Arizona Man Sentenced for $10.2 Million Securities Fraud Scheme
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Globe, Ariz., man was sentenced in federal court today for his role in a $10.2 million securities fraud conspiracy that victimized more than 12,000 investors across the United States and Canada who bought shares in Petro America Corporation, which was purported to be a profitable company with $284 billion in assets.
Brian Langenbach, 46, of Globe, was sentenced by U.S. District Judge Brian C. Wimes to three years and 10 months in federal prison without parole. The court also ordered Langenbach to pay $696,660 in restitution.
Langenbach, the final defendant to be sentenced in this case, pleaded guilty on June 22, 2012. Five co-defendants were convicted at trial and Langenbach is among nine co-defendants who pleaded guilty.
Langenbach admitted that he participated in a conspiracy to commit securities fraud and wire fraud. Contrary to the fraudulent representations Langenbach and others made to victim-investors, Petro America had no oil, no realistic prospects for obtaining, transporting or storing large amounts of oil, no significant assets, no revenue and no employees other than the CEO.
Langenbach, a major figure in the Petro America scheme, was not licensed to sell securities. Langenbach admitted that he sold Petro America stock to at least 180 investors, receiving at least $400,000 in proceeds, from Aug. 20, 2009, to March 2, 2010. Although Langenbach became aware of red flags with the company, including the existence of cease and desist orders in Missouri and Kansas, he continued to sell shares anyway. When he sold shares, he relayed inflated expectations, and he did not disclose material negative information to investors, including the existence of the cease and desist orders.
Langenbach personally spoke on behalf of Petro during business dealings, and he personally attended at least one investor meeting and one update meeting in Arizona. Langenbach spoke on behalf of the company in negotiating business deals, and on multiple occasions entered into purported deals on behalf of his own company in partnership with Petro. Langenbach frequently spoke for Petro and sought out deals in order to bring purported assets into Petro so as to inflate the value of the stock.
This case was prosecuted by Assistant U.S. Attorneys Daniel M. Nelson and Kathleen D. Mahoney. It was investigated by IRS-Criminal Investigation, the U.S. Postal Inspection Service and the Office of the Missouri Securities Commissioner.