The Securities and Exchange Commission charged Kevin T. Carney, of Chagrin Falls, OH, Jonathan D. Freeze, of Pittsburgh, PA, and Robert J. Irey, of Pittsburgh, PA with defrauding investors and misappropriating investor funds in connection with a purported waste-to-energy business venture.

The SEC's complaint alleges that Carney, Freeze, and Irey sold more than $2 million in promissory notes and equity in their purported renewable energy company, Alternative Energy Holdings, LLC, to dozens of investors, some of whom were Freeze's brokerage customers prior to his being barred from the securities industry. According to the complaint, the majority of the notes, many of which also conferred equity, promised annual returns of 120% or higher, even though the company had no sources of revenue from which it could reasonably be expected to repay investors. The complaint alleges that, among other misrepresentations, Carney, Freeze, and Irey told investors that their money would be used to defray costs related to financing a waste-to-energy plant in South Carolina. However, according to the complaint, the defendants split the majority of investor funds among themselves and used them for personal expenses unrelated to the business, such as casino visits, vacations, and to pay a fine arising from Carney's prior criminal conviction.

The complaint charges Carney, Freeze, and Irey with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks disgorgement plus prejudgment interest and penalties, as well as permanent injunctions.

In a parallel action, the U.S. Attorney's Office for the Western District of Pennsylvania announced the filing of criminal charges against Carney, Freeze, and Irey.

The SEC's investigation was conducted by Brian P. Thomas, Jennifer F. Miller and Jacquelyn King in the SEC's Philadelphia Regional Office and supervised by Assunta Vivolo and Scott A. Thompson. The litigation will be led by Karen M. Klotz and supervised by Jennifer C. Barry. The SEC appreciates the cooperation of the U.S. Attorney's Office for the Western District of Pennsylvania, the Federal Bureau of Investigation, and the United States Postal Inspection Service.