PRINCIPALS OF OFFERING FUND FRAUD SETTLE WITH THE SEC
The Commission reached a settlement with the principals in yet another offering fraud case. This time the settlement is with David Rose, Jason Rose and Mark Long, as well as with two relief defendants, Brian Rose and Joyce Rose. SEC v. Berkshire Resources, LLC, Civil Action No. 09-0704 (S.D. Ind. Filed June 8, 2009).
Beginning in April 2006, and continuing through the end of 2007, Berkshire Resources raised about $15.5 million from 265 investors in the U.S. and Canada through a series of unregistered fraudulent securities offerings according to the complaint. The company purported to be in the oil and gas exploration business. Its principals were Jason and David Rose who control the company. Mark Long and Yolanda Velazquez were the head sales agents.
The securities were marketed through cold calls and at what were called “wealth expositions.” Jason and David Rose also enlisted two others to operate boiler rooms in Florida and Indiana. Investors were told that Berkshire Resources would oversee the investment of their funds in oil and gas development projects. They were assured that all of their money would be invested in the oil and gas projects. The public was also told that Jason Rose was the lead manager of the operation with significant experience in the business.
In fact, substantial portion of the investors funds were diverted to other uses. For example, about $6.7 million was spent on matters that had noting to do with the claimed oil and gas investments. Portions of the funds were used to pay for personal items of the Rose family. Likewise, the claims regarding the expertise of Jason Rose were false. In fact, he had no experience managing an oil and gas operation. His father, David, was actually running the operation. David Rose has an extensive disciplinary history for securities fraud. The complaint alleged violations of Securities Act Sections 5 and 17(a). It also asserts claims based on Exchange Act Sections 10(b), 15(a) and 15(b)(6)(B)(i).
On Friday, the SEC settled with David Rose, Jason Rose and Mark Long and two relief defendants. David and Jason Rose each consented to the entry of permanent injunctions prohibiting future violations of Securities Act Section 5 and 17(a) and Exchange Act Sections 10(b) and 15(a). In addition, David Rose agreed to pay disgorgement of $15,400,000 along with prejudgment interest and a civil penalty of $130,000. Jason Rose agreed to disgorge $182,896.42 and prejudgment interest and to pay a civil penalty of $130,000. Defendant Long consented to the entry of a permanent injunction prohibiting future violations of Securities Act Section 5 and to disgorge $446,775 along with prejudgment interest and to pay a civil penalty of $130,000. The two relief defendants agreed to disgorge in excess of $600,000 along with prejudgment interest. David and Jason Rose and Mark Long also agreed to be barred from future association with any broker or dealer. See Litig. Rel. 21642 (Sept. 3, 2010).
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