U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21000 / April 15, 2009
Securities and Exchange Commission v. Tri Energy, Inc., H & J Energy Company, Inc., Marina Investors Group, Inc., Lowell Decker, Robert Jennings, Henry Jones, Arthur Simburg, Mildred Stultz, DJM, LLC, Financial MD, Inc., Financial MD and Associates, Inc., Daniel J. Merriman, Global Village Records, and La Vie D'Argent, as defendants, and R.P.J. Investment Group, Inc., T.M.A. Investment Enterprises, Thomas Avery, and Wing NGA Lau, a/k/a Adrienne Lau, as relief defendants, Case No. ED CV 05-00351 AG(MANx) (C.D. California)
SEC Obtains a $51 Million Final Judgment Against Tri Energy, Inc. and Defendants Arthur Simburg and Robert Jennings for Their Role in a Massive Affinity Fraud And Ponzi Scheme
The Securities and Exchange Commission ("Commission") announced today that the Honorable Andrew Guilford, U.S. District Judge for the Central District of California, entered a Final Judgment on April 13, 2009, against defendants Tri Energy, Inc., H & J Energy Company, Inc., Robert Jennings, Arthur Simburg, and La Vie D'Argent (collectively the "Tri Energy Defendants"). In this settled action, the Court ordered the Tri Energy Defendants to pay $35 million in disgorgement and $2,048,466 in prejudgment interest, and ordered Simburg and Jennings to each pay a civil penalty of $7 million. $28,058,310 of the disgorgement is deemed satisfied by the criminal restitution ordered in a parallel criminal proceeding. In the criminal case, Simburg was sentenced on November 17, 2008, to nine years imprisonment after entering into a plea agreement. Jennings was convicted after a jury trial on July 11, 2008, and sentenced to twelve years imprisonment on November 17, 2008. Defendant Henry Jones was extradited from Hong Kong and convicted after a jury trial on July 11, 2008, and was sentenced to twenty years imprisonment on April 3, 2009. This $50 million Ponzi scheme and affinity fraud has a long history, numerous defendants, and has resulted in several court actions both civil and criminal.
The Commission's Amended Complaint, filed on August 10, 2006, alleged that the aforementioned defendants, and others, perpetrated a massive affinity fraud and Ponzi scheme involving a purported coal mine venture and a so-called international "gold deal." The Complaint alleged that defendants had been telling investors that these extraordinary profits were to be generated in part by helping an unnamed Saudi Arabian prince move gold from Israel through Luxembourg to the United Arab Emirates. In reality, according to the Complaint, although some money had been paid out to investors, those funds appeared to have come from new investor money, and substantial amounts of investor funds had been transferred to bank accounts controlled by some of the defendants and relief defendants. Defendants recruited potential victims through claims that their investments were aimed, at least in part, at raising money for humanitarian and religious efforts. The defendants promised their victims outlandish returns on their investments of 100-1000% in as little as 60 days. Over 500 investors lost more than $50 million in the scheme.
The Court previously on August 13, 2007, enjoined the Tri Energy Defendants from violations of the reporting and anti-fraud provisions of the securities laws (Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10-b-5 thereunder), and specifically enjoined them from soliciting investments of the type at issue in the Commission's lawsuit. The Commission obtained a default judgment against Jones and his companies Marina Investors Group, Inc. and Global Village Records on March 20, 2008, enjoining them from future violations of the same provisions identified above, as well ordering $22,291,725 in disgorgement, $2,073,922 in prejudgment interest, and a $7 million civil penalty. The Commission also obtained final judgments against relief defendant Thomas Avery and his company T.M.A. Investment Enterprises and relief defendant R.P.J. Investment Group, Inc. on April 9, 2008, ordering $70,000 in disgorgement plus $4,342.42 in prejudgment interest jointly and severally between Avery and his company, and ordering $7,364 in disgorgement against R.P.J.
See also LR-20239 (August 13, 2007) announcing settlements with the Tri Energy Defendants, Defendant Daniel J. Merriman and his companies DJM, LLC, Financial MD, Inc., and Financial MD and Associates, Defendant Mildred Stultz, and Relief Defendant Nga Wing Lau a/k/a Adrienne Lau; LR-19907 (November 14, 2006) announcing Contempt Order Against Defendant Henry Jones; and LR-19214 (May 3, 2005) announcing Temporary Restraining Order and Asset Freeze against the Tri Energy Defendants.