LOUISVILLE — A Kentucky man serving time in federal prison for heading an oil investment scam has reached a $15.4 million settlement with the federal Securities and Exchange Commission in a second oil drilling scheme.
David G. Rose, 60, along with two members of his family reached settlements with the SEC last week over allegations that they defrauded more than 265 investors in unregulated securities in multiple states.
Rose, who is in the federal prison medical facility in Lexington, is also forbidden to sell unregistered securities in the future.
The settlements stem from a lawsuit filed by the SEC against Rose, his son Jason Rose, and nine other businesses and people. The lawsuit, filed in June 2009 in federal court in Indiana, claims Rose served as behind-the-scenes director of a company called Berkshire Offerings, which raised about $15.5 million from 265 oil and gas investors in the United States and Canada from April 2006 through December 2007.
The company, incorporated in Wyoming and based in Indiana and Florida, promised 60 percent to 80 percent returns on the investments in oil and gas rigs in Texas and Louisiana, but no investor made a profit off of any rig.
The SEC claimed Rose and his co-defendants took at least $6.7 million and spent much of the money on the company's directors and members of the Rose family, with some of the money going to home mortgages, credit card expenses and a Kentucky Derby party at Churchill Downs.
David Rose is serving a 52-month sentence in federal prison and was unavailable for comment. He pleaded guilty in July 2009 to one count of tax evasion and 21 fraud-related counts. He was also ordered to pay $3 million in restitution. Attempts to reach a spokesman for the Securities and Exchange Commission were unsuccessful.
Rose's son Jason T. Rose agreed to pay $317,194; another son, Brian C. Rose, will pay $441,658; Mark D. Long, an associate of Rose who served as a salesman for Berkshire, will pay $590,312; and Rose's ex-wife, Joyce A. Rose, agreed to pay $196,512. The agreements also bar all the participants from selling unregistered securities in the future.
A federal grand jury in Louisville charged David Rose in January 2008 with swindling investors out of millions of dollars by promising to invest in oil and gas exploration, then spending their money on himself. A grand jury in Bowling Green also charged Rose with failing to pay taxes in 2001, then taking steps to hide his assets.