A California man was sentenced to 10 years in federal prison on Thursday for spearheading a scheme to defraud oil and gas investors.
According to the OC Registrar, 51-year-old Jerry Aubrey was sentenced to prison time and ordered to pay more than $9 million in restitution to 200 victims after he pleaded guilty in January.
Aubrey was taken into custody by the Federal Bureau of Investigation in October 2013 for his involvement in an Orange County boiler room operation that defrauded investors by falsely claiming high returns from oil and gas wells and for failing to disclose high sales commissions on investments.
The scheme ran from 2005 to 2010, according to the Federal Bureau of Investigations.
Aubrey’s 53-year-old brother, Timothy Aubrey, and Aaron Glasser, 30 formerly of Mission Viejo, were also arrested and indicted on charges of mail and wire fraud by a federal grand jury.
The indictments alleged that Jerry Aubrey founded, managed, and operated Progressive Energy Partners LLC (PEP), a telemarketing investment scheme located in Costa Mesa, California.
Timothy Aubrey worked as a PEP manager and salesperson, in addition to preparing sales scripts with Glasser.
PEP allegedly employed salespersons to raise over $11 million in five unregistered securities offerings for the purported purpose of developing and supporting oil and gas wells.
According to the FBI, the majority of the funds were used by the Aubrey brothers to pay personnel expenses.
The funds were also used to pay up to 30 percent commissions to salespersons and to make “Ponzi-like” payments to previous investors.
A 2011 civil complaint filed by the Securities and Exchange Commission alleged that the Aubrey brothers diverted more than $3.2 million of investor funds for their personal use.
The funds were used to pay for box seats at L.A. Lakers games, pay for vacations to Hawaii, Las Vegas, and Palm Springs and went towards rent on “lavish homes equipped with giant fish aquariums,” the SEC said.
Timothy Aubrey is scheduled to go to trial for mail and wire fraud charges tied to the PEP scheme in October, the OC Registrar said.
Glasser pleaded guilty to one count of mail fraud in February and will be sentenced on December 19.