SEC Settles Gold Mine Offering Fraud Case
The Securities and Exchange Commission (“SEC”) announced that it has settled with two of the defendants in an offering fraud case involving a purported $11 billion gold mine. In July 2012, the SEC charged a father, son and daughter with perpetrating a $2.7 million securities fraud on approximately 140 investors in 23 states. Harry Dean Proudfoot III, Matthew Dale Proudfoot, Laurie Anne Vrvilo and their Oregon-based company, 3 Eagles Research & Development LLC (“3 Eagles”), allegedly told investors that 3 Eagles would extract gold worth more than $11 billion from its mine in Ohio resulting in a 35% return to investors.
According to the SEC, in reality, the majority of investors’ funds were used to purchase cars, jewelry and vacations. In addition, the SEC claims that 3 Eagles did not own rights to much of the land it was purportedly mining for gold and because investors’ funds were misappropriated for personal expenses, the company did not have the necessary funds to start production of the mine.
The SEC announced that Matthew Proudfoot and Laurie Anne Vrvilo agreed to permanent injunctions prohibiting future securities violations and to disgorgement of the $2.7 million raised from investors between September 2009 and October 2011. The SEC’s action against 3 Eagles and Harry Proudfoot is still pending.