September 19, 2018
The Securities and Exchange Commission (SEC) recently filed a Complaint against Joseph M. Laura, Anthony R. Sichenzio, and Walter Gil de Rubio for an alleged $12 million crude oil technology scheme to defraud investors and misappropriate and misuse investor funds.
According to the enforcement action filed on September 7, 2018, Laura, Sichenzio, and Gil de Rubio raised over $3.7 million from at least 80 investors by offering and selling Pristec America, Inc. (PAI) securities, a U.S. company owned by Laura and Sichenzio, and Pristec AG (PAG), an Austrian company established in 2006 for crude oil processing technology development, licensing, and commercialization. PAI holds its principal office in Staten Island, New York and was described as a “strategic alliance partner” to PAG responsible for business development and introduction of the technology in the U.S., Canada, Mexico, and Columbia. PAG was in the process of patenting a process called “cold cracking,” where pressure wave emissions are used to change the molecular composition of heavy oil compounds. Laura and Sichenzio also owned a combined 33% of PAG through an entity they created called Innovative Crude Technologies (ICT), which was listed as an “Oil Technology Consultant.”
According to the Complaint, Laura, Sichenzio, and Gil de Rubio offered and sold securities through revenue sharing, stock purchase, and convertible loan agreements to business and social acquaintances, making them think they were receiving a special opportunity exclusive to “friends and family.” The SEC alleges that both the investment contracts and their verbal solicitations of the offerings contained several fraudulent misrepresentations and omissions of material facts, with the most significant false claim being that the funds would be used for working capital purposes and that full-scale commercial oil processing would begin immediately. Laura, Sichenzio, and Gil de Rubio further claimed that PAI owned and had exclusive worldwide rights to profit from cold-cracking technology when, in fact, they did not receive rights to use the technology until 2014 and were ultimately only approved to use it in Mexico, Canada, Columbia, and the U.S.
Additionally, Laura, Sichenzio, and Gil de Rubio made unfounded claims regarding the timing and revenue amounts investors would receive. According to the Complaint, most of the investment contracts stated that investors would receive payments per oil barrel. Many contracts contained schedules showing production dramatically increasing, with some contracts showing increases from 10,000 barrels per day in the first month of production to 200,000 barrels per day by one year. They also claimed that profits would continue at that rate for the first five years.
The SEC alleges that since 2010, Laura, Sichenzio, and Gil de Rubio raised over $12 million from over 150 investors. Although they claimed that revenue generation was guaranteed, the SEC has been unable to prove that they have generated any revenue for their investors from commercializing this “cold cracking” technology. The SEC asserts that through this scheme, over half of the investors’ funds were misappropriated and misdirected by Laura for personal loans to friends and associates and personal expenses, such as liquor, sporting goods, gas, and gym fees or directed to Gil de Rubio and Sichenzio for reasons unrelated to this alleged investment scheme.
The SEC asserts in the Complaint that Laura violated Section 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934. The SEC asserts that Gil de Rubio and Sichenzio violated Sections 17(a)(I) and (3) of the Securities Act, Section 10(b) of the Securities Exchange Act of 1934, and aided and abetted Laura’s violations. The SEC alleges that within one year of the start of the scheme, Gil de Rubio was aware, or recklessly or negligently disregarded Laura’s fraudulent actions. The SEC is seeking permanent injunction against Laura, Sichenzio, and Gil de Rubio to enjoin them from committing future violations of federal securities laws and to pay civil monetary penalties, and disgorgement, including prejudgment interest of ill-gotten gains that they received during this scheme.