The movement to "go green" has grown increasingly popular over
recent years. Now, with more Americans than ever concerned about global
climate change and local environmental disasters (like the BP Oil Spill),
many investors are looking to invest in environmentally friendly technologies
and "green" companies. Unfortunately, this push for "green"
investments means increased opportunity for scam artists.
Warning that investors' eagerness may make them easy prey for investment
schemes, FINRA recently issued an investor alert advising investors to
"Save Your Greenbacks - Don't Fall for Green Energy Scams."
And, on its website, The North American Securities Administrators Association
warns investors that green investment schemes rank in the top ten for
2010 investment scams:
"Investment opportunities tied to the development of new energy-efficient
"green" technologies are increasingly popular with investors
and scammers alike. Scammers also exploit headlines to cash in on unsuspecting
investors, whether from investments related to the clean-up of the Gulf
of Mexico oil spill or the rising national interest in environmental innovations
tied to "clean" energy, such as wind energy, wave energy, carbon
credits and other alternative energy financing."
In a recent lawsuit involving a green energy scheme, the SEC filed an
August 4 complaint against six men from Kensington Resources (Joseph Porche,
Larry Crowder, Konrad Kafarski, Carlton Williams, Gary Juncker, and Dale
Engelhardt) for allegedly defrauding 200 investors across the country
of $11 million.
From 2008 to 2009, the men offered investors unregistered shares of American
Environmental Energy, Inc. stock (a company purchased in early 2008 by
Porche and Crowder). The Kensington sales tactics included "misrepresentations concerning the payment of sales commissions and the use of proceeds,"
as alleged by the SEC.
The men, while promising that 80% of money raised would be used by AEEI
to "acquire and run fuel and energy facilities," misappropriated
investor funds and used "nearly all of the money to fund the lavish
lifestyles of Porche and Crowder, to pay 25% in commissions to Kensington's
sale agents, and to pay for Kensington's overhead," according
to the SEC complaint.
Bottom line: While there are legitimate green energy investments, many
- like the Kensington Resources fraudulent offerings of American Environmental
Energy, Inc. stock - offer deals too good to be true.