The following are summaries of administrative enforcement actions the Texas State Securities Board took from Oct. 1 through Dec. 31, 2019.
Timeless Protect and Associated Companies: Emergency Cease and Desist Orders
Texas Securities Commissioner Travis J. Iles entered three emergency orders on Nov. 22 against Timeless Protect LLC, a company that claims it is erasing the risk in oil and gas offerings being marketed to investors in Texas.
Timeless Protect, with offices in Florida and Ontario, Canada, is enrolling oil and gas investors into its Cash Back Program. The company claims it is an “absolute guarantee” that investors will not lose their principal investments even if wells do not produce any oil or natural gas.
The emergency actions accuse Timeless Protect of fraudulently offering investments in oil and gas programs that are purportedly guaranteed by its Cash Back Program. North Texas-based oil and natural gas companies also named in the order include Rare Earth Exploration and Helium Hunters of Garland, U.S. Energy Assets LLC in Cedar Hill, and Travco Oil and Gas LLC in Little Elm.
One of the investment promoters is Bradley Sherman Haycraft of Garland. His criminal record includes pleading guilty in Collin County in 2018 to possession of methamphetamine, state jail felony, and pleading guilty in Rockwall County in 2008 to robbery, a second-degree felony.
Haycraft is the president of Rare Earth Exploration and is involved in the business of Helium Hunters. Both companies are based in Garland and offer investments in oil, natural gas, and helium. Haycraft promotes the investments on a radio show on KLRD-AM 1080 in Dallas.
Another promoter, Raymond Leslie Boykin, is a former broker who was suspended by the Financial Industry Regulatory Authority in 2015 for misappropriating confidential information from an employer to solicit investments in oil and gas drilling projects.
According to the order, Boykin is promoting Timeless Protect-backed oil and gas investments offered by U.S. Energy Assets LLC in Cedar Hill, near Dallas.
The orders entered against Timeless Protect and associated companies are:
Order No. ENF-CDO-20-1792, U.S. Energy Assets LLC; Texas Victory Joint Venture; Timeless Protect LLC; Raymond Leslie Boykin; Mark Taylor; Duane Lee; Sunil Joseph AKA Joseph Sunil; and Paul James
Order No. ENF-CDO-20-1794, Rare Earth Exploration LLC; Helium Hunters; Bradley Sherman Haycraft; Timothy P. Taylor; Bill Webber; Timeless Protect LLC; Duane Lee; Sunil Joseph AKA Joseph Sunil; and Paul James
Order No. ENF-CDO-20-1795, Travco Oil and Gas LLC; Travis Jordan; Tom Darcy; Timeless Protect LLC; Duane Lee; Sunil Joseph AKA Joseph Sunil; and Paul James
As described in the emergency actions, the company is allegedly enrolling investors in the Cash Back Program, depositing their funds in a trust account, commingling those funds with money obtained from other sources and concealing material information regarding its management and use of principal.
Timeless Protect allegedly claims funds will be available to pay returns to investors regardless of the profitability of the oil and gas investments or the solvency of the companies. According to the order against Haycraft and Rare Earth Exploration, Timeless Protect claims its "bulletproof"structure is fueling its growth into different industries.
Frugal Financial Retirement Plan Services: Fine, Reprimand
Florida investment adviser Frugal Financial Retirement Plan Services LLC paid a $5,000 fine for doing work for Texas clients while not registered with the Texas Securities Commissioner.
The fine and a reprimand were part of the Disciplinary Order that Commissioner Travis J. Iles entered on Nov. 5. The commissioner also granted the investment adviser registration of the Saint Petersburg, Fla.-based firm.
Frugal Financial Retirement Plan Services had acted as an investment adviser for Texas clients since June 2015, but did not have enough clients – six or more – to require registration with the Securities Commissioner.
In April 2018, the firm had at least six clients in Texas, meaning it lost its exemption from state registration requirements. The firm did not register and continued to advise the clients until June 2019.
The Disciplinary Order is the fourth one entered in 2019 against out-of-state firms that acquired enough Texas clients to require registration but continued to do advisory work without being registered. The firms have paid a total of $45,000 in fines to the general revenue fund of the State of Texas.
Jason Hyson LeBlanc: Repayment to Investors
Jason Hyson LeBlanc, an investment adviser representative for Vere Global Wealth Management, has been ordered to repay $366,218 to individuals who bought promissory notes he sold to fund a Fort Bend County coffee shop.
LeBlanc’s wife was a part-owner of the coffee shop, located in Fulshear.
Texas Securities Commissioner Travis J. Iles entered a Disciplinary Order on Oct. 31 that requires LeBlanc to repay 14 individuals who bought the unsecured promissory notes.
LeBlanc sold the promissory notes while working as an investment adviser representative and agent for Girard Securities Inc. Girard fired LeBlanc in 2015 because he didn’t disclose the sales, or his duties with the company that owned the coffee shop, as an outside business activity.
LeBlanc cannot solicit new accounts on behalf of his current firm for one year and he was placed on five years’ probation by the State Securities Board.
Under the conditions of probation, LeBlanc will not have trading authority on any client account at Vere Global Wealth Management; his supervisor must review and approve all information he obtains in connection with client accounts; and LeBlanc’s supervisor must review all electronic communications with clients before they are sent.
Even though the promissory notes were outside the scope of his work at Girard, LeBlanc solicited Girard clients for the notes, and 11 of the 14 investors were clients of the firm. Six clients withdrew funds from their Girard account to invest in the coffee shop.
The notes promised an annualized return of 8% for three years.
Jason LeBlanc had no ownership interest in the two companies that controlled the coffee shop business, which were called Alpha Grounds Coffee LLC and Higher Grounds Java Holdings LLC. But he incorporated both companies, opened bank accounts for both, and served as chief financial officer for both.
LeBlanc registered with the Securities Commissioner as an investment adviser representative of Vere Global Wealth Management in 2016. When he registered he disclosed his corporate duties for Missco Services and the related companies. However, he failed to disclose the full extent of his activities for Missco, which included selling the promissory notes to clients at Girard Securities.
In 2017 the Financial Industry Regulatory Authority barred LeBlanc from working for any broker-dealer it regulates.
PK Crypto Investment AKA PK-Crypto Investment; Peggy Kay Brendan; and Janet A. Osborn: Emergency Cease and Desist Order
Crypto Miner Limited AKA Cyp Miner Limited AKA Cyp Miner and Elizabeth Frazier: Emergency Cease and Desist Order
The Texas State Securities Board concluded its second regulatory crackdown on cryptocurrency offerings with two emergency actions on Oct. 15 against businesses claiming they have the expertise and financial strength to deliver high-yielding, no-risk returns.
The State Securities Board's second regulatory sweep of suspect cryptocurrency-related offerings started in mid-June 2019 in response to the price of Bitcoin nearly tripling in the prior three months.
The Enforcement Division’s first sweep of cryptocurrency investment offerings started in December 2017, also in response to a sharp increase in the price of cryptocurrencies.
George A. "Gus"Marwieh and Marwieh Advisory Services: Registrations Revoked
Texas Securities Commissioner Travis J. Iles revoked the registration of George A. “Gus” Marwieh, who fraudulently sold more than $5 million in pension-linked investments and real estate development notes to clients without disclosing his excessive commissions, misuse of client funds, and conflicts of interest.
Marwieh, the president of Marwieh Advisory Services LLC in Austin, consented to the Oct. 11 Disciplinary Order. The order revoked the investment adviser registration of Marwieh Advisory Services and the investment adviser representative registration of Marwieh.
The revocation order stemmed from a May 7 inspection of Marwieh by staff of the State Securities Board’s Inspections and Compliance Division.
The inspection revealed that from mid-2013 through 2017, Marwieh almost exclusively recommended and sold two securities: investments from Future Income Payments LLC (FIP), which were supposedly based on the payout from pensions, and promissory notes issued by real estate developers that Marwieh said would pay 18% annually.
Marwieh reaped $343,431 in commissions from selling the pension income investments and the real estate notes. He collected $228,109 in commissions from selling $2.2 million in the real estate notes and $115,322 from selling pension income investments totaling $1.8 million.
Marwieh also charged his clients an annual management fee of 1% to 2% of the value of their assets – even though the pension-linked and real estate investments required no managing.
Marwieh violated his fiduciary duty to clients by not disclosing the conflicts of interest that gave him a financial incentive to recommend the investments. In the Form ADV Part 2, which an investment adviser must provide to clients as the primary disclosure document, Marwieh stated that neither he nor his firm receives any external compensation for the sale of securities to clients.
In fact, his advisory business was based almost entirely on investments he sold while concealing the costs and conflicts of interest.
Marwieh also misused funds intended to purchase interests in the real estate notes.
In a one-week period in 2017, Marwieh took in $189,881 from three clients who intended to invest in the development notes. Marwieh never transferred the money to the developers. Instead, he used the money to pay $194,918 to a different investor whose development note had reached maturity.
Investor funds in the escrow account also paid for Marwieh’s personal expenses, including credit card payments, rent, automobile loans, and insurance.
Inkprint Finance, Onoriode Ikimi AKA Steve Ikimi, and Kevin Flores: Emergency Cease and Desist Order
Texas Securities Commissioner Travis J. Iles took emergency action Dec. 30 to stop an unregistered Sugar Land investment promoter from offering guaranteed returns through the trading of foreign currencies.
According to the Emergency Cease and Desist Order, Onoriode Ikimi, who also goes by Steve Ikimi, is telling investors his firm, Inkprint Finance, can earn a return of 25% in 30 days on an investment of $50,000. An investment of $125,000 will generate a return of 40% in 45 business days. Ikimi is advertising the offering on craigslist and other platforms.
The order also names an Inkprint trader, Kevin Flores, also known as Kevin Ulises Flores Santos. The order lists addresses in Sugar Land and West Babylon, on New York’s Long Island.
According to the order, Ikimi and Inkprint are telling investors that Inkprint has at least one licensed forex trader and that Ikimi is a broker. They are representing that Ikimi maintains a forex portfolio through an online platform that has a balance of $1.4 million.
According to the order, Ikimi and Flores are not licensed to sell securities in Texas, nor are they registered with the National Futures Association. There is also no evidence that Ikimi or Inkprint maintains a portfolio of foreign currencies of that value on any platform.
The guaranteed returns are being offered without any disclosure of the risks in the complex, global market of currency trading. Currency traders seek to profit from minor fluctuations in exchange rates and speculate on changes in the values of currencies.
According to the order, Ikimi and Inkprint are intentionally failing to disclose the risks inherent in currency trading, including fluctuations in a country’s interest rates, fees associated with trading foreign currencies, and leveraging transactions using borrowed money.
Inkprint claims offices in Texas and New York, but is not providing physical addresses in those states.