On November 10, Brian Keith Alfaro, from San Antonio, was sentenced to serve 121 months in federal prison. The sentence follows a jury finding him guilty of seven counts of mail fraud in connection with defrauding investors in an oil and gas investment scheme. The evidence showed Brian Alfaro used their funds to further an extravagant lifestyle – including the purchase of a Lamborghini and season tickets for the San Antonio Spurs.
Brian Alfaro has a long history of misconduct and fraudulent investment schemes. FINRA, the Texas State Securities Board and other state regulators previously brought enforcement actions against him and his companies. After being expelled from the industry, he was sued by defrauded investors and later put his oil investment company in bankruptcy. Despite the bankruptcy filing, the victims later won a judgment of approximately $8 million against him. The Bankruptcy Court appointed a Receiver, and the Receiver successfully recovered money after suing Brian Alfaro and Kristi Alfaro, his wife, for fraudulently transferring property.
Despite the prior regulatory, civil and criminal actions, Brian and Kristi Alfaro didn’t stop. In April 2020 – while Brian Alfaro was under house arrest awaiting criminal sentencing - they allegedly began perpetrating a new securities scheme. Brian and Kristi Alfaro allegedly began contacting potential investors – including elderly persons – and encouraging them to invest in a fraudulent wildlife breeding and development program.
On November 9, 2020, Commissioner Iles entered an Emergency Cease and Desist Order to stop Brian Alfaro and Kristi Alfaro from perpetrating the scheme. The scheme is being promoted by ARCA Wildlife Development and Conservation, LLC – an entity recently organized by Kristi Alfaro. Together, ARCA Wildlife and Brian and Kristi Alfaro are marketing units issued by Texas Savanna Partners, LLC. They are allegedly telling potential clients that ARCA Wildlife will use the proceeds of the sales of units to acquire livestock, improve property and manage a wildlife breeding scheme in Zavala County, Texas.
The offering of units is a fraud, according to the order. The parties are accused of concealing key information from potential investors, including the identity of all managers of ARCA Wildlife and Texas Savanna and the capitalization of the companies. They are also allegedly concealing information about the prior bad acts, including the award of nearly $8 million to prior victims and the lawsuit against Kristi Alfaro for fraudulently transferring property of defrauded investors. The order further accuses them of misleading investors about the proposed use of principal.
The order also took issue with the marketing materials – the marketing materials appear to be altered offering documents from a prior oil and gas program, repeatedly referring to the units in Texas Savanna as “working interests” and “net revenue interests.” They also use terms such as “oil and gas lease” and “overages” when describing the wildlife breeding scheme.
The order names ARCA Wildlife, Texas Savanna, Brian Alfaro and Kristi Alfaro. It also names Ariana A. Alfaro and Reece A. Alfaro, the other purported managers of the firms.
The parties are not registered to sell securities in Texas. Although they may have been relying on a federal law that preempts important state laws that protect the public, the order alleges the sentencing of Alfaro disqualifies the parties from relying on these exemptions.
Securities Commissioner Travis J. Iles acknowledges the hard work of the Federal Bureau of Investigation in investigating the criminal case, as well as the success of the United States Attorney’s Office for the Western District of Texas in prosecuting the case. Texas State Securities Board Enforcement Attorney Greta Cantwell assisted the investigation of the case. Her work was part of a partnership with federal law enforcement that permits the agency to pursue justice for Texans in complex criminal securities cases.