Investment recruiter asks for new trial in alleged oil scam case

By John Sammon | May 19, 2017

HOUSTON – One of a group of businessmen the U.S. Securities and Exchange Commission (SEC) alleged sold fraudulent oil and gas investments to shareholders asked for a new court trial earlier this month, contending that his involvement in the case, recruiting investors, had ended before a summary court judgment determined that fraud had been committed.

Alfredo Gonzalez, president of AMG Energy Group based in Dallas, asked for a new trial in the fraud case, contending he had played no part in the forming of “joint ventures,” which a court determined instead were federally controlled securities. Gonzalez said the court’s decision erred in that it had been made after the recruiting of investors involving him had ended - described as “post-investment” activities.

Officials for the SEC contended that Leon Ali Parvizian and companies he controlled, Aschere Energy LLC in Addison, Texas, and Arcturus Corp located in Dallas, along with defendants Gonzalez and Robert J. Balunas of R. Thomas and Co. headquartered in Stuart, Florida, allegedly violated anti-fraud provisions of federal securities laws. The government alleged that beginning in May 2007, the defendants marketed to the general public through “boiler-room” cold-calling techniques over the telephone, investments in oil and gas drilling (exploration) activities.

Parvizian reportedly set up AMG Energy Group and installed Gonzalez as its president.     

According to the government report, 380 investors in 32 states were induced to invest $22 million with the incentive of an attractive return on the investments. The government further alleged that the defendants attempted to disguise the investments as “joint ventures” for the purpose of evading federal securities laws.

Gonzalez and Balunas allegedly marketed and sold the investments through unregistered sales entities. None of the offerings were registered with the SEC or exempt from registration, the report concluded. The report further stated that none of the defendants were registered as brokers with the SEC and alleged the defendants had misrepresented information given to potential investors and improperly used money raised from investors to pay for legal fees and business expenses unrelated to the drilling operations.

Parvizian argued that the investments were in fact “joint ventures” funded by partners rather than investors, and therefore not subject to SEC regulations. However, SEC attorneys countered the investments were actually securities in that investors had no control over the drilling projects, were not knowledgeable on such projects, and depended totally on Parvizian for information.

Ed Kinkeade, a federal judge for the Northern District of Texas, agreed.

Kinkeade last year ruled in favor of the SEC in a summary judgment against the defendants, ordering Gonzalez and AMG to pay $120,000 in civil penalties and Parvizian and his companies $15.5 million in civil penalties. In July, the defendants appealed but Kinkeade denied a motion to reconsider his earlier ruling.

Gonzales is represented by the law firm of Bracewell LLP based in Houston.

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