by Brian Mahany
The SEC has taken on another Ponzi scheme, this one operating in Costa Mesa, California. The SEC says that Jerry Aubrey ran an “$11 million boiler room fraud that victimized more than 200 investors.” Operating through a company called Progressive Energy Partners, Aubrey solicited investors for oil and gas investments. Instead of drilling wells, however, most of the money was used to payoff earlier investors and to support his lavish lifestyle.
Like most Ponzi schemes the warning signs were always present.
First, Aubrey promised 50% or greater annual returns. With banks paying one percent interest, the 50% seems just to good to be true. It was. Although one should carefully scrutinize every investment, those that promise unrealistic returns are almost always a fraud. Unfortunately, they appeal to the inner greed that all of us share.
Another warning sign was Aubrey’s criminal record. He was under indictment in Florida during the same time he was actively hawking this investment. A careful Google search should have picked up the Florida press reports. (Aubrey is currently in prison serving his Florida sentence. He was indicted in Florida in 2007 but sold the oil and gas investments between May 2005 and April 2010 according to the SEC.)
Aubrey was also charged by the SEC in 1998 with securities fraud after selling interests in a fictitious cruise ship.
Anyone can establish an account with the US court system. Their online search tool is called PACER case locator. A search costing just 8 cents would have revealed the prior federal complaints and lawsuits against Aubrey.
The salesmen selling the investments (I don’t call them stockbrokers or registered reps because they aren’t licensed) offered another clue about the fraudulent nature of the investment. The three sales people, Aaron Glasser, Brian Cherry and Tim Aubrey hold no securities licenses. Glasser’s license application was denied in 2006 by the Financial Industry Regulatory Authority (FINRA) because of forgery and drug convictions.
Both the SEC and FINRA (FINRA broker check) have easy to search databases to determine if securities dealers, investment advisors and stockbrokers are licensed. The service is free.
Where did the $11 million raised go? According to the SEC, just 8% went to oil and gas wells. A huge 35% went to commissions (which were not disclosed) and the remainder went to payoff earlier investors and to support Jerry Aubrey’s lavish lifestyle.
Jerry’s brother Tim says the money was used for limo rides to Lakers games, Vegas strip clubs and “just being a high roller.” The government says he even had a giant aquarium with miniature sharks put in his home.
At least some of the sales materials said the company was audited by a CPA. According to the complaint filed in federal court, there was no CPA firm nor audit. If a company says it has audited financials, demand to see them and confirm with the alleged accounting firm that they are doing work for the company. A legitimate company won’t mind you asking.
The complaint was filed on October 1th. As of this writing, Aubrey (who is in prison) hasn’t answered and former salesperson Brian Cherry was defaulted after failing to appear or answer. Obviously, until the court rules, the government’s allegations against Aubrey are just that – allegations. Given the evidence set forth in the complaint and Aubrey’s checkered past, the allegations are probably true in my opinion.
The purpose of this story is to remind readers to perform due diligence before they invest. Even we have been taken in by a scam – it happens to everyone. Most investment fraud losses can be prevented. If you are the victim of investment fraud, stockbroker fraud or accounting malpractice, give us a call. The fraud lawyers at Mahany & Ertl have helped people across the U.S.
Currently our law firm is prosecuting a federal false claims act alleging a billion dollar fraud by Allied Home Mortgage Corporation – our claim was adopted by the United States Attorney in New York last week. From massive fraud claims to simple arbitrations against stockbrokers, we can often help. For a confidential consultation contact attorney Brian Mahany at (414) 704-6731 or by email at
Mahany & Ertl LLC – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services available in most jurisdictions.