate business activities were virtually nonexistent,” the SEC says.
     The SEC seeks disgorgement, restitution and penalties.
     SEC attorney Jennifer Purpero declined to comment. Tim Aubrey’s attorney, Robert Chandler, did not immediately respond to a request for comment.

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