U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19513 / December 22, 2005
Securities and Exchange Commission v. Allied Capital Management, Inc. and Shea Silva, Case No. CV05-8800-GPS (JTLX) (United States District Court for the Central District of California).
The Securities and Exchange Commission announced today that it filed a civil action in the United States District Court for the Central District of California against Shea Silva of Costa Mesa, California, and Allied Capital Management, Inc. ("Allied"), a California corporation under his control, for violations of the antifraud and registration provisions of the federal securities laws. On the Commission's application, the Court issued a Temporary Restraining Order; Order Freezing Assets, and Prohibiting the Destruction of Documents; and Order to Show Cause why a Preliminary Injunction Should Not Issue ("Order").
In its Complaint, the Commission alleges that from approximately November 2001 through the present, Silva, Allied, and two defunct entities known as Sunrise Energy, Inc. and Blue Marlin Energy, Inc., defrauded investors of over $5 million through the sale of unregistered securities. The securities were purportedly sold to invest in oil and gas operations. According to the Complaint, Silva, Allied, and others acting at their direction engaged in high pressure cold call campaigns and solicited investments from hundreds of individuals nationwide. However, the defendants misrepresented the nature of the investments, the risks involved in the investments, and the potential return on the investments. The Commission also alleges that Silva misappropriated a large portion of investor funds and acted as an unregistered broker-dealer.
The Complaint claims that, through these activities, Silva and Allied violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Among other things, the Court's Order prohibits the defendants, pending a hearing, from disposing of any assets and prohibits financial institutions holding the defendants' assets from allowing any withdrawals. The Order also requires that the defendants notify the Court of each account they hold with a financial or brokerage institution.