The Securities and Exchange Commission filed charges against Texas resident James VanBlaricum and six others for running an oil and gas Ponzi scheme.
The SEC’s complaint alleges that VanBlaricum was the driving force behind the scheme – and a company called Texas Energy Mutual, LLC (formerly known as Texas Energy Management). Because he was a securities fraud recidivist with a history of running deceptive schemes, the complaint also alleges that VanBlaricum convinced two other individuals – Rodney Pope and Chet Inglis – to serve as the face of the company. Together, they enlisted more people - including Robert Gilliam, Matthew Leaverton, William Hill, and Erik Rhodes – to solicit investors. The complaint alleges that the defendants raised more than $10 million by guaranteeing investment returns and promising investors that their funds would be used to drill oil wells.
Instead, the defendants used investor money for a variety of personal expenditures. VanBlaricum used investor funds to pay for an online dating website for Russian brides, vacations, international travel, automobiles, and startup costs for his son’s unrelated business. Similarly, Pope used investor funds to pay for his son’s wedding.
According to the complaint, VanBlaricum created a “special needs” program to keep dissatisfied investors from discovering the fraudulent conduct. The defendants allegedly lulled investors with cash Ponzi payments that purported to be a return on their investment or rolled over investors from a failed drilling program to a newer one.
In addition to the SEC action, VanBlaricum, Pope, Inglis, Leaverton, and Gilliam were charged in a parallel criminal case by federal authorities and have each pleaded guilty and were sentenced to prison terms ranging from 30-84 months, and ordered to pay between $1.8 million and $32 million in restitution.
Former Equifax Manager Charged With Insider Trading
The SEC charged a former Equifax manager with insider trading in advance of the company’s September 2017 announcement of a massive data breach that exposed Social Security numbers and other personal information of approximately 148 million U.S. customers.
This is the second case the SEC has filed arising from the Equifax data breach. In March, the former chief information officer of Equifax’s U.S. business unit was charged with insider trading.
In a complaint filed in federal court in Atlanta today, the SEC charged that Equifax software engineering manager Sudhakar Reddy Bonthu traded on confidential information he received while creating a website for consumers impacted by a data breach.
According to the complaint, Bonthu was told the work was being done for an unnamed potential client, but based on information he received, he concluded that Equifax itself was the victim of the breach.
The SEC alleges that Bonthu violated company policy when he traded on the non-public information by purchasing Equifax put options. Less than a week later, after Equifax publicly announced the data breach and its stock declined nearly 14%, Bonthu sold the put options and netted more than $75,000, a return of more than 3,500% on his initial investment.
Bonthu was terminated from Equifax in March after refusing to cooperate with an internal investigation into whether he had violated the company’s insider trading policy.
To settle the SEC’s civil charges, Bonthu has agreed to a permanent injunction and to return his allegedly ill-gotten gains plus interest. The settlement is subject to court approval.
In a parallel proceeding, the U.S. Attorney’s Office for the Northern District of Georgia filed criminal charges against Bonthu.
SEC Charges Credit Ratings Analyst with Insider Trading
The Securities and Exchange Commission charged a credit ratings agency employee with tipping two friends about The Sherwin-Williams Co.’s confidential plans to acquire The Valspar Corp., which he learned of through his work.