Two Austin business partners pleaded guilty Tuesday in U.S. District Court to operating a Ponzi scheme that scammed oil and gas investors of as much as $20 million.
Robert Allen Helms, 52, and Janniece Kaelin, 55, pleaded guilty to one count of securities fraud and one count of conspiracy. According to a civil lawsuit filed in 2015 by the Securities and Exchange Commission, the two used investor funds to travel around the world over 23 days in 2012 — spotting elephants in Thailand and Tanzania, riding camels in Jordan and relaxing on a beach in Fiji. The investors also funded Kaelin’s daughter’s lavish Hawaii wedding, which had a price tag of $247,415, the suit says.
According to the indictment, the SEC says Helms and Kaelin misappropriated a total of $17.9 million they raised from investors. In one example, the complaint said, Helms and Kaelin transferred about $4.4 million from their firm, Vendetta Royalty Partners, to a separate firm called Vendetta Management. At least $3 million of that money was misappropriated from investors, the complaint said, including a $1.4 million transfer to Helms himself.
Helms and Kaelin also took $5.9 million from later investors to pay earlier investors, the complaint says.
The SEC says from January 2010 to December 2010 the two misled at least 80 investors in 13 states about their credentials in the oil and gas industry and kept the invested money for themselves. Among their other spending was $111,600 for airfare, including for the Hawaii wedding, $102,440 for tuition and $287,928 for mortgage payments.
They signed identical plea agreements with each facing a maximum sentence of five years in prison on each of the two charges. They could end up serving 10 years if Judge Lee Yeakel orders their sentences to run consecutively.
U.S. Magistrate Judge Mark Lane, who presided over Tuesday’s hearing, warned the defendants prior to their guilty pleas that “you don’t know what the sentence will be.”
A sentencing date will probably be set for the fall with both sides working until then to reach an agreement on the true amount of money investors lost. The U.S. attorney’s office says it’s between $8 million and $20 million, but attorneys for Helms and Kaelin believe the figure is lower, according to Helms’ lawyer, Daniel Wannamaker.
The number could determine if — and how long — the defendants go to prison, as sentencing guidelines are influenced by the amount of money the defendants raised.
“We think that the loss is far less than what the government is calculating,” Wannamaker said. “We think there were some earnings and that should offset the losses.
The defendants will be ordered to pay restitution of twice the amount of the money the judge determines was lost by the investors.
Lane sided with the SEC in the lawsuit, ordering that Helms and Kaelin each pay a penalty of $4.2 million — half of the total amount of investor funds they were found to have applied for personal use.