Native American Energy Group Sells Unregistered Shares
The sale of unregistered securities has long been a staple of the Commission’s enforcement program. Over the years dozens of cases have been brought. Likewise, millions of dollars have been paid by investors to purchase the unregistered securities. In many instances the investors were solicited with false statements. Those statements range from claims about the use that will be made of the funds to the nature of the entity in which an interest is being acquired to if commissions were being charged. In some cases, there is no entity to invest in – the shares being sold may be to an entity that is non-existent, a sham or a shell.
The Commission’s latest case in this area involves an entity with an attractive name which at one time conducted a business. That business is gone, however. Nevertheless, investors were induced to purchase shares with the hope of making a profit. SEC v. Native American Energy Group, Inc., Civil Action No. 1:23-cv-04455 (E.D.N.Y. Filed June 16, 2023).
Named as defendants are: the company, a firm reputed to have had operations in the Fort Peck Indian Reservation in Montana. Later the company sold five wells it had operated to Shell Trading (US) Company but now has no business; Joseph D’Arrigo, the long-time president of the firm who had been sanctioned by the Connecticut Banking Commission; and David Hudzik, at one-time a consultant to the company and also a former registered representative.
Over a six year period, beginning in October 2014, Defendants solicited investors to invest in what was called a subscription agreement, described as an “investment in the company” by Defendant D’Arrigo. Defendant Hudzik aided with the sale of the subscriptions. He told investors that commissions were not charged on the interests acquired. About $3.43 million was raised from the solicitations.
In fact, the representations were false. The funds were not an investment in Native American. Rather, much of the money went to Mr. D’Arrigo who diverted it to his personal use. He also misappropriated about $958, 500. The claims about no commissions were also false. In fact, Mr. Hudzik was paid a commission of 20% and 30%.
In the end, the sale of the interests was also prohibited. None were registered. The complaint alleges violations of Securities Act Sections 5(a), 5(c) and 17(a) and Exchange Act Sections 10(b) and 15(a). The case is in litigation. See Lit. Rel. No. 23-civ-4455 (June 16, 2023).
Native American Energy Group Sells Unregistered Shares
The sale of unregistered securities has long been a staple of the Commission’s enforcement program. Over the years dozens of cases have been brought. Likewise, millions of dollars have been paid by investors to purchase the unregistered securities. In many instances the investors were solicited with false statements. Those statements range from claims about the use that will be made of the funds to the nature of the entity in which an interest is being acquired to if commissions were being charged. In some cases, there is no entity to invest in – the shares being sold may be to an entity that is non-existent, a sham or a shell.
The Commission’s latest case in this area involves an entity with an attractive name which at one time conducted a business. That business is gone, however. Nevertheless, investors were induced to purchase shares with the hope of making a profit. SEC v. Native American Energy Group, Inc., Civil Action No. 1:23-cv-04455 (E.D.N.Y. Filed June 16, 2023).
Named as defendants are: the company, a firm reputed to have had operations in the Fort Peck Indian Reservation in Montana. Later the company sold five wells it had operated to Shell Trading (US) Company but now has no business; Joseph D’Arrigo, the long-time president of the firm who had been sanctioned by the Connecticut Banking Commission; and David Hudzik, at one-time a consultant to the company and also a former registered representative.
Over a six year period, beginning in October 2014, Defendants solicited investors to invest in what was called a subscription agreement, described as an “investment in the company” by Defendant D’Arrigo. Defendant Hudzik aided with the sale of the subscriptions. He told investors that commissions were not charged on the interests acquired. About $3.43 million was raised from the solicitations.
In fact, the representations were false. The funds were not an investment in Native American. Rather, much of the money went to Mr. D’Arrigo who diverted it to his personal use. He also misappropriated about $958, 500. The claims about no commissions were also false. In fact, Mr. Hudzik was paid a commission of 20% and 30%.
In the end, the sale of the interests was also prohibited. None were registered. The complaint alleges violations of Securities Act Sections 5(a), 5(c) and 17(a) and Exchange Act Sections 10(b) and 15(a). The case is in litigation. See Lit. Rel. No. 23-civ-4455 (June 16, 2023).