Federal regulators filed a fraud lawsuit Friday against a group that includes three Laguna Beach telemarketers, alleging the group raised $8 million from investors for oil and gas drilling programs that never produced enough revenue to pay promised returns.
The Securities and Exchange Commission identified the local defendants as Alan Baiocchi, David Morris and James Silver. Neither they nor their companies, Integrity Financial Group, Tritech Investment Group Ltd. and ITS Consulting Inc., could be reached for comment.
The complaint, filed by the SEC's Denver office, also accused Petro Resources Corp. of Scottsdale, Ariz.; its president, Samuel McClintock; Austral Oil & Exploration Corp. of Sulphur, La.; and its president, Myron Palermo, with misrepresenting facts to potential investors.
Lawyers for the defendants could not be reached for comment.
Between January 1996 and July 1997, the group raised at least $8 million from more than 400 investors nationwide, the SEC said. The agency alleged they misled investors about the risks, potential profits and tax benefits of drilling programs in Texas and Oklahoma.
Most of the investors' funds "were used to pay sales commission, and the drilling programs never produced oil in quantities sufficient to make promised royalty payments to investors," the SEC said.
The agency is seeking a court order permanently halting the operation, civil penalties and refunds for investors.