Four Fraudsters Charged in Arco Hills Silica Mining Company Scheme
The Securities and Exchange Commission (“SEC”) charged Gordon Jenkins, Theodore Sweeten, Francis Kreais and Craig Parkinson with orchestrating an offering fraud involving the sale of interests in a purported mining company, Arco Hills Silica Company.
The SEC’s complaint, filed in federal court in Idaho, alleges that, beginning in January 2011, and continuing through August 2014, Jenkins, Sweeten and Kreais offered and sold $504,436.26 in promissory notes to approximately 12 investors located throughout the country. Investors were allegedly told their money would only be used to acquire financing for Jenkins’ mining company, Arco Hills, and were guaranteed a return on their investment ranging from 53% to 120% within 30 to 90 days of purchasing their notes. Instead, Jenkins, Sweeten and Kreais used approximately $422,536.58 of investor money to pay for their daily expenses, entertainment, house payments, legal expenses and medical bills. Additionally, old investors received $25,394.68 from new investors.
The complaint further alleges that Jenkins, Sweeten and Kreais represented to investors that Arco Hills held mining claims that contained 460 million ounces of gold that would be worth $805 billion. The mining claim values were purportedly based on a geological and valuation report prepared by Craig Parkinson, an Idaho licensed geologist. The complaint alleges that Parkinson’s report was false and misleading, and that Jenkins, Sweeten and Kreais knew the representations in Parkinson’s report of Arco Hills were false and misleading but they nevertheless solicited investors using the information contained in the report. Similarly, Parkinson also allegedly knew investors were being solicited and were relying on his false valuation figures.
The SEC’s complaint charges Jenkins, Sweeten and Kreais with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) and 15(a) of the Exchange Act of 1934. The complaint also charges Parkinson with violations of Sections 17(a) and 10(b) of the Securities Act and Rule 10b-5 thereunder.
Without admitting or denying the allegations in the SEC’s complaint, Jenkins, Sweeten, Kreais and Parkinson each consented to entry of a judgment enjoining them from violating the charged statutes and rules, and ordering Jenkins to disgorge $82,757.06, plus prejudgment interest of $12,616.73 and pay a civil penalty of $82,757.06; Sweeten to disgorge $227,702.32, plus prejudgment interest of $23,238.73 and pay a civil penalty of $227,702.32; Kreais to disgorge $112,077.20, plus prejudgment interest of $12,662.75, and pay a civil penalty of $112,077.20; and Parkinson to disgorge $10,000, plus prejudgment interest of $1,354.21, and pay a civil penalty of $40,000.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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