Working out of a Costa Mesa “boiler room,” three men helped trick investors out of $11 million with the promise of sky-high returns on oil and gas wells, the FBI and federal prosecutors said Tuesday.
The three charged with mail and wire fraud in a federal indictment unsealed Tuesday were brothers Jerry and Timothy Aubrey and Aaron M. Glasser, who the FBI says worked for them as a salesman.
On Tuesday, Timothy Aubrey, 53, of Moreno Valley turned himself in to the FBI, while agents arrested Glasser, 30, of Mission Viejo. Jerry Aubrey, 51, was already in state prison in Florida for an unrelated investment fraud conviction.
Lawyers for the three men could not be reached Tuesday.
With his brother as a manager, Jerry Aubrey founded and ran Progressive Energy Partners LLC, according to a grand jury indictment filed under seal Sept. 4.
More than 200 investors put in $11 million between 2005 and 2009, according to a 2011 civil complaint by the Securities and Exchange Commission.
The new indictment says the companies invested less than 10 percent of the investor funds in oil or gas wells, spending much of the rest on payroll, sales commissions and personal expenses for the Aubrey brothers.
The SEC complaint said the Aubreys spent more than $3.2 million on themselves. They went to Lakers games and took trips to Hawaii, Las Vegas, Palm Springs and Big Bear, the SEC said, while other money was paid to the brothers as salary or commission.
Other expenses the SEC cited include a Lexus for Jerry Aubrey’s girlfriend, trucks, cars, motorcycles, miniature sharks and aquariums.
Some investors got money back, but only through a scheme in which money coming in from new investors was given to previous ones, the indictment says. The SEC’s 2011 complaint called the firm a Ponzi scheme.
The SEC said the Aubreys bought an automatic dialer, 196 phone lines and lists of numbers, which the company used to cold-call people across the country and in Canada. According to an old Better Business Bureau listing, Progressive Energy Partners’ office was in a suite at 2060 Placentia Ave. in Costa Mesa.
If people returned a recorded message, salesmen called them back and pushed the company’s “investments,” the SEC complaint says.
Timothy Aubrey and Glasser prepared “scripts” that promised returns of more than 50 percent, and salespeople working in the Costa Mesa office read them, according to the criminal indictment.
In reality, the company’s only oil and gas revenue from December 2007 to January 2010 — $169,439 — came from six wells leased in West Virginia, the SEC said. The civil complaint says Progressive Energy Partners paid investors more than $2 million in “Ponzi distributions,” either giving them back their original money or giving them money from newer investors.
In 2012, a federal judge entered final judgments in favor of the SEC in the civil case, ordering Timothy Aubrey to pay more than $910,000 and Glasser to pay more than $1.5 million.
Jerry Aubrey’s legal troubles date back more than 15 years. According to the SEC’s complaint, he was accused in 1998 of selling securities in a fictitious cruise ship and later ordered to pay a $5,500 penalty.
The charges that landed him in a Florida prison stemmed from his sale of interests in a body scan imaging business he ran from 2000 to 2003, according to the SEC, which said he was ordered to pay more than $5.7 million in restitution but had not paid any as of 2011.
Florida Department of Corrections records show Jerry Aubrey was sentenced in Volusia County in 2010 to serve five years for carrying out boiler room sales.
He’s scheduled to be released in January 2015.
By ERIC HARTLEY / ORANGE COUNTY REGISTER
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