December 2011

Dennis Woods Bowden was convicted Dec. 21 on four counts of securities fraud and five counts of mail fraud for his role in the AmeriFirst companies of Dallas, which sold $50 million worth of fraudulent debt obligations to more than 500 investors. Bowden faces sentencing in U.S. District Court in Dallas in April. Bowden was the chief operations officer at AmeriFirst Funding and AmeriFirst Acceptance. The federal indictment of Bowden details how investors' money paid for an airplane, sports cars, a condominium, and real estate for used car lots, as Bowden was in that business as well. Stephanie Tourk, an enforcement attorney in the Dallas office of the State Securities Board, served as a Special Assistant U.S. Attorney in the prosecution, which was led by Assistant U.S. Attorney Alan Buie.

November

William Erik Byrne of Corpus Christi on Nov. 14 signed a Judicial Confession and Stipulation in the 117th state District Court in Nueces County, admitting he sold $389,000 in investment contracts and promissory notes without being registered to do so. Byrne acted as an unregistered adviser when he told the investments. He also failed disclose relevant facts to investors, including a 2005 Agreed Cease and Desist Order entered by the Texas Securities Commissioner. That order that required him to stop selling unregistered variable annuities and promissory notes. Byrne also failed to disclose a 2008 sanction and fine by the Texas Department of Insurance for engaging in the unauthorized business of insurance.

Michael Wallens Jr. of Plano was sentenced Nov. 9 to five years in federal prison for the sale of fraudulent promissory notes. Wallens last year pleaded guilty to count of securities fraud in U.S. District Court in Dallas, as did his father, Michael Wallens Sr. The Wallenses and another indicted defendant sold the fraudulent notes to approximately 180 investors through their company, W Financial Group (WFG). They falsely told investors that their money would be held in cash, government, or highly rated corporate bonds. The State Securities Board and federal authorities investigated the WFG case, which was prosecuted by the U.S. Attorney's Office in Dallas.

The U.S. Commodity Futures Trading Commission (CFTC) Brothers sued brothers Rodney Wagner and Roger Wagner of Grand Prairie for operating a fraudulent foreign exchange (forex) Ponzi scheme. The civil suit, filed Nov. 1 in U.S. District Court in Dallas, alleges the brothers raised $5.5 million from nearly 100 investors. The CFTC alleges the brothers provided customers of their company, GID Group Inc., with payout schedules that falsely promised returns of 200%. The case is the result of an investigation by the CFTC, the Texas State Securities Board, and the U.S. Attorney's Office for the Northern District of Texas.

Fred Howard was indicted Nov. 1 in U.S. District Court in Dallas for federal securities fraud. Howard, a Florida resident at the time of the alleged crime, sold partnership interests in Secured Capital Trust Ltd. of Florida. According to the indictment, Howard bought shares in the now-delisted Interfinancial Holdings Corp. on behalf of SCT without disclosing he owned millions of shares in the company and thus had a strong motive to boost the value of the stock. Howard also repeatedly bought Interfinancial shares at the direction of people in Dallas, who paid Howard kickbacks in the form of "rebates." Howard did not pass on the rebates to investors, the indictment states. An enforcement attorney at the State Securities Board is serving as a Special Assistant U.S. Attorney in case.

October

Richard M. Plato of Baytown was indicted Oct. 26 in U.S. District Court in Houston on charges of mail and wire fraud and securities fraud. Also charged were a business partner, Michael Derek Walker, and Tammy Renee Norris, described in the indictment as Plato's mistress. Plato, through his company, Momentum Production Corp., allegedly raised more than $5 million from investors who were not told the company was $1 million in debt when it started issuing the notes. According to the indictment, Plato diverted investors' money to pay personal expenses for himself and his family. Plato also failed to tell investors of his previous criminal convictions, all on federal fraud-related charges, and the $30 million in restitution he owes as a result of those convictions. The State Securities Board is working with the U.S. Postal Inspector's office and the Office of the U.S. Attorney for the Southern District, which is prosecuting the Momentum defendants.

William Paul Hudson of Plano was indicted Oct. 13 on charges of engaging in organized criminal activity, money laundering, theft, and securities fraud in connection with the proposed development of oil and gas wells in Gonzales County, east of San Antonio. The indictment was issued by a Collin County grand jury. Hudson and an associate, Theodore Koenen, who was indicted for theft, allegedly raised more than $500,000 from investors to re-enter previously drilled wells in Gonzales County. Hudson allegedly spent investors' money on personal expenses. He also failed to disclose his legal history to investors, which includes two sanctions by state securities regulators and three bankruptcy filings.

September

John F. Langford of Amarillo was sentenced to 15 years in state prison after pleading guilty in August to 15 counts of securities fraud and related charges. Langford was indicted in 2009 for selling fraudulent and unregistered products such as "private annuities" and promissory notes. Langford, a former insurance agent, stole nearly $7 million from dozens of investors. Many of his victims are elderly. Langford was sentenced on Sept. 12 in the 181st state District Court in Potter County to seven 15-year terms for the fraudulent sale of securities and eight 10-year terms for selling unregistered securities and selling without being registered. The sentences will run concurrently.

Carl Tinsley Ratner of Trophy Club, northwest of Dallas, was sentenced to 10 years in state prison on Sept. 28 after he pleaded guilty to charges stemming from his sale of fraudulent oil and gas interests. Ratner was one of five men indicted for their participation in Mack Diamond Energy LLC, a company in Wolfe City that raised approximately $2.6 million from defrauded investors. Ratner pleaded guilty to securities fraud, selling unregistered securities, acting as an unregistered dealer or agent, and engaging in organized criminal activity. Judge Stephen R. Tittle Jr. of the 196th District Court in Hunt County sentenced Ratner to 10 years for each count, with the sentences to run concurrently.

August

Donald Joseph Dean of Tyler pleaded guilty to selling unregistered securities on Aug. 3 and was placed on two years deferred adjudication. Dean also paid $90,000 to an investor in Mack Diamond Energy, a fraudulent energy company in Wolfe City. Dean was one of five men indicted for their role in the company. The scheme, which raised $2.6 million from about 40 investors, involved the misuse of investor funds and lying to investors about Mack Diamond's earlier failed drilling projects.

July

William Anthony "Tony" Rand and two of his sons – Gregory K. Rand and William N. Rand – were sentenced on July 27 to federal prison terms for defrauding investors in an oil and gas scheme. In U.S. District Court in Dallas, Tony Rand was sentenced to 5 years, 5 months; Gregory Rand and William Rand were sentenced to 18 years and 14 years, respectively. The three men were principals in Dallas-based Aspen Exploration Inc., which sold interests in fraudulent oil-and-gas programs to investors across the United States. The three men were also ordered to pay $99.7 million in restitution to investors. The State Securities Board in 2009 entered an Emergency Cease and Desist Order against Aspen, three members of the Rand family and another Aspen principal Petersen for engaging in fraud, failing to disclose previous lawsuits and court judgments, and making misleading statements to deceive the public.

John F. Langford of Amarillo on July 26 pleaded guilty to 15 counts of securities fraud and other charges and admitted his fraud cost investors more than $5 million. Langford was indicted in 2009 for selling fraudulent and unregistered products such as "private annuities" and promissory notes. Many of his victims are elderly. Langford faces up to 99 years in prison at sentencing, which is scheduled for Sept. 12 in Potter County state district court.

Ramiro Lugo Amaya of Corpus Christi was sentenced to 10 years in state prison for selling unregistered securities but received a suspended sentenced and was placed on 10 years' probation and ordered to pay $157,345 in restitution. The Order of Deferred Adjudication was entered July 25. Amaya sold investments from National Life Settlements LLC, a Houston company that sold fraudulent promissory notes. The notes were purportedly backed by the proceeds from death benefits paid by insurance policies.

Michael Rouse of Wellington, Fla., was sentenced to 17 ½ years in federal prison on July 22 for his part in a fraud that raised at least $2 million for a phony real estate investment trust. Rouse co-founded Golden Gate Real Estate Investment Trust and promised investors safe returns of about 15% a year. Instead of real estate, he used investors' money to make failed foreign currency trades. He was convicted in April on federal fraud and money laundering charges, but he failed to show for sentencing. Rouse was also ordered to pay $1.97 million to the 62 victims of his crime.

Five executives and salesmen who worked for A&O Resource Management Ltd., a Houston-based life settlement company, were sentenced to federal prison terms on July 22. A&O stole at least $100 million from approximately 800 investors, many of them elderly. Investors thought they were buying life-settlement investments, whose returns are tied to the payout from life insurance policies' death benefits. Sentenced in U.S. District Court in Richmond, Va., were Russell E. Mackert, general counsel for A&O (15 ½ years); Brent Oncale, former owner and founder of A&O (10 years); David White, the former president of A&O (5 years); Eric M. Kurz, a wholesaler of A&O investment products (5 years); and Tomme Bromseth, an A&O sales agent (3 years). The prosecution was the result of a joint investigation by the Texas State Securities Board, other state agencies in Texas and Virginia, and federal authorities.

June

Robbie Dale Walker of Dripping Springs was arrested June 29 on a charge of theft following an investigation by the Hays County Sheriff's Office, the Texas State Securities Board and the Secret Service. Walker allegedly promised a 93-year-old Hays County woman that she would earn 15% annual returns if she invested in an oil-and-gas project in North Dakota. Walker is the son of the alleged victim's best friend, according to an affidavit for search warrant from the Hays County Sheriff's Office. In 2009, Walker allegedly convinced the victim to invest $100,000 on two separate occasions.

William June Fletcher Jr. of Plano was sentenced to 25 years in state prison on June 20 for stealing money from investors in his oil and gas scheme. The sentence in Collin County state district court resulted from Fletcher's convictions on charges of theft and securities fraud. Fletcher raised nearly $600,000 from investors before being indicted, but he used much of that money to pay expenses unrelated to the oil and gas business. He also failed to tell his investors that he pleaded guilty to securities fraud in 2006 in connection the sale of oil and gas interests. He received a suspended sentence and was ordered to pay nearly $250,000 in restitution.

Karen P. Bowie of Dallas was indicted June 9 in Collin County for her alleged role in the fraud perpetrated by Titan Wealth Management LLC of Plano. Titan Wealth principal Thomas Lester Irby II is serving a 24-year state prison sentence after being convicted of money laundering. Irby's fraud involved the sale of fictitious high-yielding "European Mid-Term Notes," supposedly issued by European banks. According to the indictment, Bowie unlawfully appropriated at least $4.7 million from investors in Titan Wealth.

Kevin Dennis Hays of Euless on June 8 pleaded guilty to selling unregistered securities in connection with an investment scheme perpetrated by Mack Diamond Energy LLC of Hunt County. The 196th state District Court in Hunt County placed Hays on community supervision for one year and deferred adjudication of his guilt. Hays cooperated with prosecutors and provided testimony against his nephew, Chad Michael Hays, who was sentenced to 25 years in state prison in April for his role in the Mack Diamond fraud. Kevin Hays paid full restitution of $9,000 to the one person to whom he sold an investment. The case was prosecuted by Dale Barron and Travis Iles, attorneys in the enforcement division of the State Securities Board.

May

Reginald Lee Clark of Woodway was sentenced to 25 years in state prison on May 26 after a Limestone County jury convicted him on a charge of theft. Clark stole more than $400,000 from clients of his business, Clark Investment Advisors, which operated in Limestone County and surrounding areas. Clark was not registered to sell securities in Texas. He stole amounts ranging from $15,000 to $152,000 from his clients. In some instances Clark convicted clients to withdraw funds from legitimate investments and invest the money with Clark Investment Advisors. Clark provided false statements to clients with fictitious returns.

Ray M. White was sentenced to 10 years in federal prison on May 24 and ordered to pay $9.4 million in restitution. White, a North Texas resident, had pleaded guilty to one count of commodities fraud in U.S. District Court for the Northern District of Texas. According to the Stipulated Facts in the case, White, working through CRW Management LP in Mansfield, defrauded investors by lying about the trading of foreign currency contracts. White lost money trading forex contracts and provided false return statements to investors. He also misappropriated investor funds or used the money to pay other investors as part of a Ponzi scheme.

April 2011

Chad Michael Hays was sentenced to 25 years in state prison on April 25 after being convicted on one count of securities fraud, eight counts of the sale of unregistered securities, and eight counts of sale of securities by an unregistered dealer or agent. Hays was convicted in the 196th District Court of Hunt County for his sale of interests in oil and gas joint ventures offered by Mack Diamond Energy LLC, a company in Wolfe City. Hays was one of five North Texas men indicted for their role in Mack Diamond Energy, which raised $2.6 million from about 40 investors. Hays was part of a scheme to lie to investors about Mack Diamond's earlier failed drilling projects. Hays also failed to tell investors that money raised for a previous drilling project was diverted to other uses.

Patricia Ann Noble on April 7 pleaded guilty to securities fraud for lying about the purchase of stock and stock options for investors in her firm, Noble Funds Asset Management of Denton. The 362nd state District Court in Denton County deferred adjudication of guilt and ordered Noble to repay $522,491 to her victims, serve 30 days in the county jail, and perform 500 hours of community service. Noble engaged in fraud by misrepresenting that investors' funds, which she said would be used to buy stock and stock options, were instead used to pay unrelated expenses. Noble, who was indicted on May 6, 2010, was prosecuted by the Denton County District Attorney's Office after an investigation by the DA's office and the State Securities Board.

Richard M. Plato was indicted on April 6 by a U.S. District Court grand jury in Houston on seven counts of mail fraud and two counts of securities fraud. Plato, the owner of Momentum Production Corp. of Baytown, allegedly took in more than $5 million from investors in promissory notes that were supposedly backed by oil and gas interests. According to the indictment, Plato transferred investors' money to his personal accounts to benefit himself and others. He also failed to tell investors about his prior criminal convictions, the restitution he owed from those convictions, and his disbarment from practicing law.

March 2011

Ronnie Gene Nichols Jr. pleaded guilty March 4 to a charge of theft for stealing money from investors who thought they were investing in a biodiesel plant in Hunt County. A Collin County state district judge sentenced Nichols to eight years in state prison. Nichols and other individuals associated with Greenway Energy Partners LLC, the alleged developer of the plant, falsely told investors their money was protected by an insurance policy and that their investment would earn a return of 33% a year over five years. The Texas Department of Insurance in 2009 denied Nichols' application for a license to sell insurance, saying he "engaged in fraudulent or dishonest acts or practices."

A Collin County grand jury on March 31 indicted Thomas Earl Grimshaw and Robert Joseph Mangiafico on charges of theft, money laundering, and engaging in organized criminal activity. Grimshaw, of Frisco, and Mangiafico, who is currently detained in the Collin County jail, did business as Security Financial Services LLC. The company, which was based in Frisco, allegedly sold annuities. The Texas Department of Insurance cancelled Grimshaw's license to sell insurance in 2009, finding that he engaged in fraudulent or dishonest practices and misappropriated money belonging to an insured or insurer.

Kenneth Paul Lawrence of Rowlett was indicted March 31 for his role in the alleged sale of interests in a Hunt County biodiesel plant. A Collin County grand jury indicted Lawrence for securities fraud, money laundering, theft, and engaging in organized criminal activity for his role in Greenway Energy Partners LLC. The indictment alleges that Lawrence falsely told investors that their money would be used to build the plant when in fact investor funds were used for Lawrence's personal expenses; that their investment was protected by an insurance policy; and that their investment would earn a return of 33% a year over five years. According to the indictment, Lawrence failed to disclose a 2004 Bankruptcy Court filing by him and his wife and a 2009 judgment against him in U.S. District Court in Arkansas. Lawrence also filed to disclose a 2003 Agreed Cease and Desist Order with the Texas State Securities Board.

Christian M. Allmendinger, the co-founder of Houston-based A&O Life Funds, was convicted March 24 by a U.S. District Court jury in Richmond, Va., on mail fraud, money laundering and securities fraud charges. Allmendinger was among several Houston-area residents indicted in September 2010 for an investment scam based on the death benefits from life insurance policies. Prosecutors alleged that Allmendinger and others involved in A&O stole approximately $100 million from at least 800 investors in 37 states and Canada. The indictment was the result of an investigation by the FBI, Texas State Securities Board, U.S. Postal Inspection Service, the IRS, and Virginia state authorities. Texas state regulators began investigating A&O because the company appeared to be selling unregistered securities. Allmendinger is scheduled to be sentenced Aug. 12.

Jack Russell Gilvin of Amarillo pleaded guilty March 30 to one charge of selling unregistered securities in connection with interests in oil and gas projects in Ohio. The case was brought by the Potter County District Attorney's Office, based on an investigation by the State Securities Board. Even before his recent plea in Potter County state district court, Gilvin was on probation, having pleaded guilty in 2007 to charges of aggravated assault and burglary of a habitation. In addition to pleading guilty to the unregistered securities charge, Gilvin acknowledged violating the terms of his probation. Gilvin was sentenced to nine years for violating his probation and sentenced to two years on the securities charge; the sentences will run concurrently. The State Securities Board previously entered an Emergency Cease and Desist Order against Gilvin and a separate company, JR Gilvin Investments LLC. The Order stems from an undrilled well on the same lease in Ohio. According to the Order, Gilvin used investors' money for personal expenses, including the purchases of a 1996 Corvette and a 1969 Camaro.

February 2011

Chad D. Taylor and Douglas L. Williams pleaded guilty on Feb. 25 to state charges stemming from their role in selling interests in non-existent oil and gas wells. Williams, of Dover, Ark., pleaded guilty to money laundering in the 382nd District Court of Rockwall County and was sentenced to 10 years of probation, a fine of $5,000, and 30 days in jail as a condition of his probation. Taylor, of Rowlett, Texas, pleaded guilty in the same court to the sale of unregistered securities and was sentenced to 10 years of deferred adjudication, a fine of $5,000, and 120 hours of community service. Taylor and Williams sold interests in Black Lake Energy and Rockwall Oil and Gas, which defrauded investors by providing false statements about the viability of exploration projects and spent investors' money on expenses unrelated to drilling.

John J. Kim, a Maryland resident who was part of a Texas-based scam to sell supposedly high-yielding European notes, pleaded guilty Feb. 21 in Collin County state District Court to engaging in organized criminal activity. Kim was sentenced to 10 years in state prison. Kim was part of a scheme organized by Thomas Lester Irby, a Frisco money manager who convinced about 30 investors to put $3.1 million into fictitious "European Mid-Term Notes" issued by European banks. The notes supposedly paid short-term returns of between 10% and 50%. Most of the money from investors was diverted to pay Irby's personal expenses and to pay early investors in what turned out to be a Ponzi scheme. Irby was sentenced to 24 years in state prison on Dec. 20.

Kurt Barton, the former CEO of Austin-based Triton Financial, was indicted by a federal grand jury in Austin on Feb. 15 on 33 charges of securities fraud, wire fraud, money laundering, and false statements regarding loans. Barton faces a maximum of 30 years in prison. Barton created a series of "false, fictitious and fraudulent limited partnerships," according to the indictment. He raised more than $50 million from investors who thought they were putting money into real estate partnerships and other Triton investments. The indictment alleges that Barton consistently lied to investors about how their money was used. He also used investors' money to fund a lavish personal lifestyle and to prop up Triton investments that were failing, according to the indictment. The criminal case follows a joint investigation by the Securities and Exchange Commission and the State Securities Board, which started in 2009. The Securities Commissioner revoked Barton's registration in 2010.

A U.S. District Court grand jury in San Antonio on Feb. 2 indicted Richard Morin on six counts of wire fraud related to a real estate investment scheme. The indicted was unsealed on March 8. According to the indictment, Morin solicited investor funds for businesses that would purchase and repair distressed houses. Morin promised investors they would receive their invested principal, plus additional income, in less than four months. Morin didn't have the ability to repay investors, the indictment states, and he spent investors' money on his own personal expenses and to pay mortgage interest on properties unrelated to his purported real estate repair business. The State Securities Board investigated the case with the FBI.

January 2011

Travis County state District Judge Stephen Yelenosky on Jan. 7 approved a Temporary Restraining Order against Warr Investment Group LLC and Warr International Group LLC, Austin-based firms that allegedly sold illegal investments in violation of a Cease and Desist Order issued by the State Securities Board. A lawsuit filed by the State Securities Board and the Texas Attorney General's Office alleges that the Warr companies and CEO James Elton "Jim" Warr defrauded the public through illegal and deceptive sales of securities in real estate investment programs. The defendants claimed investors would receive a guaranteed 8% annual return and that the real estate investments are safe and secure. The suit alleges the defendants misused and misapplied investor funds to pay commissions to unregistered sales agents and to pay for a 2008 Mercedes Benz and other items unrelated to the investment program.

Four principals of Aspen Exploration Inc., the Dallas-based company that sold interests in fraudulent oil-and-gas programs to investors across the United States, pleaded guilty Jan. 26 in U.S. District Court in Dallas. William Anthony "Tony" Rand of Plano and two of his sons, Gregory Keith "Greg" Rand and William Nicholas "Bill" Rand, both of Dallas, pleaded guilty before U.S. District Judge Jorge A. Solis. Co-defendant Joel William Petersen of Frisco also entered his guilty plea. The sentencing hearing for the four men is scheduled for April 20. The defendants, who were indicted in 2009, attempted to raise $68 million from more than 330 investors. Greg Rand pleaded guilty to one court of conspiracy to commit mail fraud and securities fraud. Bill Rand pleaded guilty to three counts of securities fraud. Tony Rand and Joel Petersen each pleaded guilty to one count of conspiracy to commit mail fraud and securities fraud and one count of securities fraud.

Samuel Longoria of Mercedes, convicted of the sale of unregistered securities and the sale of securities without a license, was sentenced Jan. 19 to a probated 10-year state prison sentence and ordered to pay $1.5 million in restitution within a year. The sentence, handed down in the 445th state District Court of Cameron County, also requires Longoria to perform 300 hours of community service. Longoria was indicted in 2008 on securities fraud and theft charges stemming from his role in the sale of fraudulent investments that were purportedly tied to a federal grant program. Longoria promised Rio Grande Valley residents who were interested in starting small businesses that he could help them obtain federal economic development program loans.

Alan Keith Nelsen and Mary Alice Monteza of San Antonio were arrested the week of Jan. 24 on a felony theft charge in connection with an alleged "prime bank" scheme. According to an arrest warrant affidavit filed by the Bexar County Sheriff's office, Nelsen and Monteza signed a contract with a San Antonio woman that promised to increase her $30,000 investment by 25% a week for 40 consecutive weeks. The potential investor was part of a sting operation by the FBI, the Texas State Securities Board, and Bexar County authorities. The pair was also indicted in 2009 and again in 2010 for securities fraud and theft in alleged prime bank fraud – scams that promise to deliver high returns from non-existent investments in offshore or foreign banks. The indictments followed a Cease and Desist Order by the Texas State Securities Board in 2007 in which Nelsen and Monteza agreed to stop engaging in fraud in connection with the sale of unregistered securities.

Wayne Anthony Rand, who orchestrated an extensive oil-and-gas scam, was sentenced to 20 years in state prison on Jan. 24 after pleading guilty to a felony charge of theft. Rand was sentenced in Rockwall County state district court. Rand raised approximately $8 million from dozens of investors who thought they were putting money into energy exploration projects run by Rand's company, Rock Wall Oil Co., also known as Black Lake Energy Inc. Rock Wall Oil Co. failed to drill nine of the 13 wells Rand touted to investors, according to court documents. Rand or his wife used investors' money to make payments on their residence, to acquire property, and to buy luxury boats and automobiles, guns, and jewelry, among other personal expenditures.

A Harris County grand jury on Jan. 5 indicted Howard Judah and Gregory Jablonski on charges of securities fraud and sale of unregistered securities. Judah, a three-time federally convicted felon, was the former CEO of National Life Settlements LLC of Houston, and Jablonski was a principal in the company. National Life Settlements sold about $30 million in investments that were purportedly tied to the payout from life insurance policies the company acquired. The indictments stem from an undercover investigation by the State Securities Board into NLS' claims that it would pay investors a no-risk return of 10% a year. That investigation led to a civil suit against NLS by the State Securities Board and Texas Attorney General's Office and the court-ordered appointment of a receiver to oversee the company. In December 2009 investors received $19.8 million, or 69% of their money back as a result of the lawsuit and receivership.