Investors Lose Over $20 Million in Offering Fraud

Offering fraud actions continue to be perhaps the most prevalent type of action initiated by the Commission. These cases are repeatedly filed based on a variety of fraudulent schemes carefully designed and crafted to lure trusting investors into putting their hard-earned cash into what often turns out to be nothing more than a greedy fraudster spinning stories of profits but not for the investors, only him. The Commission’s latest case in this area is SEC v. San Miguel, Civil Action No. 4:24-cv-002805 (S.D.Tx. Filed July 29, 2024).

Defendant Thomas San Miguel is a resident of Montgomery, Texas. During the time of this action he served as the President, CEO and sole director of SGR Energy, Inc., a private company based in Huston, Texas. The company operated until late 2021. In July 2022 a creditor initiated involuntary Chapter 7 bankruptcy proceedings for the company. In re SGR Energy, Inc., Case No. 4:22-bk-32050 (Bankr. Tex. Filed July 22, 2022). A Trustee currently oversees the company.

Beginning in November 2015, and continuing until December 2021, Defendant San Miguel raised about $21.3 million from over 300 investors. Those investors purchased interests in his firm, SGR Energy, Inc. Investors were told that the shares had a 12% annual dividend. Investors were told that the dividend was funded by escalating revenues and profits and a $19 million account receivable.

There were, in addition, other sources of revenue and funds to assure potential investors that they should put their cash into SGR shares. For example, the investor funds were to grow the company and expand its fuel-blending business. This would be done by expanding the geographical scope of its customers and acquiring strategically situated blending facilities and terminals. Defendant also touted SGR’s supposed acquisition of a large fuel terminal in Columbia. Investors were assured that commissions were not paid to sales personnel.

The claims were false as were the books. Defendant knew that the revenues were minimal. Defendant knew that there was no $19 million account receivable. And, he knew that no terminal in Columbia was acquired. The complaint alleges violations of Securities Act Sections 5(a), 5(c) and 17(a) and Exchange Act Section 10(b). See Lit. Rel. No. 26059 (July 29, 2024).