The US Securities and Exchange Commission charged Berkshire Resources LLC and its principals, Jason T. Rose and David G. Rose, with securities fraud on June 7 in connection with their oil and gas offerings.
Mark D. Long and Yolanda D. Velazquez, the company’s head sales agents, were also named in the complaint filed in federal district court for the Southern District of Indiana. In that complaint, the SEC said that it alleged that Berkshire raised $15.5 million from 265 US and Canadian investors through a series of unregistered, fraudulent offerings of securities in the form of “units of participation.”
The offerings’ purported purpose was to fund oil and gas operations which Berkshire was to oversee, the SEC said. It said that Jason Rose was the company’s public face and was portrayed as its lead manager with extensive oil and gas experience. In reality, he had no such experience and David Rose, his father, ran the company behind the scenes. David Rose has an extensive disciplinary history for securities fraud and is facing a criminal indictment in connection with another similar, but unrelated, oil and gas scam, the SEC said.
It said that the complaint also alleges that Berkshire and its principals misled investors when they assured them that 100% of the investments would be used for oil and gas drilling projects. Instead, the SEC said, Berkshire spent $6.7 million on items having nothing to do with oil and gas drilling, including its own payroll, outside sales commissions, and marketing and promotional expenses. Of that amount, $1.7 million went to Rose family members to pay for home mortgages, furnishings, and electronics; cars, and credit card charges, the federal securities regulator said.
It said that Jason and David Rose hired Long and Velazquez to run two boiler room operations and gave them sales commissions despite neither being a registered broker-dealer. The complaint alleged that Velazquez violated a March 2005 SEC order barring her from associating with any broker or dealer. It also named Brian C. Rose and Joyce A. Rose as relief defendants and alleged that they received ill-gotten gains.
California’s Corporations Department issued an order on June 10 to Berkshire Resources and Jason Rose to desist and refrain from offering, selling or offering to buy securities in the state. The company and its subsidiaries listed office addresses in Casper and Cheyenne, Wyo., and, more recently, Jeffersonville, Ind., the California agency said.
Contact Nick Snow at [email protected]