An Orange County couple who lost $207,646 in an alleged oil lease scam several years ago have won a $2.6-million court judgment against the defunct Huntington Beach investment companies that ran the telemarketing operation.
Ronald and Joan Grosse of Garden Grove won the judgment against Beacon Energy Inc. and Beacon Income Fund XVIII. The two companies, however, are subsidiaries of Pacific Coast Financial Services Inc., which has filed for bankruptcy--greatly reducing the likelihood that the Grosses will see any of the money.
"We're hopeful," Ronald Grosse said, "but there is a big question mark there."
The Grosses were among more than 1,200 investors who claimed they lost an estimated $25 million when Pacific and its subsidiaries closed last year.
Pacific, in a notice to investors who bought oil well leases from its sales agents and brokers, blamed its demise on litigation against the company and its owners.
The companies, according to those lawsuits and an arbitration panel of the National Assn. of Securities Dealers, used aggressive and misleading telephone sales techniques to market oil well leasing investments. Investors were promised returns of 11% of more, the suits contended.
The suits claim that Pacific and Beacon were running Ponzi schemes, in which early investors are paid "earnings" that actually come from funds obtained from later investors.
Grosse said he and his wife bought oil leases in 1994 and received monthly earnings checks for about a year. "Then they just stopped coming," he said.
The award to the Grosses, filed June 12 in Orange County Superior Court, was a default judgment--meaning that Beacon and Beacon Investments never defended themselves against the claims. Most of the award consisted of punitive damages.