Two New Jersey men have been arrested in Los Angeles on suspicion of securities fraud in connection with a telephone sales operation in which they marketed oil leases but allegedly used millions of dollars from investors to finance a sex magazine and sexually explicit videotapes, authorities said this week.
Dorene B. Wolf, a senior attorney for the California Department of Corporations, said that an undetermined number of unsuspecting investors in at least seven states, including California, lost an average of $6,000 each in the alleged scam.
"At this point we believe it took in millions of dollars," Wolf said. She added that some investors are believed to have lost sums "in the six-figure range."
Held Without Bail
Arrested Wednesday were Robert Foti, 42, and Robert Siebert, 34. Both men were being held without bail in the Los Angeles County Jail pending extradition to Jackson County, Mo., where they were recently indicted on securities fraud charges, Wolf said.
The securities case against the two men apparently began with complaints from investors in Missouri, Alabama, Kansas, Minnesota, North Dakota and Wisconsin. Each of those states subsequently issued cease-and-desist orders to stop the men's business operations.
California issued a similar order Wednesday.
The two had been doing business since January under the corporate name Bobbert Energy Group, also known as Old Bridge Oil & Gas, Wolf said. They allegedly ran a "boiler room" operation from an office building in the 12000 block of Wilshire Boulevard, in which about 20 telephone salesmen made calls to thousands of potential investors across the country, Wolf said.
Production of Tapes
But instead of using investors' money to secure interests in oil and gas well leases, Wolf said, the money was channeled into the production of master tapes for films depicting homosexual sex acts, as well as publication of the explicit homosexual sex magazine, "Bolt."
Authorities were uncertain whether investors actually received any return on funds they had intended be used for securing oil or gas leases.