SEC v. Progressive Energy Partners, LLC; Jerry L. Aubrey; Timothy J. Aubrey; Brian S. Cherry; and Aaron M. Glasser, Central District of California (Oct. 11, 2011) — Complaint

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-' 
MOLLY M. WlllTE (Cal. Bar No. 171448) 

Email: 
whitem(CV,sec.gov 

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JENNIFER T. PlJRPERO (Cal. Bar No. 247976) 
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Email: [email protected] 

Attorneys for Plaintiff 

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Securities and Exchange Commission 

Rosalind R. Tyson, Regional Director 
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John M. 
McCoy III, Associate Regional Director 
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5670 Wilshire Boulevard, 11th Floor 
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Los Angeles, California 90036 
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Telephone: (323} 965-3998 ';:.D c.n 
FacsImile: (323) 965-3908 
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UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT 
OF CALIFORNIA 

SOUTHERN DIVISION 

Case No. <;;AeV {\-ISLe I-{ u
v 
$. (!2-NV/~')
COMMISSION, 
COMPLAINT 
Plaintiff, 
vs. 
JERRYL.AUBREY, TIMOTHY J. 

AUBREY, BRIAN S. CHERRY, 

AARON M. GLASSER, 

Defendants. 
SECURITIES AND EXCHANGE 

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1. 
Progressive Energy Partners, LLC ("PEP"), Jerry L. Aubrey, 
Timothy 
J. Aubrey, Brian S. Cherry, and Aaron M. Glasser conducted an $11 
million boiler room fraud that victimized more than 200 investors. From 
approximately September 2005 to December 2009, PEP fraudulently offered and 
sold its securities to investors nationwide and in Canada through unregistered 
offerings. The Defendants claimed the investors' money would be used to develop 
and support oil and gas wells. 
In fact, the bulk ofthe money was used to line the 
Defendants' pockets, fund lavish lifestyles, and make Ponzi-like payments 
intended to perpetuate the fraud. 
2. Jerry Aubrey, PEP's principal, used PEP to run a Ponzi scheme by 
paying alleged investor returns with money raised from new investors. Tim 
Aubrey played a key role in the fraud by helping his brother manage PEP. Both 
Jerry and Tim Aubrey misappropriated investor funds for their personal use to pay 
for, among other things, box seats at Lakers basketball games, trips to Hawaii and 
Las Vegas, and personal attorney's fees, 
as well as taking direct distributions by 
cash or check. In carrying out the fraud, Jerry Aubrey, Tim Aubrey, Brian Cherry, 
and Aaron Glasser (collectively, the "Defendants"): 
1) misrepresented to investors 
they could expect a greater than 50% annual return on their investment; 2) failed to 
disclose to investors that up to 35% 
oftheir investment would be used to pay sales 
commissions; and 3) falsely represented to investors that PEP used an accounting 
firm to assist with investor distributions. 
3. The Defendants, by engaging in the conduct described in this 
complaint, have violated, and unless enjoined will continue to violate, the 
registration, antifraud, and broker-dealer registration provisions 
ofthe federal 
securities laws. By this action, the Securities and Exchange Commission 
("Commission") seeks permanent injunctions, disgorgement with prejudgment 
interest, and civil penalties. 
1 

III 

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JURISDICTION AND VENUE 

4. This Court has jurisdiction over this action pursuant to Sections 20(b), 
20(d)(l) and 22(a) 
ofthe Securities Act of 1933 ("Securities Act"), 15 U.S.C. 
§§ 77t(b), 77t(d)(l), & 77v(a), and Sections 21(d)(l), 21(d)(3)(A), 21(e), and 27 of 
the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §§ 78u(d)(l), 
78u(d)(3)(A), 78u(e), & 78aa. The Defendants have, directly or indirectly, made 
use 
ofthe means or instrumentalities of interstate commerce, of the mails, or ofthe 
facilities 
of a national securities exchange in connection with the transactions, acts, 
practices and courses 
ofbusiness alleged in this Complaint. 
5. Venue is proper in this district pursuant to Section 22(a) 
ofthe 
Securities Act, 
15 U.S.C. § 77v(a), and Section 27 ofthe Exchange Act, 15 U.S.C. 
§ 78aa, because certain 
ofthe transactions, acts, practices, and courses of conduct 
constituting violations 
ofthe federal securities laws occurred within this district, 
and most 
ofthe Defendants reside or are located in this district. 
DEFENDANTS 
6. Jerry L. Aubrey, of Moreno Valley, California, was PEP's founder, 
managing member, and a PEP salesperson. Jerry Aubrey operated PEP from about 
May 2005 to April 2010. He holds no securities licenses and has never been 
registered with the Commission in any capacity. 
7. In April 2007, the Florida Attorney General's Office criminally 
charged Jerry Aubrey with securities fraud in connection with the offer and sale 
of 
security interests in a body scan imaging business that he operated from 
approximately December 2000 to October 2003. 
State ofFla. v. Aubrey, Case No. 
07-31911CFAES (Fla. Volusia County Ct. 2007). In July 2010, he pled guilty to 
one count 
of securities or investment fraud in that matter. In October 2010, he was 
sentenced to five years in prison followed by 25 years probation, and he was 
ordered to pay $5,795,923 in restitution. Jerry Aubrey is currently serving his 
prison sentence in Florida and has not yet paid any restitution. 
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8. 
In August 1998, the Commission charged Jerry Aubrey with violating 
the broker-dealer registration provisions 
ofthe Exchange Act in connection with an 
offering fraud in which he sold securities in a fictitious cruise ship. 
SEC v. Todd, 
Case No. 98-6509 DT (JGX) (C.D. Cal. 1998). In March 1999, he was 
permanently enjoined from future violations 
of Section 15(a)(1) ofthe Exchange 
Act and was ordered to pay a $5,500 civil penalty. Many state securities agencies 
have obtained cease-and-desist orders against Jerry Aubrey for his involvement 
with PEP and other companies. 
9. Timothy 
J. Aubrey, of Moreno Valley, California, is Jerry Aubrey's 
brother and was a PEP manager and salesperson. Tim Aubrey helped manage PEP 
and its salespeople from approximately May 2005 to December 2009. Tim Aubrey 
holds no securities licenses and has never been registered with the Commission in 
any capacity. 
10. Brian S. Cherry ("Cherry"), ofNewport Beach, California, was a PEP 
salesperson from about September 2006 to January 2009. He holds no securities 
licenses and has never been registered with the Commission in any capacity. 
11. Aaron M. Glasser ("Glasser"), of Costa Mesa, California, was a PEP 
salesperson from about August 2006 to October 2009. He holds Series 22 and 
63 
licenses. In May 2006, FINRA denied Glasser's registration because in 2002 he 
pled guilty to four counts 
of check forgery and in 2003 he pled guilty to one count 
ofpossession or sale ofa controlled substance. Glasser has never been registered 
with the Commission in any capacity. During the Commission's investigation, 
Glasser asserted his Fifth Amendment privilege against self-incrimination. 
THE FRAUDULENT SCHEME 
12. Jerry Aubrey masterminded and organized the scheme that he and the 
other Defendants conducted through PEP. He operated and managed PEP's boiler 
room operations from May 2005 through April 2010. His brother, Tim Aubrey, 
played a key role in orchestrating PEP's fraud. 
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13. From September 2005 through December 2009, PEP raised 
approximately 
$11 million from more than 200 investors nationwide and in Canada 
through five unregistered securities offerings 
of limited liability company ("LLC") 
interests (which were called "units" in PEP's Private Placement Memorandum, or 
"PPMs"). PEP's offerings were titled Progressive Energy Partners, LLC 
#1 
through 
#5 ("PEP #1 through #5"). The Defendants sold units or partial units of 
$25,000 in the five offerings. The Defendants caused PEP to take in more money 
in most 
of its offerings than the PPMs permitted. The Defendants also sometimes 
extended the offering periods beyond what was stated in the PPMs. Some 
investors invested in multiple offerings. The money raised from each offering was 
supposed to be used to develop and support oil and gas wells. 
14. PEP 
#1 offered $900,000 worth of units and raised $1,361,250 from 
September 2005 to October 2006 from 
57 investors. PEP #2 offered $1,500,000 
worth 
ofunits and raised $1,962,500 from October 2006 to March 2007 from 61 
investors. PEP #3 offered $2,000,000 worth of units and raised $2,674,985 from 
March 2007 to October 2007 from 
67 investors. PEP #4 offered $1,800,000 worth 
of units and raised $4,549,905 from October 2007 to April 2009 from 91 investors. 
PEP 
#5 offered $1,800,000 worth of units and raised $462,500 from May 2009 to 
December 2009 from 
19 investors. Details of these offerings are summarized 
below: 

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15. Jerry Aubrey prepared the offering and marketing materials (the 
"Offering Materials") that were mailed to potential investors for PEP 
#1 through 
#5. The Offering Materials for each offering included a cover letter, a PPM, an 
LLC agreement, a subscription agreement, a purchaser questionnaire, a 
bro~hure, 
and projection statements. The Offering Materials for the five different offerings 
were very similar, and the same brochure was used for all five offerings. 
A. Solicitation of Investors 
16. To solicit investors, Jerry and Tim Aubrey established and operated a 
boiler room with 
196 telephone lines. Jerry Aubrey bought an automatic dialer 
that cold called potential investors nationwide and in Canada. Tim Aubrey 
purchased lead lists with potential investors' phone numbers and loaded the lead 
lists onto the automatic dialer. The automatic dialer called the potential investors 
on the lead lists, and the potential investors heard a pre-recorded sales script when 
they answered the phone. 
Ifthe potential investors were interested in investing, 
they left a voice message on the automatic dialer. PEP salespeople called those 
potential investors who left a voice message. Tim Aubrey also purchased lead lists 
that PEP salespeople used to cold call potential investors. In addition, Jerry and 
Tim Aubrey personally cold called potential investors to solicit their investment. 
PEP also used a website (www.pepllc.net) to solicit investors. 
17. PEP salespeople were called "fronters" and "closers." Tim Aubrey 
supervised the fronters, and Jerry Aubrey supervised the closers. Fronters were 
salespeople who made the initial cold call to potential investors and sometimes 
read sales scripts to potential investors. 
Ifthe potential investors were interested in 
investing, then Tim Aubrey authorized the mailing 
of Offering Materials to the 
potential investors. A closer then called the potential investors to complete'the 
sale. Investors sent checks payable to PEP or wired funds directly to PEP's bank 
accounts. 
18. Cherry worked for PEP as a fronter and a closer for almost two and a 
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half years, from about September 2006 to January 2009. Cherry solicited investors 
for PEP 
#1 through #4. Cherry read or skimmed the PPMs, brochure, projection 
statements, and LLC agreements for those offerings. 
19. Glasser worked for PEP as a fronter and a closer for more than three 
years, from approximately August 2006 to October 2009. Glasser solicited 
investors for PEP 
#1 through #5. 
B. 	Misappropriation of Investor Funds and Material Misrepresentations 
And Omissions 
of Material Fact 
20. Jerry Aubrey used investor funds to run a Ponzi scheme, and Jerry and 
Tim Aubrey misused investor funds to pay for numerous personal expenses. The 
Defendants also made multiple false and misleading statements to investors. The 
Defendants misrepresented that investors could expect a greater than 50% annual 
return on investment, failed to disclose that investor funds would be used to pay up 
to 35% sales commissions, and falsely represented that PEP used a CPA firm to 
assist with investor distributions. 
1. Jerry and Tim Aubrey Misused Investor Funds 
21. The PPMs prepared by Jerry Aubrey for PEP #1 through #5 falsely 
represented that almost half 
of investor funds would be spent on oil and gas wells 
and the remainder 
of investor funds would be used for other business expenses. 
But investor funds were not spent as represented in the PPMs. Only about 
$887,458, or 8%, 
ofthe $11 million raised from all five offerings was spent on oil 
and gas wells. 
22. Instead 
of using investor funds for oil and gas wells, Jerry Aubrey 
used most 
ofthe $11 million to pay alleged investor returns, personal expenses, 
and undisclosed sales commissions to PEP salespeople, and to distribute cash and 
checks to himself and family members (including Tim Aubrey). 
23. Jerry Aubrey, who controlled 
PEP's bank accounts and determined 
investor distribution amounts, used approximately 
$2 million of investor funds to 
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pay alleged investor returns and return some investor principal. During the almost 
five years PEP was in operation, PEP only had $169,439 in total revenue, and PEP 
had no profits. PEP's only operational revenue came from six wells in West 
Virginia that PEP leased for PEP # 
1. PEP never developed any wells for PEP #2 
through #5. Because PEP generated no profits, PEP's only source 
of money was 
new investor funds. Using new investor money, Jerry Aubrey transferred investor 
funds between PEP's bank accounts to pay alleged investor returns. 
24. Jerry and Tim Aubrey misappropriated more than $3.2 million 
of 
investor funds for their personal use. Jerry Aubrey withdrew about $500,000 
directly from PEP's bank accounts to pay for personal expenses, and he distributed 
another $2.7 million in cash and checks to himself, Tim Aubrey, their mother, and 
their company, Allied Marketing Consultants. A portion 
of the $2.7 million in 
cash and checks were alleged salary and sales commissions paid to Jerry and Tim 
Aubrey, even though PEP's legitimate business activities were virtually 
nonexistent. 
25. According to Tim Aubrey, Jerry Aubrey used investor funds to do "all 
kinds 
ofthings... limo rides ... to [Staples Center] for Lakers game[s] ... Vegas ... 
strip clubs and just being a high roller." Jerry and Tim Aubrey spent investor 
funds on such items 
as: 
• 	Rent for the Aubrey family's lavish house in Orange County, California. 
The Aubreys paid 
as much as $7,100 per month for a three story, 
approximately 4,000 square foot house, equipped with large screen 
televisions, a pool table, giant fish aquariums with exotic fish, a hot tub, a 
pool, and a tennis court. 
• 	Personal attorney's fees, including fees for the defense 
of Jerry Aubrey'S 
criminal securities fraud case in Florida. 
• 	Box seats at Lakers basketball games and limousine rides to Lakers games. 
• 	Family vacations, which included two trips to Maui, Hawaii. 
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The chart below details how the bulk 
of investor funds were 
• 	Vacations for Jerry Aubrey, Tim Aubrey, PEP salespeople, and 
administrative staff, which included trips to Las Vegas, Palm Springs, and 
Big Bear. 
• 	A Lexus car and jewelry for Jerry Aubrey's girlfriend. 
• 	Trucks, cars, and Harley Davidson motorcycles. 
• 	Expensive fish, including miniature sharks, and fish aquariums. 
27. 
Jerry and Tim Aubrey knew, or were reckless in not knowing, that 
they were misusing investor proceeds in contravention 
of their representations to 
investors. 
2. 
The Defendants Misrepresented PEP's Return on 
Investment 
28. The Defendants falsely represented that investors could expect an 
extremely high return on investment. 
PEP's brochure, which was prepared by 
Jerry Aubrey, contained a section titled "Potential High Financial Rewards" that 
falsely stated PEP had a "return of capital in as little as 12 to 24 months," "better 
than 10 to 1 potential return on investment," and "greater than 50% annual rate 
of 
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return." In addition to sending the brochure to potential investors, PEP salespeople 
sometimes used the brochure 
as a script when they spoke with potential investors 
over the phone. 
29. PEP's projection statements for PEP 
#1 through #5 falsely projected 
that for the first year the oil and gas wells were operating, PEP would make large 
investor distributions ranging from $23,069 to $52,399 on a $25,000 investment. 
The statements also projected that for the first 
five years the wells were ·operating, 
total investor distributions would range from $91,708 to $212,811 on a $25,000 
investment. In addition to sending the projection statements to potential investors, 
PEP salespeople sometimes used the projection statements when they spoke with 
potential investors over the phone. 
30. Tim Aubrey and Aaron Glasser prepared sales scripts that Tim 
Aubrey gave the fronters to read to potential investors. Jerry Aubrey and Tim 
Aubrey also used an automatic dialer that had a script that potential investors 
heard. These scripts generally said PEP projected annual returns 
of more than 
70%, or PEP had potential returns 
ofbetter than 10 to 1. 
31. Cherry sometimes read the misleading "Potential High Financial 
Rewards" section from PEP's brochure to potential investors. At times, Cherry 
also read a sales script to potential investors that falsely claimed PEP had high 
returns. In addition, Cherry falsely told potential investors they had a chance to 
earn multiples on their investment for the life 
ofthe wells and the average life of a 
well was 
10 to 14 years. Cherry also told potential investors, "it's not a matter of if 
you're going to make money, it's how much you're going to make." 
32. Glasser wrote a letter to a potential investor assuring him that 
ifhe did 
not earn a 73% return on his investment, then 
he could sell his investment back to 
PEP. Glasser also wrote an email to an existing investor stating that he was 
earning a 45% annual return on PEP #1, and that 
ifthe investor invested in PEP #3, 
he would earn $1,740 per month for each $25,000 unit, an almost 84% annual 
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return. Glasser reviewed the projection statements for PEP #3 and #4 with at least 
one investor over the phone. Glasser also told this investor that the investor was 
making a 40-60% return on PEP # 1 and that another company was interested in 
buying PEP's wells for a large price. Furthermore, Glasser told at least one other 
investor that PEP #4 was a great investment that would make more money than 
PEP #2. 
33. In fact, PEP only had $169,439 in revenue from December 2007 to 
January 2010 and no profits. Despite PEP's lack 
of revenue and profit, the 
Defendants continued to use the brochure, projection statements, and sales scripts. 
The Defendants knew, or were reckless in not knowing, that their representations 
regarding PEP's return on investment were false. 
3. The Defendants Failed to Disclose Sales Commissions 
34. The Defendants failed to disclose to potential investors that up to 35% 
oftheir investment would be used to pay sales commissions. The PPMs for PEP 
# 1 through 
#5 were silent on the subject of sales commissions, and the Defendants 
did not disclose the sales commissions to investors. The amount 
of sales 
commission varied depending on whether an investor was a new investor or an 
existing investor and whether the salesperson fronted and/or closed the deal. 
Fronters generally received 5-7% 
ofthe funds raised. Closers generally received 
20-30% 
ofthe funds raised. Jerry Aubrey, who authorized the payment of sales 
commissions to salespeople, paid about $2.2 million in undisclosed sales 
commISSIons. 
35. Jerry and Tim Aubrey each took a 2% sales commission on all PEP 
investments sold. Cherry received up to a 25% sales commission on investments 
he sold, and he received total sales commissions 
of about $337,450. Glasser 
received up to a 25% sales commission on investments he sold, and he received 
total sales commissions 
of about $741,633. The Defendants knew, or were 
reckless in not knowing, that the sales commissions were not disclosed to 
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investors. 
4. 	The Defendants Misrepresented the Help of an Accounting 
Firm in Making Investor Distributions 
36. 
Jerry Aubrey prepared the LLC agreements that falsely stated that 
PEP used the assistance 
of an "independent CP A firm" to make distributions to 
investors. PEP did not use an independent CPA 
firm-Jerry Aubrey simply 
decided 
how much to distribute to investors. In addition, Cherry and Glasser each 
misrepresented to at least one investor that PEP's financial statements were 
audited. The Defendants knew, or were reckless in not knowing, that·PEP did not 
use an independent CP A to make distributions to investors and that PEP did not 
have audited financial statements. 
FIRST CLAIM FOR RELIEF 

Unregistered Offer and Sale 
of Securities 

Violations 
of Sections 5( a) and 5( c) of the Securities Act 

(Against All Defendants) 

37. The Commission realleges and incorporates by reference paragraphs 1 
through 36 above. 
38. The Defendants, and each 
ofthem, by engaging in the conduct 
described above, directly or indirectly, made use 
of means or instruments of 
transportation or communication in interstate commerce or of the mails, to offer to 
sell or to sell securities, 
or to carry or cause such securities to be carried through 
the mails or in interstate commerce for the purpose 
ofsale or for delivery after 
sale. 
39. 
No registration statement has been filed with the Commission or has 
been in effect with respect to any ofthe offerings alleged herein. 
40. 
By engaging in the conduct described above, all of the Defendants 
violated, and unless restrained and enjoined will continue to violate, Sections 5(a) 
and 5(c) 
ofthe Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c). 
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SECOND CLAIM FOR RELIEF 

Fraud in The Offer or Sale of Securities 

Violations 
of Section 17(a) of the Securities Act 

(Against All Defendants) 

41. The Commission realleges and incorporates by reference paragraphs 1 
through 36 above. 
42. The Defendants, and each 
of them, by engaging in the conduct 
described above, in the offer or sale 
of securities by the use of means or 
instruments 
oftransportation or communication in interstate commerce or by use 
ofthe mails directly or indirectly: 
a. 	with scienter, employed devices, schemes, or artifices to 
defraud; 
b. 	obtained money or property by means ofuntrue statements of a 
material fact or by omitting to state a material fact necessary in 
order to make the statements made, in light 
ofthe 
circumstances under which they were made, not misleading; or 
c. 	
engaged in transactions, practices, or courses 
ofbusiness which 
operated or would operate 
as a fraud or deceit upon the 
purchaser. 
43. By engaging in the conduct described above, the defendants violated, 
and unless restrained and enjoined will continue to violate, Section 17(a) 
ofthe 
Securities Act, 
15 U.S.C. § 77q(a). 
THIRD CLAIM FOR RELIEF 

Fraud in Connection With The Purchase or Sale of Securities 

Violations 
of Section 1 O(b) of the Exchange Act and Rule 10b-5 Thereunder 

(Against All Defendants) 

44. The Commission realleges and incorporates by reference paragraphs 1 
through 36 above. 
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45. The Defendants, and each of them, by engaging in the conduct 
described above, directly or indirectly, in connection with the purchase or sale 
of a 
security, by the use 
of means or instrumentalities of interstate commerce, ofthe 
mails, or 
ofthe facilities of a national securities exchange, with scienter: 
a. 	employed devices, schemes, or artifices to defraud; 
b. 	made untrue statements of a material fact or omitted to state a 
material fact necessary in order to make the statements made, in 
the light 
ofthe circumstances under which they were made, not 
misleading; or 
c. 	
engaged in acts, practices, or courses 
of business which 
operated or would operate 
as a fraud or deceit upon other 
persons. 
46. By engaging in the conduct described above, the Defendants violated, 
and unless restrained and enjoined will continue to violate, Section 1 
O(b) of the 
Exchange Act, 
15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. 
§ 240.10b-5. 
FOURTH CLAIM FOR RELIEF 

Fraud in Connection With The Purchase or Sale of Securities 

Aiding and Abetting Violations of Section lOeb) of the Exchange Act and Rule 

lOb-5 Thereunder 

(Against Jerry Aubrey) 

47. The Commission realleges and incorporates by reference paragraphs 1 
through 36 above. 
48. PEP and PEP 
#1 through #5, by engaging in the conduct described 
above, directly or indirectly, in connection with the purchase or sale 
of a security, 
by the use 
of means or instrumentalities of interstate commerce, of the mails, or of 
the facilities of a national securities exchange, with scienter made untrue 
statements 
of a material fact or omitted to state a material fact necessary in order to 
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make the statements made, in the light of the circumstances under which they were 
made, not misleading. 
49. Jerry Aubrey knew, or was reckless in not knowing, that PEP's and 
PEP 
#1 through #5's conduct was improper and Jerry Aubrey knowingly and 
substantially assisted PEP and PEP # 1 through 
#5 in directly or indirectly violating 
Section 10(b) 
of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. 
§ 240.10b-5, thereunder. 
50. By engaging in the conduct described above, pursuant to Section 
20(e) 
ofthe Exchange Act, 15 U.S.C. § 78t(e), Jerry Aubrey aided and abetted the 
violations 
of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 
10b-5, 
17 C.F .R. § 240.10b-5, thereunder. 
FIFTH CLAIM FOR RELIEF 

Failure to Register as a Broker-Dealer 

Violations 
of Section 15(a) of the Exchange Act 

(Against All Defendants) 

51. The Commission realleges and incorporates by reference paragraphs 1 
through 36 above. 
52. The Defendants, and each 
ofthem, by engaging in the conduct 
described above, directly or indirectly, made use 
ofthe mails or means or 
instrumentalities 
of interstate commerce to effect transactions in, or to induce or 
attempt to induce, the purchase or sale 
of securities, without being registered as 
brokers or dealers in accordance with Section 15(a) 
ofthe Exchange Act, 15 
U.S.C. § 780(a). 
53. By engaging in the conduct described above, the Defendants violated 
and unless restrained and enjoined will continue to violate Section 15(a) 
ofthe 
Exchange Act, 
15 U.S.C. § 780(a). 
III 
III 
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PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court: 
I. 
Issue findings of fact and conclusions of law that the Defendants committed 
the alleged violations. 
n 
Issue judgments, in forms consistent with Rule 65(d) ofthe Federal Rules of 
Civil Procedure: 
A. 	Temporarily, preliminarily and permanently enjoining the Defendants 
and their officers, agents, servants, employees, and attorneys, and 
those persons in active concert or participation with any 
of them, who 
receive actual notice 
of the judgment by personal service or otherwise, 
and each 
ofthem, from violating Sections 5(a), 5(c), and 17(a) ofthe 
Securities Act, 
15 U.S.C. §§ 77e(a), 77e(c), & 77q(a), and Sections 
10(b) and 15(a) 
ofthe Exchange Act, 15 U.S.C. §§ 78j(b) & 78o(a), 
and Rule 10b-5 thereunder, 
17 C.F.R. § 240.10b-5. 
B. 	Permanently enjoining Jerry Aubrey and any entity he owns or 
controls from offering unregistered securities in the future. 
C. 	Ordering Tim Aubrey, Cherry, and Glasser to disgorge all ill-gotten 
gains from their illegal conduct, together with prejudgment interest 
thereon. 
D. 	Ordering Tim Aubrey, Cherry, and Glasser to pay civil penalties 
under Section 20(d) 
of the Securities Act, 15 U.S.C. § 77t(d), and 
Section 21(d)(3) 
ofthe Exchange Act, 15 U.S.C. § 78u(d)(3). 
III. 
Retain jurisdiction ofthis action in accordance with the principles of equity 
and the Federal Rules 
of Civil Procedure in order to implement and carry out the 
terms 
of all orders and decrees that may be entered, or to entertain any suitable 
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application or motion for additional relief within the jurisdiction ofthis Court. 
IV. 
Grant such other and further relief 
as this Court may determine to be just and 
necessary. 
DATED: October 11,2011 
MOLLY M. WHITE 
Attorneys for Plaintiff 
Securities and Exchange Commission 
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-' 

MOLLY M. WlllTE (Cal. Bar No. 171448) 

Email: whitem(CV,sec.gov 


,--'j ""- , ... ,..JJENNIFER T. PlJRPERO (Cal. Bar No. 247976) r';;·' c~ 

Email: [email protected] 


Attorneys for Plaintiff 

>. ~-.' - 1Securities and Exchange Commission 


Rosalind R. Tyson, Regional Director ._' , 

-,..\ -., :t::"-'='John M. McCoy III, Associate Regional Director 
c 

"tl -:.) ........:.:..


5670 Wilshire Boulevard, 11th Floor 
~:~ '2Los Angeles, California 90036 ,-' N

Telephone: (323} 965-3998 ';:.D c.n 
FacsImile: (323) 965-3908 4 

UNITED STATES DISTRICT COURT 


CENTRAL DISTRICT OF CALIFORNIA 


SOUTHERN DIVISION 


Case No. <;;AeV {\- ISLe I-{ uv $. (!2-NV/~ ')
COMMISSION, 

COMPLAINT 
Plaintiff, 

vs. 

JERRYL.AUBREY, TIMOTHY J. 

AUBREY, BRIAN S. CHERRY, 

AARON M. GLASSER, 


Defendants. 

SECURITIES AND EXCHANGE 



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1. Progressive Energy Partners, LLC ("PEP"), Jerry L. Aubrey, 

Timothy J. Aubrey, Brian S. Cherry, and Aaron M. Glasser conducted an $11 

million boiler room fraud that victimized more than 200 investors. From 

approximately September 2005 to December 2009, PEP fraudulently offered and 

sold its securities to investors nationwide and in Canada through unregistered 

offerings. The Defendants claimed the investors' money would be used to develop 

and support oil and gas wells. In fact, the bulk of the money was used to line the 

Defendants' pockets, fund lavish lifestyles, and make Ponzi-like payments 

intended to perpetuate the fraud. 

2. Jerry Aubrey, PEP's principal, used PEP to run a Ponzi scheme by 

paying alleged investor returns with money raised from new investors. Tim 

Aubrey played a key role in the fraud by helping his brother manage PEP. Both 

Jerry and Tim Aubrey misappropriated investor funds for their personal use to pay 

for, among other things, box seats at Lakers basketball games, trips to Hawaii and 

Las Vegas, and personal attorney's fees, as well as taking direct distributions by 

cash or check. In carrying out the fraud, Jerry Aubrey, Tim Aubrey, Brian Cherry, 

and Aaron Glasser (collectively, the "Defendants"): 1) misrepresented to investors 

they could expect a greater than 50% annual return on their investment; 2) failed to 

disclose to investors that up to 35% oftheir investment would be used to pay sales 

commissions; and 3) falsely represented to investors that PEP used an accounting 

firm to assist with investor distributions. 

3. The Defendants, by engaging in the conduct described in this 

complaint, have violated, and unless enjoined will continue to violate, the 

registration, antifraud, and broker-dealer registration provisions of the federal 

securities laws. By this action, the Securities and Exchange Commission 

("Commission") seeks permanent injunctions, disgorgement with prejudgment 

interest, and civil penalties. 

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III 



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JURISDICTION AND VENUE 


4. This Court has jurisdiction over this action pursuant to Sections 20(b), 

20(d)(l) and 22(a) of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. 

§§ 77t(b), 77t(d)(l), & 77v(a), and Sections 21(d)(l), 21(d)(3)(A), 21(e), and 27 of 

the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §§ 78u(d)(l), 

78u(d)(3)(A), 78u(e), & 78aa. The Defendants have, directly or indirectly, made 

use of the means or instrumentalities of interstate commerce, of the mails, or of the 

facilities of a national securities exchange in connection with the transactions, acts, 

practices and courses ofbusiness alleged in this Complaint. 

5. Venue is proper in this district pursuant to Section 22(a) ofthe 

Securities Act, 15 U.S.C. § 77v(a), and Section 27 of the Exchange Act, 15 U.S.C. 

§ 78aa, because certain of the transactions, acts, practices, and courses of conduct 

constituting violations of the federal securities laws occurred within this district, 

and most of the Defendants reside or are located in this district. 

DEFENDANTS 

6. Jerry L. Aubrey, of Moreno Valley, California, was PEP's founder, 

managing member, and a PEP salesperson. Jerry Aubrey operated PEP from about 

May 2005 to April 2010. He holds no securities licenses and has never been 

registered with the Commission in any capacity. 

7. In April 2007, the Florida Attorney General's Office criminally 

charged Jerry Aubrey with securities fraud in connection with the offer and sale of 

security interests in a body scan imaging business that he operated from 

approximately December 2000 to October 2003. State ofFla. v. Aubrey, Case No. 

07-31911CFAES (Fla. Volusia County Ct. 2007). In July 2010, he pled guilty to 

one count of securities or investment fraud in that matter. In October 2010, he was 

sentenced to five years in prison followed by 25 years probation, and he was 

ordered to pay $5,795,923 in restitution. Jerry Aubrey is currently serving his 

prison sentence in Florida and has not yet paid any restitution. 

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8. In August 1998, the Commission charged Jerry Aubrey with violating 

the broker-dealer registration provisions of the Exchange Act in connection with an 

offering fraud in which he sold securities in a fictitious cruise ship. SEC v. Todd, 

Case No. 98-6509 DT (JGX) (C.D. Cal. 1998). In March 1999, he was 

permanently enjoined from future violations of Section 15(a)(1) of the Exchange 

Act and was ordered to pay a $5,500 civil penalty. Many state securities agencies 

have obtained cease-and-desist orders against Jerry Aubrey for his involvement 

with PEP and other companies. 

9. Timothy J. Aubrey, of Moreno Valley, California, is Jerry Aubrey's 

brother and was a PEP manager and salesperson. Tim Aubrey helped manage PEP 

and its salespeople from approximately May 2005 to December 2009. Tim Aubrey 

holds no securities licenses and has never been registered with the Commission in 

any capacity. 

10. Brian S. Cherry ("Cherry"), ofNewport Beach, California, was a PEP 

salesperson from about September 2006 to January 2009. He holds no securities 

licenses and has never been registered with the Commission in any capacity. 

11. Aaron M. Glasser ("Glasser"), of Costa Mesa, California, was a PEP 

salesperson from about August 2006 to October 2009. He holds Series 22 and 63 

licenses. In May 2006, FINRA denied Glasser's registration because in 2002 he 

pled guilty to four counts of check forgery and in 2003 he pled guilty to one count 

ofpossession or sale ofa controlled substance. Glasser has never been registered 

with the Commission in any capacity. During the Commission's investigation, 

Glasser asserted his Fifth Amendment privilege against self-incrimination. 

THE FRAUDULENT SCHEME 

12. Jerry Aubrey masterminded and organized the scheme that he and the 

other Defendants conducted through PEP. He operated and managed PEP's boiler 

room operations from May 2005 through April 2010. His brother, Tim Aubrey, 

played a key role in orchestrating PEP's fraud. 

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13. From September 2005 through December 2009, PEP raised 

approximately $11 million from more than 200 investors nationwide and in Canada 

through five unregistered securities offerings of limited liability company ("LLC") 

interests (which were called "units" in PEP's Private Placement Memorandum, or 

"PPMs"). PEP's offerings were titled Progressive Energy Partners, LLC #1 

through #5 ("PEP #1 through #5"). The Defendants sold units or partial units of 

$25,000 in the five offerings. The Defendants caused PEP to take in more money 

in most of its offerings than the PPMs permitted. The Defendants also sometimes 

extended the offering periods beyond what was stated in the PPMs. Some 

investors invested in multiple offerings. The money raised from each offering was 

supposed to be used to develop and support oil and gas wells. 

14. PEP #1 offered $900,000 worth of units and raised $1,361,250 from 

September 2005 to October 2006 from 57 investors. PEP #2 offered $1,500,000 

worth ofunits and raised $1,962,500 from October 2006 to March 2007 from 61 

investors. PEP #3 offered $2,000,000 worth of units and raised $2,674,985 from 

March 2007 to October 2007 from 67 investors. PEP #4 offered $1,800,000 worth 

of units and raised $4,549,905 from October 2007 to April 2009 from 91 investors. 

PEP #5 offered $1,800,000 worth of units and raised $462,500 from May 2009 to 

December 2009 from 19 investors. Details of these offerings are summarized 

below: 



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15. Jerry Aubrey prepared the offering and marketing materials (the 

"Offering Materials") that were mailed to potential investors for PEP #1 through 

#5. The Offering Materials for each offering included a cover letter, a PPM, an 

LLC agreement, a subscription agreement, a purchaser questionnaire, a bro~hure, 

and projection statements. The Offering Materials for the five different offerings 

were very similar, and the same brochure was used for all five offerings. 

A. Solicitation of Investors 

16. To solicit investors, Jerry and Tim Aubrey established and operated a 

boiler room with 196 telephone lines. Jerry Aubrey bought an automatic dialer 

that cold called potential investors nationwide and in Canada. Tim Aubrey 

purchased lead lists with potential investors' phone numbers and loaded the lead 

lists onto the automatic dialer. The automatic dialer called the potential investors 

on the lead lists, and the potential investors heard a pre-recorded sales script when 

they answered the phone. If the potential investors were interested in investing, 

they left a voice message on the automatic dialer. PEP salespeople called those 

potential investors who left a voice message. Tim Aubrey also purchased lead lists 

that PEP salespeople used to cold call potential investors. In addition, Jerry and 

Tim Aubrey personally cold called potential investors to solicit their investment. 

PEP also used a website (www.pepllc.net) to solicit investors. 

17. PEP salespeople were called "fronters" and "closers." Tim Aubrey 

supervised the fronters, and Jerry Aubrey supervised the closers. Fronters were 

salespeople who made the initial cold call to potential investors and sometimes 

read sales scripts to potential investors. If the potential investors were interested in 

investing, then Tim Aubrey authorized the mailing of Offering Materials to the 

potential investors. A closer then called the potential investors to complete'the 

sale. Investors sent checks payable to PEP or wired funds directly to PEP's bank 

accounts. 

18. Cherry worked for PEP as a fronter and a closer for almost two and a 

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half years, from about September 2006 to January 2009. Cherry solicited investors 

for PEP #1 through #4. Cherry read or skimmed the PPMs, brochure, projection 

statements, and LLC agreements for those offerings. 

19. Glasser worked for PEP as a fronter and a closer for more than three 

years, from approximately August 2006 to October 2009. Glasser solicited 

investors for PEP #1 through #5. 

B. 	 Misappropriation of Investor Funds and Material Misrepresentations 

And Omissions of Material Fact 

20. Jerry Aubrey used investor funds to run a Ponzi scheme, and Jerry and 

Tim Aubrey misused investor funds to pay for numerous personal expenses. The 

Defendants also made multiple false and misleading statements to investors. The 

Defendants misrepresented that investors could expect a greater than 50% annual 

return on investment, failed to disclose that investor funds would be used to pay up 

to 35% sales commissions, and falsely represented that PEP used a CPA firm to 

assist with investor distributions. 

1. Jerry and Tim Aubrey Misused Investor Funds 

21. The PPMs prepared by Jerry Aubrey for PEP #1 through #5 falsely 

represented that almost half of investor funds would be spent on oil and gas wells 

and the remainder of investor funds would be used for other business expenses. 

But investor funds were not spent as represented in the PPMs. Only about 

$887,458, or 8%, of the $11 million raised from all five offerings was spent on oil 

and gas wells. 

22. Instead of using investor funds for oil and gas wells, Jerry Aubrey 

used most of the $11 million to pay alleged investor returns, personal expenses, 

and undisclosed sales commissions to PEP salespeople, and to distribute cash and 

checks to himself and family members (including Tim Aubrey). 

23. Jerry Aubrey, who controlled PEP's bank accounts and determined 

investor distribution amounts, used approximately $2 million of investor funds to 

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pay alleged investor returns and return some investor principal. During the almost 

five years PEP was in operation, PEP only had $169,439 in total revenue, and PEP 

had no profits. PEP's only operational revenue came from six wells in West 

Virginia that PEP leased for PEP # 1. PEP never developed any wells for PEP #2 

through #5. Because PEP generated no profits, PEP's only source of money was 

new investor funds. Using new investor money, Jerry Aubrey transferred investor 

funds between PEP's bank accounts to pay alleged investor returns. 

24. Jerry and Tim Aubrey misappropriated more than $3.2 million of 

investor funds for their personal use. Jerry Aubrey withdrew about $500,000 

directly from PEP's bank accounts to pay for personal expenses, and he distributed 

another $2.7 million in cash and checks to himself, Tim Aubrey, their mother, and 

their company, Allied Marketing Consultants. A portion of the $2.7 million in 

cash and checks were alleged salary and sales commissions paid to Jerry and Tim 

Aubrey, even though PEP's legitimate business activities were virtually 

nonexistent. 

25. According to Tim Aubrey, Jerry Aubrey used investor funds to do "all 

kinds of things... limo rides ... to [Staples Center] for Lakers game[s] ... Vegas ... 

strip clubs and just being a high roller." Jerry and Tim Aubrey spent investor 

funds on such items as: 

• 	 Rent for the Aubrey family's lavish house in Orange County, California. 

The Aubreys paid as much as $7,100 per month for a three story, 

approximately 4,000 square foot house, equipped with large screen 

televisions, a pool table, giant fish aquariums with exotic fish, a hot tub, a 

pool, and a tennis court. 

• 	 Personal attorney's fees, including fees for the defense of Jerry Aubrey'S 

criminal securities fraud case in Florida. 

• 	 Box seats at Lakers basketball games and limousine rides to Lakers games. 

• 	 Family vacations, which included two trips to Maui, Hawaii. 

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The chart below details how the bulk of investor funds were 

• 	 Vacations for Jerry Aubrey, Tim Aubrey, PEP salespeople, and 

administrative staff, which included trips to Las Vegas, Palm Springs, and 

Big Bear. 

• 	 A Lexus car and jewelry for Jerry Aubrey's girlfriend. 

• 	 Trucks, cars, and Harley Davidson motorcycles. 

• 	 Expensive fish, including miniature sharks, and fish aquariums. 

27. Jerry and Tim Aubrey knew, or were reckless in not knowing, that 

they were misusing investor proceeds in contravention of their representations to 

investors. 

2. The Defendants Misrepresented PEP's Return on 

Investment 

28. The Defendants falsely represented that investors could expect an 

extremely high return on investment. PEP's brochure, which was prepared by 

Jerry Aubrey, contained a section titled "Potential High Financial Rewards" that 

falsely stated PEP had a "return of capital in as little as 12 to 24 months," "better 

than 10 to 1 potential return on investment," and "greater than 50% annual rate of 

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return." In addition to sending the brochure to potential investors, PEP salespeople 

sometimes used the brochure as a script when they spoke with potential investors 

over the phone. 

29. PEP's projection statements for PEP #1 through #5 falsely projected 

that for the first year the oil and gas wells were operating, PEP would make large 

investor distributions ranging from $23,069 to $52,399 on a $25,000 investment. 

The statements also projected that for the first five years the wells were ·operating, 

total investor distributions would range from $91,708 to $212,811 on a $25,000 

investment. In addition to sending the projection statements to potential investors, 

PEP salespeople sometimes used the projection statements when they spoke with 

potential investors over the phone. 

30. Tim Aubrey and Aaron Glasser prepared sales scripts that Tim 

Aubrey gave the fronters to read to potential investors. Jerry Aubrey and Tim 

Aubrey also used an automatic dialer that had a script that potential investors 

heard. These scripts generally said PEP projected annual returns of more than 

70%, or PEP had potential returns ofbetter than 10 to 1. 

31. Cherry sometimes read the misleading "Potential High Financial 

Rewards" section from PEP's brochure to potential investors. At times, Cherry 

also read a sales script to potential investors that falsely claimed PEP had high 

returns. In addition, Cherry falsely told potential investors they had a chance to 

earn multiples on their investment for the life of the wells and the average life of a 

well was 10 to 14 years. Cherry also told potential investors, "it's not a matter of if 

you're going to make money, it's how much you're going to make." 

32. Glasser wrote a letter to a potential investor assuring him that ifhe did 

not earn a 73% return on his investment, then he could sell his investment back to 

PEP. Glasser also wrote an email to an existing investor stating that he was 

earning a 45% annual return on PEP #1, and that if the investor invested in PEP #3, 

he would earn $1,740 per month for each $25,000 unit, an almost 84% annual 

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return. Glasser reviewed the projection statements for PEP #3 and #4 with at least 

one investor over the phone. Glasser also told this investor that the investor was 

making a 40-60% return on PEP # 1 and that another company was interested in 

buying PEP's wells for a large price. Furthermore, Glasser told at least one other 

investor that PEP #4 was a great investment that would make more money than 

PEP #2. 

33. In fact, PEP only had $169,439 in revenue from December 2007 to 

January 2010 and no profits. Despite PEP's lack of revenue and profit, the 

Defendants continued to use the brochure, projection statements, and sales scripts. 

The Defendants knew, or were reckless in not knowing, that their representations 

regarding PEP's return on investment were false. 

3. The Defendants Failed to Disclose Sales Commissions 

34. The Defendants failed to disclose to potential investors that up to 35% 

of their investment would be used to pay sales commissions. The PPMs for PEP 

# 1 through #5 were silent on the subject of sales commissions, and the Defendants 

did not disclose the sales commissions to investors. The amount of sales 

commission varied depending on whether an investor was a new investor or an 

existing investor and whether the salesperson fronted and/or closed the deal. 

Fronters generally received 5-7% of the funds raised. Closers generally received 

20-30% ofthe funds raised. Jerry Aubrey, who authorized the payment of sales 

commissions to salespeople, paid about $2.2 million in undisclosed sales 

commISSIons. 

35. Jerry and Tim Aubrey each took a 2% sales commission on all PEP 

investments sold. Cherry received up to a 25% sales commission on investments 

he sold, and he received total sales commissions of about $337,450. Glasser 

received up to a 25% sales commission on investments he sold, and he received 

total sales commissions of about $741,633. The Defendants knew, or were 

reckless in not knowing, that the sales commissions were not disclosed to 

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investors. 

4. 	 The Defendants Misrepresented the Help of an Accounting 

Firm in Making Investor Distributions 

36. Jerry Aubrey prepared the LLC agreements that falsely stated that 

PEP used the assistance of an "independent CP A firm" to make distributions to 

investors. PEP did not use an independent CPA firm- Jerry Aubrey simply 

decided how much to distribute to investors. In addition, Cherry and Glasser each 

misrepresented to at least one investor that PEP's financial statements were 

audited. The Defendants knew, or were reckless in not knowing, that·PEP did not 

use an independent CP A to make distributions to investors and that PEP did not 

have audited financial statements. 

FIRST CLAIM FOR RELIEF 


Unregistered Offer and Sale of Securities 


Violations of Sections 5( a) and 5( c) of the Securities Act 


(Against All Defendants) 


37. The Commission realleges and incorporates by reference paragraphs 1 

through 36 above. 

38. The Defendants, and each of them, by engaging in the conduct 

described above, directly or indirectly, made use of means or instruments of 

transportation or communication in interstate commerce or of the mails, to offer to 

sell or to sell securities, or to carry or cause such securities to be carried through 

the mails or in interstate commerce for the purpose of sale or for delivery after 

sale. 

39. No registration statement has been filed with the Commission or has 

been in effect with respect to any of the offerings alleged herein. 

40. By engaging in the conduct described above, all of the Defendants 

violated, and unless restrained and enjoined will continue to violate, Sections 5(a) 

and 5(c) of the Securities Act, 15 U.S.C. §§ 77e(a) and 77e(c). 

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SECOND CLAIM FOR RELIEF 


Fraud in The Offer or Sale of Securities 


Violations of Section 17(a) of the Securities Act 


(Against All Defendants) 


41. The Commission realleges and incorporates by reference paragraphs 1 

through 36 above. 

42. The Defendants, and each of them, by engaging in the conduct 

described above, in the offer or sale of securities by the use of means or 

instruments of transportation or communication in interstate commerce or by use 

of the mails directly or indirectly: 

a. 	 with scienter, employed devices, schemes, or artifices to 

defraud; 

b. 	 obtained money or property by means ofuntrue statements of a 

material fact or by omitting to state a material fact necessary in 

order to make the statements made, in light of the 

circumstances under which they were made, not misleading; or 

c. 	 engaged in transactions, practices, or courses ofbusiness which 

operated or would operate as a fraud or deceit upon the 

purchaser. 

43. By engaging in the conduct described above, the defendants violated, 

and unless restrained and enjoined will continue to violate, Section 17(a) of the 

Securities Act, 15 U.S.C. § 77q(a). 

THIRD CLAIM FOR RELIEF 


Fraud in Connection With The Purchase or Sale of Securities 


Violations of Section 1 O(b) of the Exchange Act and Rule 10b-5 Thereunder 


(Against All Defendants) 


44. The Commission realleges and incorporates by reference paragraphs 1 

through 36 above. 

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45. The Defendants, and each of them, by engaging in the conduct 

described above, directly or indirectly, in connection with the purchase or sale of a 

security, by the use of means or instrumentalities of interstate commerce, of the 

mails, or of the facilities of a national securities exchange, with scienter: 

a. 	 employed devices, schemes, or artifices to defraud; 

b. 	 made untrue statements of a material fact or omitted to state a 

material fact necessary in order to make the statements made, in 

the light of the circumstances under which they were made, not 

misleading; or 

c. 	 engaged in acts, practices, or courses of business which 

operated or would operate as a fraud or deceit upon other 

persons. 

46. By engaging in the conduct described above, the Defendants violated, 

and unless restrained and enjoined will continue to violate, Section 1 O(b) of the 

Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. 

§ 240.10b-5. 

FOURTH CLAIM FOR RELIEF 


Fraud in Connection With The Purchase or Sale of Securities 


Aiding and Abetting Violations of Section lOeb) of the Exchange Act and Rule 


lOb-5 Thereunder 


(Against Jerry Aubrey) 


47. The Commission realleges and incorporates by reference paragraphs 1 

through 36 above. 

48. PEP and PEP #1 through #5, by engaging in the conduct described 

above, directly or indirectly, in connection with the purchase or sale of a security, 

by the use of means or instrumentalities of interstate commerce, of the mails, or of 

the facilities of a national securities exchange, with scienter made untrue 

statements of a material fact or omitted to state a material fact necessary in order to 

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make the statements made, in the light of the circumstances under which they were 

made, not misleading. 

49. Jerry Aubrey knew, or was reckless in not knowing, that PEP's and 

PEP #1 through #5's conduct was improper and Jerry Aubrey knowingly and 

substantially assisted PEP and PEP # 1 through #5 in directly or indirectly violating 

Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. 

§ 240.10b-5, thereunder. 

50. By engaging in the conduct described above, pursuant to Section 

20(e) of the Exchange Act, 15 U.S.C. § 78t(e), Jerry Aubrey aided and abetted the 

violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 

10b-5, 17 C.F .R. § 240.10b-5, thereunder. 

FIFTH CLAIM FOR RELIEF 


Failure to Register as a Broker-Dealer 


Violations of Section 15(a) of the Exchange Act 


(Against All Defendants) 


51. The Commission realleges and incorporates by reference paragraphs 1 

through 36 above. 

52. The Defendants, and each of them, by engaging in the conduct 

described above, directly or indirectly, made use of the mails or means or 

instrumentalities of interstate commerce to effect transactions in, or to induce or 

attempt to induce, the purchase or sale of securities, without being registered as 

brokers or dealers in accordance with Section 15(a) of the Exchange Act, 15 

U.S.C. § 780(a). 

53. By engaging in the conduct described above, the Defendants violated 

and unless restrained and enjoined will continue to violate Section 15(a) of the 

Exchange Act, 15 U.S.C. § 780(a). 

III 

III 

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PRAYER FOR RELIEF 


WHEREFORE, the Commission respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that the Defendants committed 

the alleged violations. 

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Issue judgments, in forms consistent with Rule 65(d) ofthe Federal Rules of 

Civil Procedure: 

A. 	 Temporarily, preliminarily and permanently enjoining the Defendants 

and their officers, agents, servants, employees, and attorneys, and 

those persons in active concert or participation with any of them, who 

receive actual notice of the judgment by personal service or otherwise, 

and each of them, from violating Sections 5(a), 5(c), and 17(a) of the 

Securities Act, 15 U.S.C. §§ 77e(a), 77e(c), & 77q(a), and Sections 

10(b) and 15(a) of the Exchange Act, 15 U.S.C. §§ 78j(b) & 78o(a), 

and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5. 

B. 	 Permanently enjoining Jerry Aubrey and any entity he owns or 

controls from offering unregistered securities in the future. 

C. 	 Ordering Tim Aubrey, Cherry, and Glasser to disgorge all ill-gotten 

gains from their illegal conduct, together with prejudgment interest 

thereon. 

D. 	 Ordering Tim Aubrey, Cherry, and Glasser to pay civil penalties 

under Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d), and 

Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3). 

III. 

Retain jurisdiction of this action in accordance with the principles of equity 

and the Federal Rules of Civil Procedure in order to implement and carry out the 

terms of all orders and decrees that may be entered, or to entertain any suitable 

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application or motion for additional relief within the jurisdiction of this Court. 

IV. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

DATED: October 11,2011 

MOLLY M. WHITE 
Attorneys for Plaintiff 
Securities and Exchange Commission 

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