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    United States Attorney's Office
    Central District of California

    Thom Mrozek
    Public Affairs Officer

    (213) 894-6947
    thom.mrozek@usdoj.gov



    Return to the 2007 Press Release Index
    Release No. 07-129

    October 5, 2007

    TWO MEN ARRESTED IN $27 MILLION SCAM THAT BILKED MORE THAN 5OO IN COAL MINES, GOLD TRANSACTION SCAM

    Federal authorities have arrested two men on charges of defrauding more than 500 investors out of more than $27 million through a bogus investment scheme that promised victims huge returns in relation to coal mines and an international commodities transaction.

    Robert Jennings, 57, who claimed to be the president of Tri Energy, a coal mining company, was arrested Thursday at his residence in Perris. Arthur Simburg, 63, who represented himself as the senior vice president of Tri Energy, was arrested Thursday morning in Portland, Oregon. The arrests followed the return of a 33-count federal grand jury indictment on September 27 that accuses Jennings, Simburg and a third man of operating the Ponzi scheme and violating a court order to cease the scheme.

    The third defendant, Henry Jones, 53, a record company executive, formerly of Marina Del Rey, was arrested by Hong Kong authorities in July at the request of the United States and is pending extradition.

    According to the indictment, Jones, Simburg and Jennings solicited investors for a coal mine venture and a purported gold transaction that was highly secretive and allegedly involved the sale of 20,000 tons of gold between Israel and the United Arab Emirates. Investors were solicited largely through nightly conference calls in which investors were promised huge rates of return on the investments – as much as double or 300 percent return within two months. Many of the conference calls included group prayer and claims that the gold transaction was “divinely inspired.”

    Despite the promises of profitable investments, Jones allegedly spent a large portion of the victim-investors’ money on extravagant personal expenses, including a house in Marina Del Rey, a condominium in Culver City, and Ferrari Spider and Porsche Cayenne automobiles. Simburg and Jennings allegedly used victim-investor funds to support themselves. The victim-investors ultimately lost more than $27 million to Jones, Simburg and Jennings.

    “Many times the financial loss suffered by victims of investment fraud ruins every aspect of their life,” said Inspector in Charge B. Bernard Ferguson, Los Angeles Division - U.S. Postal Inspection Service. “Hopefully, the indictment and arrests of these defendants will bring some satisfaction to the victims in this case.”

    J. Stephen Tidwell, Assistant Director in Charge of the FBI in Los Angeles, said: "The numerous charges against Mr. Jennings and Mr. Simburg illustrate multi-tiered criminal activity where hundreds of individuals fell victim to an elaborate scheme allegedly concocted by the defendant sin order to steal millions for their personal luxury. The case should also serve as a reminder to future investors that it is prudent to investigate potential ventures before taking costly risks."

    Jennings, who is expected to be released on bond today, is scheduled to be arraigned on the indictment Tuesday morning in United States District Court in Los Angeles. Simburg made an initial appearance Thursday afternoon in federal court in Portland and was ordered to appear by next Thursday in United States District Court in Los Angeles.

    The indictment charges Jennings with three counts of mail fraud, 10 counts of wire fraud, six counts of securities fraud and one count of contempt of court for violating of a federal court order issued in a related case filed by the Securities and Exchange Commission. The indictment charges Simburg with three counts of mail fraud, 10 counts of wire fraud, six counts of securities fraud and two counts of contempt of court. The indictment charges Jones with three counts of mail fraud, 10 counts of wire fraud, six counts of securities fraud, four counts of contempt of court, one count of witness tampering and seven counts of money laundering. If convicted of the respective counts charged against them, Jennings faces a maximum statutory sentence of 390 years in federal prison, Simburg faces a maximum statutory sentence of 400 in federal prison and Jones faces a maximum statutory sentence of 500 years in federal prison.

    Thomas M. Jankowski, acting Special Agent in Charge of IRS - Criminal Investigation in Los Angeles, stated:“Money laundering is not a victimless crime. Innocent people who have taken advantage of by schemes such as this are victims. The arrests and the indictment of Robert Jennings, Arthur Simburg, and Henry Jones is an example of the effectiveness of law enforcement cooperation in bringing these types of criminals to justice. The perpetrators of Ponzi schemes need to be put on notice that stealing from their victims will be investigated and prosecuted whenever possible."

    An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

    The charges in the indictment are the results of an investigation conducted by the United States Postal Inspection Service, the Federal Bureau of Investigation and IRS-Criminal Investigation Division. The Securities and Exchange Commission provided substantial assistance.

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    Release No. 07-129
    Return to the 2007 Press Release Index