20 Aug 2014
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MoVal Man Accused in O.C. Telemarketing Investment Scheme

MoVal Man Accused in O.C. Telemarketing Investment Scheme
A Moreno Valley man and his brother were accused Tuesday of defrauding investors in Orange County by falsely claiming high returns from oil and gas wells and by failing to disclose high sales commissions on investments, according to the FBI.

Timothy Aubrey, 53, of Moreno Valley, surrendered to the FBI in Riverside, federal justice officials said in an announcement. His brother, Jerry Aubrey, 51, was already in custody. A third man, Aaron Glasser, 30, of Mission Viejo, was arrested without incident.

A federal grand jury indictment unsealed Oct. 1 charges the Aubrey brothers and Glasser with mail and wire fraud.

The indictment alleges Jerry Aubrey founded, managed, and operated a telemarketing investment scheme, also known as a "boiler room," in Costa Mesa. The defendants did business together as Progressive Energy Partners, LLC, also known as PEP, according to the FBI.

"Timothy Aubrey worked as a PEP manager and salesperson, in addition to preparing, with Aaron Glasser, the sales scripts read to potential investors," FBI officials said Tuesday.

"Aaron Glasser was a PEP salesperson who worked as both a sales 'fronter' and 'closer,' making cold calls and closing deals," FBI officials said. "In his work as a salesperson, the indictment alleges Glasser raised around a quarter of the total amount of investments."

PEP allegedly employed other salespersons to raise more than $11 million in five unregistered securities offerings for the purported purpose of developing and supporting oil and gas wells, according to the FBI.

"In reality, most of the money was used to pay for the Aubrey brothers' personal expenses, to pay up to 30% commissions to salespersons, and to make Ponzi-like payments to previous investors," FBI officials said.

According to the FBI, the defendants directed salespersons to cold call potential investors from purchased lead lists and solicit investments using scripts touting the profitability of investing in PEP. Fronters would pass the names of those who were potentially interested to closers, who could conclude the sale.

"The indictment alleges that by devising, executing, and participating in the above scheme, the defendants induced more than 200 investors to distribute to PEP over $11 million between 2005 and 2010," FBI officials said.

According to the FBI, the Securities and Exchange Commission in 2011 obtained summary judgment against the same defendants in connection with the PEP investment scheme.

"In addition, Jerry Aubrey was charged in 1998 by the SEC with violating the broker-dealer registration provisions of the Securities Exchange Act of 1934 in connection with an offering fraud in which he sold securities in a fictitious cruise ship," FBI officials said. "The following year, he was permanently enjoined from future violations of Section 15(a)(1) of the Exchange Act (failure to register as a broker dealer), a permanent injunction he has violated through his alleged activities in PEP."

If convicted on eight counts of mail fraud and two counts of wire fraud, each defendant faces a maximum of 200 years in federal prison, according to the FBI.

The FBI conducted the criminal investigation of these allegations, and the SEC conducted the civil investigation.

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