SEC Cases: Real Estate Agent Accused in Ponzi Scam, Oil Company Charged in $2.4M Offering Fraud, and NY Private Equity Fund Adviser Resolves Negligence Claims

Oil Well Company and Founders Accused In $2.4M Offering Fraud
The SEC has filed offering fraud-related charges against Kentucky-Tennessee 50 Wells/400 BBLPD Block, Limited Partnership, its founders, and three members of its sales team over a $2.4M offering fraud. According to the US Securities and Exchange Commission’s complaint, the oil well company fraudulently offered and sold unregistered securities to investors through a boiler room operation. They raised about $2.4M from 41 investors.

Carol J. Wayland and her son John C. Mueller founded K-T 50 Wells. They are accused of misappropriating investor funds for purposes not disclosed in the private placement memorandum, including taking more than $871K for their own expenses and making Ponzi payments to some investors.

Real Estate Agent Allegedly Sold Unregistered Securities as Part of Brother’s Ponzi Scam
Cheryl L. Jones is accused of defrauding investors by helping her brother, Mark Jones, recruit investors for his Ponzi scam. The Commission contends that Jones brought in associates and friends to buy unregistered promissory notes and personal guarantees that her brother was involved in.

Mark Jones is accused of touting short-term bridge loans to Jamaican companies as investment vehicles. He allegedly promised investors 15-24% yearly returns and then took nearly all of their money for his own spending and to make Ponzi payments.

The SEC claims Mark Jones promised his sister about 10% of the principal invested by those she referred as her commission fee. She also purportedly received a monthly legal retainer. Even as she allegedly was wrongfully enriched, investors sustained significant losses.

Private Equity Fund Adviser Pays Penalty, Settles Negligence Allegations
Paramount Group Real Estate Adviser LLC, has settled fraud charges with the SEC alleging negligence. The New York-based private equity fund advisor, which was the investment adviser for Paramount Group Residential Development Fund, L.P. (RDF) and Paramount Group Real Estate Fund III, L.P., resolved the charges without denying or admitting to the SEC’s findings and will pay a $250K penalty.

According to the SEC’s investment adviser fraud order, the private equity fund adviser caused Fund III to sell a parking garage to RDF but failed to cause the latter to pay back $4.5M in development costs to Fund III. The Commission said this failure occurred even though Paramount had committed to the reimbursement occurring and had not gotten approval to get rid of the reimbursement requirement as part of the sale.

At Shepherd Smith Edwards and Kantas, LTD LLP, our securities fraud law firm has helped thousands of investors to recover their investment losses. If you feel that negligence, mistakes, or wrongdoing caused by your financial representatives, his or her firm, or another party may have caused you unnecessary financial losses, please contact us today so that we can help you explore your legal options. Your first session with us is a free, no obligation consultation to determine whether you may have grounds for a securities claim.

The Complaint in the K-T 50 Wells Case (PDF)

The SEC Complaint Against Cheryl Jones (PDF)

The Order Administering Cease and Desist Proceedings in the Paramount Group Real Estate Advisor Case (PDF)