From The BizOp News blog by Michael Webster, Tri Energy: Massive Affinity Fraud And Ponzi Scheme.
A U.S. District Judge in California ruled against Tri Energy Inc., H&J Energy Company Inc., and several others last week. The defendants are permanently enjoined from committing violations of Securities and Exchange Commissions rules. Specifically, they may not solicit investments of the type at issue in the case. Defendants were also ordered to pay disgorgement and civil penalties.
The suit alleged that the defendants perpetrated a massive affinity fraud and Ponzi scheme with a coal mine venture and something referred to as an international “gold deal.” Defendants told investors that they would generate large returns on their investments by assisting a Saudi prince in moving gold from Israel, through Luxembourg, and ultimately to the United Arab Emirates.
The investment “returns” paid to investors were actually nothing more than funds collected from newer investors, a hallmark of a Ponzi scheme (also called pyramid scheme). Investors were promised 100% to 1,000% returns in as little as 60 days, and over 500 investors lost tens of millions of dollars.