U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22891 / December 16, 2013
Securities and Exchange Commission v. Arcturus Corporation, et al., Civil Action No. Civ. Action No. 3:13-cv-04861-K (N.D. Tex., Dallas Division, filed December 12, 2013)
SEC Charges Texas Oil and Gas Promoters for Securities Fraud
On December 12, 2013, the Securities and Exchange Commission charged Leon Ali Parvizian and his two companies, Arcturus Corporation and Aschere Energy LLC, with the fraudulent offer and sale of securities in the form of interests in oil and gas joint ventures. The Commission also charged promoters Alfredo Gonzalez, AMG Energy, LLC , Robert Balunas, and R. Thomas & Co., LLC with violations of the securities offering and broker-dealer registration provisions of the federal securities laws.
Filed in the United States District Court for the Northern District of Texas, the Commission's complaint alleges that the Parvizian, through Arcturus and Aschere, raised nearly $22 million from at least 380 investors between 2007 and December 2011.The complaint alleges that Parvizian prepared and disseminated to prospective investors offering materials that included material misrepresentations and omissions regarding, among other things, material litigation involving Arcturus and Aschere. According to the complaint, Parvizian, Arcturus and Aschere systematically, and without disclosure to investors, used the offering proceeds to pay the costs of defending and settling the litigation. The complaint further alleges that, among other things, Parvizian prematurely called for completion funds on at least two projects before he had finished drilling and testing the wells because he had already spent the offering proceeds for non-JV related expenses, including legal fees. According to the complaint, Parvizian, Arcturus, and Aschere spent only $7.9 million, or 36 percent, of the money raised to drill oil and gas wells.
The complaint also alleges that the defendants offered and sold the joint venture interests in unregistered securities offerings that were not exempt from the registration requirements of the federal securities laws. In addition, the complaint alleges that Parvizian, Gonzalez, AMG, Balunas, and R. Thomas & Co. acted as unregistered broker-dealers. According to the complaint, Parvizian, Gonzalez, Balunas, AMG Energy, and R. Thomas received transaction-based compensation in the form of sales commissions based upon a percentage of the amount of investor funds raised.
The complaint alleges that Parvizian, Arcturus, and Aschere violated Sections 5(a) and 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act")and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 thereunder and that Parvizian also violated Section 15(a) of the Exchange Act. Gonzalez, AMG, Balunas, and R. Thomas are charged with violating Section 5(a) and 5(c) of the Securities Act and with Section 15(a) of the Exchange Act. The Commission is seeking permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against each of the defendants.
The SEC's investigation was conducted by Ronda Blair, Ty Martinez, and Barbara Gunn of SEC's Fort Worth Regional Office. The SEC acknowledges the assistance of the Financial Industry Regulatory Authority and the Texas State Securities Board.