Ascenergy first crowdfunding investment fraud complaint.
News broke today through Crowdfund Insider, about the SEC’s crowdfunding investment fraud complaint against Ascenergy, an oil and gas company that raised $5 million through 90 crowdfund investors.
In late October, the SEC accused Ascenergy of crowdfunding investment fraud, specifically that:
“Ascenergy has raised at least approximately $5 million from 90 investors nationwide and internationally. Ascenergy has already spent at least $1.2 million of the offering proceeds, but only a few thousand dollars appear to have been used for oil and gas-related expenses. Instead, a significant part of the $1.2 million has been spent on payments to Galbadon or companies he controls, or for expenses unrelated to the oil & gas business, including, by way of example, foreign travel, fast food restaurants, Apple stores and iTunes, dietary supplements, and personal care products.”
“…Ascenergy has no known oil and gas revenues or track record of reserve identification, drilling, or production…”
Crowdfund Insider writes about this crowdfunding investment fraud, “What is widely known within the industry is that multiple platforms turned Ascenergy down. The curation and vetting process achieved its objective on several platforms and protected their investors. One platform operator stated that the Ascenergy pitch was like a “Securities 101 What Not to Do Manual”.
SeedInvest rejected Ascenergy not just once. But twice.
Wefunder, another platform that dodged the bullet, stated;
“Ascenergy reached out to us last year to fundraise on Wefunder, and even offered to pay us to feature them. We did not allow them to fundraise from our community. We feel a great responsibility to make sure we do everything possible to mitigate fraud to protect our investors, and it didn’t take a rocket scientist to figure out that something smelled sketchy with that company.”
As I discussed on the Angel Investing podcast recently, how these complaints are handled are going to dramatically affect the industry–especially with respect to platform liability. Nobody knows how liable platforms are going to be when fraud inevitably hits.
The full complaint is embedded below.
As an update for 2021, The Bradshaw Law Group assists companies in raising money for businesses looking to utilize crowdfunding to raise capital. There are many laws associated and to do this right we offer a free consultation.
Contact us today and get set in the right direction: https://bradshawlawgroup.com/location/contact/
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