The U.S. Securities and Exchange Commission (SEC) recently filed fraud charges against four individuals and others who allegedly profited by defrauding investors in a cash-strapped California-based renewable energy company.
Patrick Carter, the founder and CEO of 808 Renewable Energy, was charged along with the company, COO Peter Kirkbride, sales representatives Martin Kinchloe and Thomas Flowers, and three other firms: 808 Investments, West Coast Commodities and T.A. Flowers.
The complaint alleges that the fraud began in 2009 and lasted at least five years, raising over $30 million from hundreds of investors.
According to the report, the defendants misled investors, falsely claiming their funds would be used to acquire new equipment and expand 808 Renewable. Carter was allegedly paid millions for “consulting fees” by 808 Investments, a company he owned and controlled, and diverted millions more to support his lavish lifestyle, to pay commissions to sales representatives, and to make Ponzi-like payments to investors.
The SEC also alleged that in 2013 Carter falsely announced that the New York Stock Exchange had preliminarily approved 808 Renewable’s stock for trading on the AMEX and sold millions of his own shares to investors.
Michele Wein Layne, director of the SEC’s Los Angeles Office, commented:
We allege that Patrick Carter orchestrated a fraudulent scheme using 808 Renewable Energy Corporation to raise millions. While telling investors their funds would be used for the benefit of the company, Carter and his associates looted 808 Renewable.
The SEC is seeking disgorgement of allegedly ill-gotten gains plus prejudgment interest and penalties, permanent injunctive relief and penny-stock bars against the defendants, as well as officer and director bars against Carter and Kirkbride.
Flowers and T.A. Flowers have offered to settle the SEC’s action without admitting or denying the allegations against them. Under the settlement, which is subject to court approval, they will agree to full injunctive relief, disgorgement plus prejudgment interest of $1.4 million, penny-stock bars and a $160,000 penalty assessed against Flowers.