Another Offering Fraud Action by SEC
The Commission’s focus on small, retail investors seems to have turned into a near quest to uncover offering frauds of all types, sizes and configuration. To be sure these actions fleece thousands of investors on a continual basis. That is evident from the near continual stream of these cases discovered and prosecuted by the agency. Despite the ardent and continuing efforts of the Commission they continue. Perhaps it is time to consider devoting more time to prevention, a most difficult task. In the long run that effort may be worthwhile, however.
In the immediate future look for the stream of cases to continue. This week the agency brought yet another offering fraud action. It adopts a technique frequently used by those behind such schemes – a key popular theme. In SEC v. Thunderbird Power Corp., Civil Action No. 1:20-cv-22901 (N.D. Fla. Filed July 14 2020) the theme was conservation in the form of wind turbines. The named defendants – Richard Hinds, Anthony Goldstein and John Alexander Van Arem – are each officers of the company who sold the vision to investors who departed with their cash.
The vision was the wind turbine, popular with environmentalists. Thunderbird supposedly had an industrial grade turbine called PowerStack under development. The tech had been validated by a nationally-known – but unidentified – scientific firm, according to the sales pitch. Proceeds from the offering were supposed to go to development. The stock was compared to an early version of Amazon and other, similar start-ups that later were successful.
Defendants raised almost $2 million from investors in less than three years. The claims were false. Portions of the investor money was misappropriated. The Commission’s complaint alleges violations of Securities Act Section 5(a), 5(c), each subsection of 17(a) and Exchange Act Sections 10(b) and 15(a). The case is pending.