Justin Solomon of Florida has consented to the Security and Exchange Commission’s decision to fine him $275,000 for his part in a federal securities fraud lawsuit. The lawsuit involved a scheme in which overseas investors put money into Texas oil and gas projects that was then misused. Solomon did not confirm that he oversaw the scheme. However, Solomon was the managing official of Seisma Oil Research, Permian Asset Management and Seisma Energy Research — three of the investment businesses involved in the scam.
In June 2010, Solomon and his three businesses were sued by the Securities and Exchange Commission. According to the SEC’s allegations, high-pressure sales tactics, originating in Costa Rica and Thailand “boiler room” call centers, persuaded overseas investors to contribute $25 million into six Texas gas and oil projects.
Solomon settled the lawsuit by agreeing to pay disgorgement which accounts for his own “unjust enrichment” and prejudgment interest. The disgorgement total was $265,436.06, while the interest total was $9,564.94. Both Solomon and the SEC agreed to a 36-month payment plan which will begin in 6 months. Furthermore, all three of Solomon’s companies signed consent agreements that promised they would not violate United States securities laws. At the same time as these consent agreements were signed, Solomon posted a deposit in the amount of $92,500 that will go toward the $275,000 he must pay. According to the agreement, Solomon will pay $5,000 each month for 35 months, followed by a final payment of $7,500.
This settlement only covers the personal gains of Justin Solomon and does not include other broker misconduct. Allegedly, only $9.5 million of the total $25 million invested went to the oil and gas projects, as investors believed. Around $10 million was spent on operating the scheme, employee commissions, boats and cars. Talks of repaying investors would be premature, according to an SEC spokeswoman.