Three men pled guilty to securities violations in Madison CountyPublished 11:27am Monday, December 3, 2012
Three men pleaded guilty in Madison County last week to involvement in an investment scam dating back to 2006.
Madison County District Attorney Robert L. Broussard and Director of the Alabama Securities Commission Joseph P. Borg said Patrick Michael Daleiden and Bruce J. Mabey each pled guilty to one count of securities fraud on Nov. 27.
Daleiden is a former resident of Satellite Beach, Fla., and Mabey is a former resident of f Salt Lake City, Utah.
Presiding Judge William K. Bell, Madison County Circuit Court, sentenced Daleiden and Mabey each to a 6-year sentence that will run concurrent with the federal time to be determined and imposed by U.S. District Judge Kristi Dubose of the Southern District of Alabama in December.
With sentencing in Madison County and pending sentences in Choctaw County, Daleiden and Mabey have been ordered to pay $1,475,000 jointly in restitution to Alabama victims. Upon their entry of guilty pleas in Madison County the Madison County Sheriff will deliver them to Choctaw County jail for further sentencing. Thereafter, they are to be returned to the federal custody of the U.S. Marshals to face their final sentences with the U.S. District Court, Southern District of Alabama.
Also involved in this scam in Choctaw County, Madison County resident Matthew Arnold Gibson, pled guilty to three counts of sale of unregistered securities before Madison County Circuit Judge Dennis E. O’Dell on Nov. 28, the day after Daleiden and Mabey pled guilty.
Gibson was sentenced to one year and one day on each count, to run concurrently. The Court suspended the sentence, placed Gibson on probation for five years and ordered him to pay restitution totaling $150,000 to several Alabama investors.
“Daleiden, Mabey and Gibson cheated hardworking people and communities out of millions of dollars,” Borg said. “Daleiden and Mabey also took a joyride around the world living the high life at the expense and demise of others for almost a decade. Justice has been served and one reason is the superb continuing support, cooperation and sharing of resources between state and federal law officials. In addition to recognition of the Alabama Securities Commission’s Enforcement Division, special recognition goes to Kenyen Brown, U.S. Attorney for the Southern District of Alabama, and the FBI. Our agency welcomes continued cooperation with federal, state, and local authorities to prevent financial fraud and exploitation of citizens and to punish those who break the law.”
In September, Daleiden pled guilty to conspiracy and wire fraud charges and Mabey also pled guilty to wire fraud for involvement in a Choctaw County investment scam. The investment scam began in the summer of 2006 when Patrick Daleiden, his co-defendant Bruce Mabey, and Gibson solicited four Alabama investors by offering an opportunity to invest in a new industrial development on a 3,200 acre tract of land in Choctaw County, Alabama.
Daleiden, Mabey, and Gibson told investors Daleiden was in discussion with Bermuda-based Butterfield Bank about a $10 million credit facility for his company and the development of the facility was expected to begin in fall of 2006. The investors were told the loan proceeds from the credit facility would be used for the purchase of the land in Choctaw County and to develop the industrial park.
The collateral for the loan was alleged to be a $10 million bank guarantee issued by the Union Bank of Switzerland, which was purportedly issued to Starboard Capital Inc. Investors were told of a lending commitment for the project by a New York based real estate lending fund for the purchase of the land. Neither loan ever existed and the bank guarantee from UBS to Starboard Capital was a fake.
A seven-count indictment returned by a December 2009 session of the Madison County Grand Jury charged Daleiden with two counts of sale of unregistered securities; one count of sale of securities by an unregistered agent; and, four counts of securities fraud involving material misrepresentations or omissions.
The charges were the result of an Alabama Securities Commission Enforcement Division investigation into the failed industrial park development deal in Choctaw County, Alabama in which at least three Alabamians invested in excess of $400,000 with Daleiden’s company, Starboard Capital Inc., headquartered in Satellite Beach, Fla.
Alabama investors were issued worthless promissory notes, investment contracts and other investment instruments by Daleiden in return for their money, which was purportedly to be used for the development of a business and industrial park in Choctaw County.
The Alabama Securities Commission investigation revealed investor funds were not used as represented and that Daleiden used investors’ money for personal benefit. Alabama Securities Commission Registration Division records indicated that neither Daleiden, Starboard Capital Inc., nor the securities he offered and sold were registered with the Alabama Securities Commission as required by law.
Also convicted was Bruce J. Mabey, a Salt Lake City, Utah resident, who was arrested on outstanding warrants by U.S. Customs officers in Atlanta, Ga. on March 29, 2010. Mabey was transported to the Clayton County, Georgia Sheriff’s Department detention facility and later transported to Madison County to face charges. Mabey was indicted by the December 2009 session of the Madison County Grand Jury.
The Alabama Securities Commission cautions potential investors to thoroughly scrutinize and research any investment opportunity or offer.
Contact the Alabama Securities Commission with inquiries concerning securities broker-dealers, agents, investment advisers, investment adviser representatives, financial planners, registration status of securities or debt management programs, to report suspected fraud or to obtain consumer information. The Alabama Securities Commission provides free investor education and fraud prevention materials in print, on our website and through educational presentations upon request.