(Okoboji)– A now-bankrupt Texas company trying to recoup commissions it paid on fraudulent securities is suing four Iowa firms who sold them, including a local one.
Provident Royalties of Dallas and its subsidiaries was charged last summer with running a $495 million Ponzi scheme. The company has since filed for bankruptcy and last week filed a lawsuit against the dealers who directly sold the securities to clients. It’s trying to recover $285 million in claims and commissions.
The Securities Exchange Commission says offerings from Provident sold between June 2006 and January 2009 falsely promised annual returns of up to 18 percent and told investors that 85 percent of the money raised through the offerings would be used for oil and gas ventures. Instead they say less than 50 percent was used for that purpose.
A Chief Operating officer of one of the companies named in the suit says he’s confident the matter will be dismissed.
The local firm named in the suit, Okoboji Financial, has filed notice with the Securities and Exchange Commission and the Financial Industry Regulatory Authority that it intends to cease business as a broker/dealer.
