A Mission Viejo man this week joined two Moreno Valley brothers taken into custody by FBI special agents investigating an Orange County boiler room operation that allegedly defrauded investors by falsely claiming high returns from oil and gas wells and by failing to disclose high sales commissions on investments. Aaron Glasser, 30, was arrested without incident after a federal grand jury indictment was unsealed in connection with the alleged $11 million scam. He and the brothers each face eight counts of mail fraud and two counts of wire fraud that come with maximum sentences of 200 years in federal prison with convictions.
Glasser was taken into custody Tuesday, the same day Timothy Aubrey, 53, surrendered to the FBI's Riverside office. His 51-year-old brother Jerry Aubrey was already in custody.
Bill L. Lewis, assistant director in charge of the FBI's Los Angeles office, and André Birotte Jr., the U.S. Attorney in LA, announced the federal grand jury indictment that alleges Jerry Aubrey founded, managed and operated the boiler room, Progressive Energy Partners, LLC, in Costa Mesa. Timothy Aubrey was a manager and salesperson and Glasser was a sales "fronter" and "closer" who made cold calls and closed deals.
Glasser was good at his job, according to the indictment, which accuses him of having raised around a quarter of the $11 million raised in five unregistered securities offerings for the purported purpose of developing and supporting oil and gas wells between 2005-2010. In reality, most of the money was used to pay for the Aubrey brothers' personal expenses, to pay up to 30 percent commissions to salespersons and to make Ponzi-like payments to previous investors, according to court documents.
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The trio is accused of directing other salespeople to make material misrepresentations and conceal material facts when speaking to investors about, among other things, the percentage of investor money that would be spent on the development and operation of oil and gas wells, the anticipated amount and timing of returns to investors, and the payment of sales commissions to fronters and closers.
Some investors were told: of greater than 50 percent annual rates of return on their investments; that almost half of the investor funds would be spent on oil and gas wells; that the remainder of the investor funds would be spent on other business expenses; that salespeople would only receive commissions as shares of the investment profits; and that the company would use the assistance of an "independent CPA firm" to make distributions to investors, according to the government.
The Securities and Exchange Commission obtained summary judgment against Glasser and the Aubreys in 2011 for the same scam, the agencies note. Jerry Aubrey had been charged in 1998 by the SEC with violating the broker-dealer registration provisions of the Securities Exchange Act of 1934 in connection with an offering fraud in which he sold securities in a fictitious cruise ship. In 1999, he was permanently enjoined from future violations of those provisions of the act; the government now accuses him of violating that with his more recent activities.