Tri Energy
Tri Energy, was a business enterprise run by Henry Uliomereyon Jones, better known as Dr. Henry Jones, a record producer in Marina del Rey, California running MIG Records (later renamed Global Village Records) and Marina Investors Group Inc. Jones with two of his main associates, Arthur Simburg, a former marketing representative for sporting-goods manufacturer and Robert Jennings, an associate pastor at the New Life Fellowship Church in Perris, California[1] were convicted of running a fraudulent Ponzi scheme operation and affinity fraud through Tri Energy, involving defrauding over 735 people of $50 million, resulting in several court actions both civil and criminal cases, and imprisonment of the three Tri Energy associates.
History
Tri Energy was involved in:
- A coal mine venture in four coal mines in Kentucky which Tri Energy claimed were profitable and that would potentially produce a reported 99.3% emissions-free coal. In fact there were only two mines, and neither was profitable.
- A so-called international "gold deal" for transfer of gold from Israel to Luxembourg to United Arab Emirates through the help of an unnamed Saudi Arabian prince. Gold involved was 20,000 metric tons of bullion, twice as much gold as the entire U.S. reserves.
The schemes promised to potential investors astronomical returns in a short period (reaching 100% in just 60 days). Other schemes included a plan to ship Congolese uranium via a diplomatic pouch, and a project to develop hydroelectric power in Sierra Leone.
Kim Flanigan, a Mormon who owned a furniture store, blew the whistle when she heard her own widowed mother and her aunt were involved as both participants and recruiters for a classic get-rich-quick scheme that had already ensnared hundreds of people. Flanigan called state and federal officials.[2] The authorities considered Flanigan's mother and aunts more as victims. But they launched extensive investigations that would eventually bring down the $50 million Ponzi scheme and put its three ringleaders in federal prison.
SEC introduced many tapes, transcripts and summaries of sessions conducted by the ringleaders from early 2004 to early 2005. They showed Simburg leading the meetings, with Jennings speaking about the coal mine project and Jones offering updates on the gold transaction. The three also talked about the common religious beliefs that held the group of investors together. Simburg and Jennings say they were conned by Jones. They together reportedly took about $1 million of the $32.6 million raised from February 2002 to January 2006, less than one-twentieth of what went to Jones.
The SEC says the scam went back to the 1990s and brought in at least $50 million. During the four-year period covered by the federal indictment, almost $8 million was paid back to investors, including some who received commissions for bringing in new money, prosecutors say. Simburg took $589,000 for his own use, including salary and expenses. Jennings, took $386,000, which he shared with his father-in-law. Another $3.39 million was spent on the coal mine, a muddy hole in the ground with broken equipment, about two dozen employees and output that generated just $117,825 in revenue over 2 1/2 years. About two-thirds of the money raised by Tri Energy went to Jones, prosecutors say. And $21 million went to his two entertainment companies, MIG Records and Marina Investors Group.[1]
Rulings
On August 13, 2007, settlements were announced with the Tri Energy defendants, defendant Daniel J. Merriman and his companies DJM, LLC, Financial MD, Inc., and Financial MD and Associates, defendant Mildred Stultz, and relief defendant Nga Wing Lau a/k/a Adrienne Lau with temporary restraining order and asset freeze against the Tri Energy defendants.
SEC obtained a default judgment against Jones and his companies Marina Investors Group, Inc. and MIG Records (Global Village Records) on March 20, 2008.
Final judgments was obtained against relief defendant Thomas Avery and his company T.M.A. Investment Enterprises and relief defendant R.P.J. Investment Group, Inc. on April 9, 2008, ordering $70,000 in disgorgement plus $4,342 in prejudgment interest jointly and severally between Avery and his company, and ordering $7,364 in disgorgement against R.P.J.
The lawsuit "Securities and Exchange Commission v. Tri Energy, Inc., H & J Energy Company, Inc., Marina Investors Group, Inc., Lowell Decker, Robert Jennings, Henry Jones, Arthur Simburg, Mildred Stultz, DJM, LLC, Financial MD, Inc., Financial MD and Associates, Inc., Daniel J. Merriman, Global Village Records, and La Vie D'Argent, as defendants, and R.P.J. Investment Group, Inc., T.M.A. Investment Enterprises, Thomas Avery, and Wing NGA Lau, a/k/a Adrienne Lau, as relief defendants" in Case No. ED CV 05-00351 AG(MANx) (C.D. California)[3] resulted in a judgement of $51 million against Tri Energy, Inc. and defendants Arthur Simburg and Robert Jennings for their role in a massive affinity fraud and Ponzi Scheme.
The Final Judgment on April 13, 2009, against defendants Tri Energy, Inc., H & J Energy Company, Inc., Robert Jennings, Arthur Simburg, and La Vie D'Argent (collectively the "Tri Energy Defendants") with a settled action, ruled for payment of $35 million in disgorgement and $2,048,466 in prejudgment interest, and ordered Simburg and Jennings to pay a civil penalty of $7 million each.
Imprisonment
In the criminal cases, prison sentences were passed:
- Arthur Simburg was sentenced on November 17, 2008, to 9 years imprisonment after entering into a plea agreement.
- Robert Jennings was convicted after a jury trial on July 11, 2008, and sentenced to 12 years imprisonment on November 17, 2008.
- Defendant Henry Jones was extradited from Hong Kong and convicted after a jury trial on July 11, 2008, and was sentenced to 20 years imprisonment on April 3, 2009.
In popular culture
- CNBC covered the history of the scheme in Episode 3 of Year 5 of its investigative program American Greed.