U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21520 / May 6, 2010
Securities and Exchange Commission v. Dennis Lee Keating II, United State District Court for the District of Utah, Civil Action No.2:10-cv-00419-DAK
SEC CHARGES CALIFORNIA-BASED SECURITIES PROFESSIONAL FOR DEFRAUDING INVESTORS IN SCRAP METAL INVESTMENT
The Securities and Exchange Commission today filed civil fraud charges against Dennis Lee Keating II, a former registered representative and part owner of San Diego-based Torrey Pines Securities, Inc., for making misrepresentations to investors in a $17.6 million unregistered private securities offering.
The SEC alleges that Keating, who lives in Highland, Utah, and previously resided in Temecula, Calif., swindled more than 100 investors by encouraging them to invest in his company, Corona, Calif.-based Paseo Partners LLC. Keating falsely promised investors exorbitant returns ranging from four to twelve times their investment. The complaint alleges that Keating agreed to use investor funds to purchase investment contracts involving scrap metal extracted from properties in Texas. Instead, he used the money to fund the purchase of a Texas paper mill by another Keating-affiliated company. Unbeknownst to the investors, Keating also allegedly committed the investors' funds to pay a third-party debt on the same paper mill.
The complaint, filed in the United States District Court for the District of Utah, further alleges that Keating misrepresented that he personally invested millions of dollars in Paseo. Keating also allegedly gave investors the false impression that Torrey Pines, a registered broker-dealer, was involved in the Paseo offering when, in fact, it was not. The complaint further alleges that until at least November 2008, Keating continued to deceive investors with false assurances that they would receive a return on their Paseo investments.
Keating agreed to settle this matter without admitting or denying the allegations in the complaint. Keating consented to a permanent injunction from further violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The disgorgement and civil penalty amounts will be determined by the court at a later time. Keating also consented to the entry of a Commission order that will permanently bar him from association with any broker, dealer, or investment adviser.
See Also: SEC Complaint