Colorado Man Indicted for Securities Fraud
In Colorado Springs Robert Allen Zickefoose, 48, was indicted by a grand jury on seven counts of securities fraud and theft, for allegedly perpetrating a scheme by which he defrauded investors of over $3.2 million. The investors were defrauded into purchasing investments in the two oil and natural gas wells.
According to the Attorney General’s press release Zickefoose never actually owned any part of the two wells, called Ruby #1 and Ruby #2. This did not, however, dissuade him from bringing in a large amount of investment dollars, to the tune of $3.2 million, by selling interests in his companies Zickefoose Reserves LLC., and Choice Energy Group LLC. Using cold calling as his primary way of luring investors in Zickefoose was able to convince people in Colorado Springs and other areas that they were purchasing the rights to 45 percent of the profits generated by the two wells. With Oil and Natural Gas being in the news frequently and seemingly a hot commodity, Zickefoose was able to craft a pitch that sounded legitimate. At least 14 investors were convinced until it came to light that the wells were actually owned by Star Ryder Energy LLC, a Sedalia based company, and that neither Zickefoose Reserves nor Choice Energy, had anything to do with them. Further facts about documents provided and other due diligence will, most likely, emerge as the investigation continues. Thus far Zickefoose has not cooperated with investigators.
Zickefoose Reserves LLC was set up by Robert Zickefoose in 2009, and voluntarily dissolved in December 2012. Choice Energy Group LLC was set up in 2011.
Zickefoose, meanwhile spent the majority of the money on personal expenses, cash withdrawals, and payments to employees at his company. He also used some of the money to pay off past investors, according to the statement released by the Colorado Attorney General’s Office. More details are sure to emerge as the investigation and case continues to unravel.
Zickefoose Reserves LLC and Choice Energy Group LLC came under scrutiny from the Colorado Division of Securities in 2011 based on a call made to a Colorado investor by a Choice Energy representative. Zickefoose then failed to show up for a number of appointments with division investigators, ultimately prompting Judge Herbert Stern III to order Zickefoose to provide sworn testimony in connection with the investigation.
On June 17th, Zickefoose was arrested and incarcerated at El Paso County Criminal Justice Center on $500,000 bond from where he is scheduled to enter a plea before Judge Thomas Kennedy this week.
There are many legitimate companies out raising money, however, there are also a large number of individuals who will readily defraud an investor of their money. Mr. Zickefoose’s actions came to light because of an alert investor that informed authorities. In today’s economy it always behooves an investor to perform the right level of due diligence and have a good knowledge of the investment opportunities before signing over any money.