The founder and CEO of 808 Renewable Energy Corp. has been charged with orchestrating a scheme to steal millions of dollars from investors to support his lifestyle and pay commissions to sales agents who allegedly helped him perpetrate the fraud.
Between 2009 through 2014, 808 Renewable raised more than $30 million from more than 500 investors nationwide through securities offerings, representing that the proceeds would go toward acquiring new equipment and expanding the business.
But according to the U.S. Securities and Exchange Commission, 808 Renewable CEO Patrick Carter misappropriated about half of that money, sometimes taking a portion for himself of the commission fees paid to sales agents.
Also named as defendants in an SEC civil complaint are Renewable Energy chief operating officer Peter Kirkbride, sales agents Martin Kinchloe and Thomas Flowers, and 808 Investments LLC, a company controlled by Carter.
“We allege that Patrick Carter orchestrated a fraudulent scheme using 808 Renewable Energy Corporation to raise millions,” Michele Wein Layne, director of the SEC’s Los Angeles office, said in a news release. “While telling investors their funds would be used for the benefit of the company, Carter and his associates looted 808 Renewable.”
Carter, who has previously been sanctioned by Texas and California securities regulators, found 808 Renewable in May 2009 to manage renewable energy projects for public entities and industrial firms. According to the SEC, it has never been profitable and by 2015 had only four operations systems installed at customer sites.
Five different types of stock were sold through private placements, with most of the money ($14 million) coming from sales of Carter’s founder shares. In promoting the offerings, Carter and his sales agents allegedly misrepresented not only how the investor funds would be used, but that Renewable 808 was generating positive cash flow that would be used to pay dividends to investors.
The SEC said the company was “cash-strapped” and used a “Ponzi-like” structure to pay dividends to existing investors from new investor funds.
Flowers has agreed to pay more than $1.4 million to settle the charges against him.