The Securities and Exchange Commission charged a Colorado man Thursday with raising $9.9 million from investors by touting 300% returns on fractional oil well investments, but then spending $2.3 million of that money to buy a custom speed boat, ski vacations and jewelry.
“Allen convinced investors to finance his projects without telling them about his actual uses of their funds or his dismal track record in failing to generate investor returns,” said George B. Curtis, Deputy Director of the SEC’s Division of Enforcement.
The defendant, Donald Allen, has agreed to disgorge $510,000 to 355 gullible investors many of whom invested based on cold calls.
Allen, whose projects had never provided return to investors, predicted annual returns of up to 354% from his two companies. The SEC says he failed to disclose the highly speculative nature of these projections.
While saying the investments would only be used to cover the costs of setting up specific oil-well sites, Allen used teh money to pay for a boat, jewelry, exercise equipment, and vacations.
The $510,000 disgorgement is an estimate of the amount in assets held by Allen and the two companies as a result of the fraud.
Allen and his two companies have neither denied nor admitted to the charges.