SEC v. Kevin T. Carney; Jonathan D. Freeze; and Robert J. Irey, No. 2:21-cv-00720-WSS, Western District of Pennsylvania (June 2, 2021) — Complaint

IN THE UNITED ST
ATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
SECURITIES AND EXCHANGE COMMISSION,
Case No.
Plaintiff,
v.
KEVIN T. CARNEY, JONATHAN D. FREEZE,
AND ROBERT J. IREY,
JURY TRIAL DEMANDED
Defendants.
COMPLAI
NT
Plaintiff Securities and Exchange Commission (the “Commission”) files this Complaint
against defendants Kevin T. Carney (“Carney”), Jonathan D. Freeze (“Freeze”), and Robert J.
Irey (“Irey”) (collectively, “Defendants”) and alleges as follows:
SUMMARY
1.This matter concerns an offering fraud orchestrated by Defendants who purported
to raise money for the renewable energy company, Alternative Energy Holdings, LLC (“AEH”).
Defendants were officers and managing members of AEH.
2.From June 2016 through February 2018, Defendants raised approximately $2.1
million from at least 25 investors through a fraudulent offering of securities in the form of at
least 31 promissory notes, many of which included an equity component, issued from AEH or
entities controlled by Irey.
3.Instead of investing the money as promised, Defendants used the majority of
investor proceeds for their personal benefit and to repay at least one existing investor.
2:21-cv-720

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4. To induce investment in AEH, Defendants falsely told investors, among other
things, that their money would be used for expenses related to a number of waste-to-energy
projects in which AEH was involved.
5. Defendants also told prospective investors, many of whom were Freeze’s broker-
dealer customers and Freeze’s and Irey’s neighbors, that they each had personally invested in
AEH when, in reality, they had not invested any of their own money in AEH.
6. Defendants further deceived investors by promising outsized returns on the
promissory notes, despite the fact that AEH had no source of short-term revenue and no realistic
expectation of making timely payments.
7. Instead of using the funds as promised, Defendants divided up investor proceeds,
often immediately upon receipt, and used the funds to pay for personal expenses, including
frequent casino visits, expensive clothing, meals, and vacations.
8. Carney also used investor funds to pay a portion of the criminal fine for his
convictions of grand theft and forgery related to selling a promissory note in another energy
venture—a fact which Defendants failed to disclose to investors.
9. By engaging in the conduct described in this Complaint, Defendants violated, and
unless enjoined will continue to violate, Section 17(a) of the Securities Act of 1933 (“Securities
Act”) [15 U.S.C. § 77q(a)] and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange
Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
JURISDICTION AND VENUE
10. The Commission brings this action pursuant to Sections 20(b) and 20(d) of the
Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)] and Sections 21(d) and 21(e) of the Exchange
Act [15 U.S.C. §§ 78u(d) and 78u(e)] to enjoin such acts, transactions, practices, and courses of

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business, and to obtain disgorgement, prejudgment interest, civil money penalties, and such other
and further relief as the Court may deem just and appropriate.
11. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d), and
22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)] and Sections 21(d), 21(e),
and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
12. Venue in this district is proper pursuant to Section 22(a) of the Securities Act [15
U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  Defendants Freeze and
Irey are believed to reside in this district.  In addition, certain of the acts, practices, and courses
of business constituting the violations of the federal securities laws alleged herein, including
misstatements to potential investors, misuse of investor proceeds, and the sale of promissory
notes, occurred within the Western District of Pennsylvania.
DEFENDANTS
13. Kevin Carney is a resident of Euclid, Ohio.  Carney is the Founder, Chief
Executive Officer and Chief Business Development Officer of AEH, and a Co-Founder of
Maxximus Group, LLC.  In October 2016, Carney pleaded guilty in Ohio state court to grand
theft and forgery in connection with a promissory note that he sold for Global Green Energy
Partners, LLC, another company under his control.
14. Jonathan Freeze is believed to reside in the Western District of Pennsylvania.
Freeze was AEH’s Chief Investment Officer.  From June 1995 until April 2017, Freeze worked
as a registered representative and/or an investment advisor representative with a series of firms.
The Financial Industry Regulatory Authority (“FINRA”) barred Freeze on August 14, 2017.
15. Robert Irey is a resident of Clarksville, Pennsylvania.  Irey was AEH’s Chief
Commercial Development Officer, a Co-Founder of Maxximus Group, LLC, the Founder and

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President of The Irey Group, LLC (“TIG”), and Founder and President of ACES America, LLC
(“ACES”).
FACTS
I. DEFENDANTS FRAUDULENTLY INDUCED INVESTORS TO BUY ALMOST
$2.1 MILLION IN AEH PROMISSORY NOTES AND EQUITY
16. Carney formed AEH in 2016 as a purported renewable energy company.  In May
of that year, AEH partnered with an energy company based in Washington, D.C. that possessed
established waste-to-energy technology (the “Energy Company”).
17. AEH was tasked with securing funding for the Energy Company’s proposed
waste-to-energy sites, each requiring approximately $130 million (“AEH-Energy Company
Projects”).
18. In the process of trying to fund an initial site in Greenville, South Carolina,
Carney met Freeze, a registered representative, and Irey, who worked for an energy consulting
group and claimed to have connections to several potential funding sources for the AEH-Energy
Company Projects.  Freeze and Irey joined AEH and became managing members.
19. In May 2016, an Irey-controlled entity, TIG, contracted with AEH to assist with
raising funds for AEH-Energy Company Projects.
20. In or around June 2016, Defendants began selling promissory notes purportedly to
support AEH’s pursuit of funding for the AEH-Energy Company Projects.
21. Most of the promissory notes were between investors and AEH, but TIG and
ACES, another Irey-controlled entity, were counterparties on seven promissory notes sold to
investors.  The promissory notes stated that the funds were for the benefit of AEH.

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22. The majority of the promissory notes had 60-day terms with a median annualized
promised return of 120%, and many included equity rights in the form of AEH Membership
Units which Defendants and investors referred to as “stock,” “shares,” and “equity.”
23. Freeze tapped into his broker-dealer customer base to solicit investors.  He and
Irey also targeted individuals who lived in their same apartment complex, most of whom were
unsophisticated investors.
24. Defendants induced investors to purchase the promissory notes by making false
statements to investors about the use of funds, the ability to pay large returns, Defendants’ own
investments in AEH, and failing to disclose Carney’s criminal conviction in a similar fraud.
25. During the relevant time period, Defendants raised nearly $2.1 million from the
sale of at least 31 promissory notes purportedly for the benefit of AEH.
26. Defendants caused investor funds to be placed into one of four AEH bank
accounts (collectively, “AEH Accounts”) which Defendants controlled.
A. Defendants Misrepresented How Investors’ Money Would Be Used
27. Many of the promissory notes Defendants offered and sold to investors contained
a “Use of Proceeds” sections that stated AEH would use the proceeds for expenses related to the
AEH-Energy Company Projects.
28. Despite the representations in the promissory notes about how investor funds
would be used, Defendants used the majority of investor funds to pay for personal expenses like
casino visits, restaurants, expensive clothing, and vacations.
29. Defendants also told investors that their investments with AEH would be used to
pursue funding for the AEH-Energy Company Projects.

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30. For example, in June 2016, an investor who was a broker-dealer customer of
Freeze purchased an $180,000 promissory note from ACES that promised a 20% return on
investment in four months.
31. Irey falsely told the investor that the money was needed for closing costs on the
AEH-Energy Company Projects.  No project was ever closed and the money was not used as
promised.
32. Emails from Carney also falsely informed investors that their proceeds would be
used for the AEH-Energy Company Projects.
33. For example, in a January 2017 email to an investor, Carney wrote, “our intent is
to use these funds for our ongoing soft and pre-development cost, allowing us a 30-60 day jump
on each of our current sites.”
34. In February 2017, Carney told another investor that their money would be used
for three categories of expenses: 1) a $50,000 engagement fee to a banking group to participate
in a “carbon credit monetization program”; 2) travel and expenses to set up a second waste-to-
energy site; and 3) legal and accounting expenses for the second site.
35. After both of these investors purchased promissory notes, most of their money
was used to pay for Defendants’ personal expenses unrelated to what Carney described,
including rent, car payments, expensive clothes, credit card payments, and cash withdrawals at
casino and racetrack locations.
36. In the majority of the promissory note transactions, Carney, Freeze, and Irey
withdrew all or most of the investors’ money immediately after it was deposited and divided it
among themselves.

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37. Defendants relied on the money obtained through the sale of promissory notes as
their primary source of income to pay for their personal expenses, as each Defendant had little
money during the relevant time period.
38. On May 9, 2017, Carney’s, Freeze’s, and Irey’s personal bank accounts carried
balances of $1,508, $22, and $104, respectively.  The next day, an investment of $49,999 from
the sale of a promissory note was deposited into an AEH bank account.
39. On May 11, 2017, Freeze withdrew $45,000 in cash from that AEH bank account.
That same day, Freeze, Carney, and Irey each deposited $15,000 into their respective personal
accounts to pay for expenses unrelated to AEH-Energy Company Projects.
40. In May 2018, Carney drafted documents called “Advance/Loan Against Future
Earnings Promissory Agreements” (the “Agreements”) in which he tracked investor funds
diverted to himself, Irey, and Freeze, labeling the payments “advances.”
41. Although Carney labeled these payments to Defendants as “advances,” the
promissory notes did not provide for investor funds to be advanced to the Defendants.
42. According to Carney’s calculations in the Agreements, at least $1,307,500 of
investor funds were taken by Defendants, including $414,620 of alleged “estimated advances” to
Irey, $435,380 to Freeze, and $457,500 to Carney.  Carney also listed in the Agreements a
purported $592,500 of “estimated company advances.”
B. Defendants Misrepresented the Ability to Pay the Promised High Returns on
the Promissory Notes
43. Four months after Defendants began selling promissory notes in June 2016, AEH
missed its first note repayment on October 1, 2016.
44. By the end of 2016, AEH was past due on four promissory notes and owed
investors more than $480,000.

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45. By May 2017, not a single investor had been repaid and AEH was late on more
than $1 million of payments due to investors.
46. Despite the inability to make any payments on existing promissory notes,
Defendants continued to solicit AEH investments while promising large, short-term returns.
47. Defendants knew, or were reckless in not knowing, that AEH could not make
payments within the terms of the promissory notes—particularly in light of the outstanding
balances owed to investors and the lack of significant progress in meeting any funding goals for
the AEH-Energy Company Projects.
48. AEH had no regular income stream.  More than 90% of the funds flowing into the
AEH Accounts were proceeds from the promissory notes.
49. Even if Defendants had financed deals for the AEH-Energy Company Projects,
which they did not, Defendants could not close the deal and repay investors in accordance with
the terms of the promissory notes, most of which required repayment within 60 days or less.
50. In July 2017, an investor purchased a $100,000 promissory note redeemable in 60
days with $50,000 of interest after Freeze assured the investor that AEH needed his money for
only one week.
51. The $100,000 from the sale of the promissory note was deposited into an AEH
bank account, which, prior to the deposit, had a balance of only $121.
52. On the same day that the investor purchased the promissory note, AEH owed
more than $1.6 million to prior investors, had not repaid any prior investors, had no expectation
of short-term income (other than the sale of promissory notes), and had only $121 in an AEH
bank account.

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53. Freeze knew, or was reckless in not knowing, that the investor could not be repaid
in accordance with the terms of the promissory note.
54. In February 2018, Irey sent a prospective investor an email, drafted by Carney,
that offered the investor $50,000 in interest on a $100,000 promissory note, with principal and
interest to be repaid in full within 30 days.
55. The email also stated that the investor would receive $30,000 each month for 12
months, starting on March 4, 2018, for a total return on investment of $410,000.
56. The investor purchased the $100,000 promissory note and the funds from the sale
were deposited into an AEH bank account, which, prior to the deposit, had a negative balance.
57. At this time, AEH owed more than $2 million in principal and interest to
investors, had only repaid one investor $13,000, and had a negative balance of $842 in an AEH
bank account.
58. Carney and Irey knew, or were reckless in not knowing, that there was no
reasonable expectation that AEH could make these promised payments that would have totaled
$410,000 in profits owed over the next twelve months—a return of more than four times the
initial investment.
59. Defendants sold 26 promissory notes, raising over $1.4 million, while Defendants
knew, or were reckless in not knowing, that they were past due in repaying prior investors.
60. Of the limited repayments that Defendants made to investors, none of the
repayments used revenue from the AEH-Energy Company Projects.  In fact, the AEH-Energy
Company Projects never generated any revenue.
61. Defendants made at least one repayment to an existing investor using other
investors’ money in the form of a Ponzi-like payment.

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62. Defendants repaid at least two other investors using money obtained from a
previous AEH investor’s loan to TIG.
C.  Defendants Misrepresented That They Had Invested Their Own Money in
AEH and Failed to Disclose Carney’s Criminal Conviction for a Similar
Fraud
63. In the course of soliciting investments in AEH during the relevant time period,
Defendants falsely claimed to have made significant personal investments in AEH and the AEH-
Energy Company Projects.
64. In or about early 2017, Defendants stated during a meeting with a prospective
investor that each of them personally had invested in AEH.
65. In or around May 2016, Carney told an investor that he personally had invested
$400,000, and that Irey personally had invested $200,000.
66. In or around May 2017, Carney told an investor that he personally had invested
$1 million in AEH.
67. Freeze often told investors during the relevant time period that he invested
$600,000 with AEH that he had received from a legal settlement.
68. None of these statements were true.  The Defendants never invested in AEH.
69. In soliciting investments in AEH, Defendants falsely described to potential
investors Carney’s “decades of proven experience” in the renewable energy business.
70. Defendants failed to disclose, however, that in October 2016, Carney was
convicted in Ohio of grand theft and forgery in connection with his solicitation of a promissory
note in another alleged renewable energy company.
71. Carney used AEH investor money to pay a portion of his $5,000 criminal fine.
72. Defendants did not disclose this criminal matter or criminal sanctions as they
were actively seeking AEH investors.

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73. Defendants did not disclose to investors that any investor money would be used to
pay Carney’s criminal fine.
II. DEFENDANTS VIOLATED THE FEDERAL SECURITIES LAWS
74. The promissory notes offered and sold by Defendants (the “Securities”) were
securities within the meaning of the Securities Act and the Exchange Act.
75. AEH investors provided Defendants with an investment of money—from June
2016 through February 2018 approximately 25 investors gave Defendants approximately $2.1
million.
76. Defendants pooled investors’ money into the AEH Accounts and represented that
they would use those funds to operate AEH and grow the business.
77. Investors considered the promissory notes to be investments and were interested
in the profits the promissory notes were expected to generate.  In fact, the investors and
Defendants alike often referred to the promissory notes as “investments.”
78. The promissory notes were not secured by accounts receivable, liens, or any other
asset, and there is no other regulatory scheme that would reduce the risk associated the
promissory notes.
79. Investors played no role in the management or operations of the business of AEH.
80. Investors made their investments with a reasonable expectation of profits to be
derived solely from Defendants’ supposed ability to generate profits without any participation by
any of its investors.
81. Defendants engaged in the conduct described herein, including the offer and sale
of the Securities, by use of the means or instruments of transportation or communication in
interstate commerce, the instrumentalities of interstate commerce, and/or by use of the mails.

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82. Defendants solicited investments from investors in at least seven states and
through the use of the mails.
83. Defendants knowingly made material untrue statements and omitted material facts
necessary in order to make the statements made, in light of the circumstances under which they
were made, not misleading.
84. A reasonable investor would consider the misrepresented facts and omitted
information described herein—including, among other things, misrepresentations and omissions
regarding the high rate of returns on investments, the ability to make payments to investors,
Carney’s criminal conviction for a similar fraud scheme, and the use of investors’ money to pay
for Defendants’ personal expenses—important in deciding whether or not to purchase the
Securities.
85. The untrue statements of material fact and material omissions described herein
were made in the offer or sale and in connection with the purchase or sale of Securities.
86. In connection with the conduct described herein, Defendants acted knowingly or
recklessly.  Defendants knew, or were reckless in not knowing, that they were making material
misrepresentations and omitting to state material facts necessary to make certain statements not
misleading under the circumstances.
87. Defendants knew, or were reckless in not knowing, that investor funds were not
being used as promised and that the Defendants had no reasonable basis to believe that they
could repay investors in accordance with the terms of the promissory notes they were selling.
88. Defendants obtained money or property by means of untrue statements of material
fact and omissions of material fact necessary in order to the make the statements made, in light

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of the circumstances under which they were made, not misleading.  Investors sent money directly
to the Defendants, and Defendants took the money for their own use and benefit.
89. Defendants used devices, schemes, and artifices to defraud investors, and engaged
in acts, transactions, practices, or courses of business that operated as a fraud or deceit upon the
investors.
90. In addition to the numerous misrepresentations discussed herein, among other
things, Defendants misled investors and misappropriated investors’ funds for their personal use
and benefit.
FIRST CLAIM FOR RELIEF
Violations of Section 17(a) of the Securities Act
(Against All Defendants)
91. The Commission re-alleges and incorporates by reference each and every
allegation in paragraphs 1 through 90, above, as if the same were fully set forth herein.
92. From at least June 2016 through February 2018, as a result of the conduct alleged
herein, Defendants Carney, Freeze, and Irey knowingly or recklessly or, with respect to subparts
b and c below, negligently, in the offer or sale of securities, directly or indirectly, singly or in
concert, by the use of the means or instruments of transportation or communication in interstate
commerce, or the means or instrumentalities of interstate commerce, or the mails, or the facilities
of a national securities exchange:
a. employed devices, schemes or artifices to defraud;
b. obtained money or property by means of, or made, untrue statements of
material fact, or omitted to state material facts necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading; and
c. engaged in acts, transactions, practices, or courses of business that
operated as a fraud or deceit upon offerees, purchasers, and prospective purchasers of securities.

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93. By engaging in the foregoing conduct, Defendants Carney, Freeze, and Irey
violated, and unless restrained and enjoined will continue to violate, Section 17(a) of the
Securities Act [15 U.S.C. § 77q(a)].
SECOND CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder
(Against All Defendants)
94. The Commission realleges and incorporates by reference each and every
allegation in paragraphs 1 through 90, above, as if the same were fully set forth herein.
95. From at least June 2016 through February 2018, as a result of the conduct alleged
herein, Defendants Carney, Freeze, and Irey, knowingly or recklessly, in connection with the
purchase or sale of securities, directly or indirectly, by use of the means or instrumentality of
interstate commerce or of the mails, or a facility of a national securities exchange:
a. employed devices, schemes or artifices to defraud;
b. made untrue statements of material fact, or omitted to state material facts
necessary in order to make the statements made, in light of the circumstances under which they
were made, not misleading; and
c. engaged in acts, practices, or courses of business which operated or would
operate as a fraud or deceit upon any person in connection with the purchase or sale of any
security.
96. By engaging in the foregoing conduct, Defendants Carney, Freeze, and Irey
violated, and unless restrained and enjoined will continue to violate, Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that this Court enter a final
judgment:

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I.
Permanently restraining and enjoining Defendants Carney, Freeze, and Irey from
violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)] and Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5];
II.
 Ordering Defendants Carney, Freeze, and Irey to each disgorge any and all ill-gotten
gains, together with prejudgment interest, derived from the activities set forth in this Complaint.
III.
 Ordering Defendants Carney, Freeze, and Irey each to pay a civil penalty pursuant to
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)]; and
IV.
 Granting such other and further relief as the Court may deem just and appropriate.
JURY DEMAND
 Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, the Commission hereby
requests that this case be tried to a jury.
Respectfully submitted,

SECURITIES AND EXCHANGE COMMISSION

Dated:  June 1, 2021     By: s/ Karen M. Klotz
Karen M. Klotz (PA88171) (Pro Hac Vice Motion to be filed)
Jennifer Chun Barry (PA72961) (Pro Hac Vice Motion to be filed)
Securities and Exchange Commission
1617 JFK Boulevard, Suite 520
Philadelphia, PA 19103
Telephone: (215) 597-3100
Email: [email protected]
[email protected]

IN THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF PENNSYLVANIA 

SECURITIES AND EXCHANGE COMMISSION, 

Case No.  
Plaintiff,

v. 

KEVIN T. CARNEY, JONATHAN D. FREEZE, 
AND ROBERT J. IREY, 

JURY TRIAL DEMANDED 

Defendants.

COMPLAINT 

Plaintiff Securities and Exchange Commission (the “Commission”) files this Complaint 

against defendants Kevin T. Carney (“Carney”), Jonathan D. Freeze (“Freeze”), and Robert J. 

Irey (“Irey”) (collectively, “Defendants”) and alleges as follows: 

SUMMARY 

1. This matter concerns an offering fraud orchestrated by Defendants who purported

to raise money for the renewable energy company, Alternative Energy Holdings, LLC (“AEH”).  

Defendants were officers and managing members of AEH. 

2. From June 2016 through February 2018, Defendants raised approximately $2.1

million from at least 25 investors through a fraudulent offering of securities in the form of at 

least 31 promissory notes, many of which included an equity component, issued from AEH or 

entities controlled by Irey.   

3. Instead of investing the money as promised, Defendants used the majority of

investor proceeds for their personal benefit and to repay at least one existing investor. 

2:21-cv-720

Case 2:21-cv-00720-WSS   Document 1   Filed 06/01/21   Page 1 of 15



 

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4. To induce investment in AEH, Defendants falsely told investors, among other 

things, that their money would be used for expenses related to a number of waste-to-energy 

projects in which AEH was involved.   

5. Defendants also told prospective investors, many of whom were Freeze’s broker-

dealer customers and Freeze’s and Irey’s neighbors, that they each had personally invested in 

AEH when, in reality, they had not invested any of their own money in AEH.   

6. Defendants further deceived investors by promising outsized returns on the 

promissory notes, despite the fact that AEH had no source of short-term revenue and no realistic 

expectation of making timely payments.   

7. Instead of using the funds as promised, Defendants divided up investor proceeds, 

often immediately upon receipt, and used the funds to pay for personal expenses, including 

frequent casino visits, expensive clothing, meals, and vacations.   

8. Carney also used investor funds to pay a portion of the criminal fine for his 

convictions of grand theft and forgery related to selling a promissory note in another energy 

venture—a fact which Defendants failed to disclose to investors.     

9. By engaging in the conduct described in this Complaint, Defendants violated, and 

unless enjoined will continue to violate, Section 17(a) of the Securities Act of 1933 (“Securities 

Act”) [15 U.S.C. § 77q(a)] and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange 

Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].    

JURISDICTION AND VENUE 

10. The Commission brings this action pursuant to Sections 20(b) and 20(d) of the 

Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)] and Sections 21(d) and 21(e) of the Exchange 

Act [15 U.S.C. §§ 78u(d) and 78u(e)] to enjoin such acts, transactions, practices, and courses of 

Case 2:21-cv-00720-WSS   Document 1   Filed 06/01/21   Page 2 of 15



 

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business, and to obtain disgorgement, prejudgment interest, civil money penalties, and such other 

and further relief as the Court may deem just and appropriate. 

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

22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)] and Sections 21(d), 21(e), 

and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa]. 

12. Venue in this district is proper pursuant to Section 22(a) of the Securities Act [15 

U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  Defendants Freeze and 

Irey are believed to reside in this district.  In addition, certain of the acts, practices, and courses 

of business constituting the violations of the federal securities laws alleged herein, including 

misstatements to potential investors, misuse of investor proceeds, and the sale of promissory 

notes, occurred within the Western District of Pennsylvania.   

DEFENDANTS 

13. Kevin Carney is a resident of Euclid, Ohio.  Carney is the Founder, Chief 

Executive Officer and Chief Business Development Officer of AEH, and a Co-Founder of 

Maxximus Group, LLC.  In October 2016, Carney pleaded guilty in Ohio state court to grand 

theft and forgery in connection with a promissory note that he sold for Global Green Energy 

Partners, LLC, another company under his control. 

14. Jonathan Freeze is believed to reside in the Western District of Pennsylvania.  

Freeze was AEH’s Chief Investment Officer.  From June 1995 until April 2017, Freeze worked 

as a registered representative and/or an investment advisor representative with a series of firms.  

The Financial Industry Regulatory Authority (“FINRA”) barred Freeze on August 14, 2017.   

15. Robert Irey is a resident of Clarksville, Pennsylvania.  Irey was AEH’s Chief 

Commercial Development Officer, a Co-Founder of Maxximus Group, LLC, the Founder and 

Case 2:21-cv-00720-WSS   Document 1   Filed 06/01/21   Page 3 of 15



 

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President of The Irey Group, LLC (“TIG”), and Founder and President of ACES America, LLC 

(“ACES”).             

FACTS 

I. DEFENDANTS FRAUDULENTLY INDUCED INVESTORS TO BUY ALMOST 
$2.1 MILLION IN AEH PROMISSORY NOTES AND EQUITY  

16. Carney formed AEH in 2016 as a purported renewable energy company.  In May 

of that year, AEH partnered with an energy company based in Washington, D.C. that possessed 

established waste-to-energy technology (the “Energy Company”).   

17. AEH was tasked with securing funding for the Energy Company’s proposed 

waste-to-energy sites, each requiring approximately $130 million (“AEH-Energy Company 

Projects”).  

18. In the process of trying to fund an initial site in Greenville, South Carolina, 

Carney met Freeze, a registered representative, and Irey, who worked for an energy consulting 

group and claimed to have connections to several potential funding sources for the AEH-Energy 

Company Projects.  Freeze and Irey joined AEH and became managing members.  

19. In May 2016, an Irey-controlled entity, TIG, contracted with AEH to assist with 

raising funds for AEH-Energy Company Projects.   

20. In or around June 2016, Defendants began selling promissory notes purportedly to 

support AEH’s pursuit of funding for the AEH-Energy Company Projects.   

21. Most of the promissory notes were between investors and AEH, but TIG and 

ACES, another Irey-controlled entity, were counterparties on seven promissory notes sold to 

investors.  The promissory notes stated that the funds were for the benefit of AEH.    

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22. The majority of the promissory notes had 60-day terms with a median annualized 

promised return of 120%, and many included equity rights in the form of AEH Membership 

Units which Defendants and investors referred to as “stock,” “shares,” and “equity.”      

23. Freeze tapped into his broker-dealer customer base to solicit investors.  He and 

Irey also targeted individuals who lived in their same apartment complex, most of whom were 

unsophisticated investors.   

24. Defendants induced investors to purchase the promissory notes by making false 

statements to investors about the use of funds, the ability to pay large returns, Defendants’ own 

investments in AEH, and failing to disclose Carney’s criminal conviction in a similar fraud.  

25. During the relevant time period, Defendants raised nearly $2.1 million from the 

sale of at least 31 promissory notes purportedly for the benefit of AEH. 

26. Defendants caused investor funds to be placed into one of four AEH bank 

accounts (collectively, “AEH Accounts”) which Defendants controlled.   

A. Defendants Misrepresented How Investors’ Money Would Be Used 

27. Many of the promissory notes Defendants offered and sold to investors contained 

a “Use of Proceeds” sections that stated AEH would use the proceeds for expenses related to the 

AEH-Energy Company Projects.   

28. Despite the representations in the promissory notes about how investor funds 

would be used, Defendants used the majority of investor funds to pay for personal expenses like 

casino visits, restaurants, expensive clothing, and vacations.   

29. Defendants also told investors that their investments with AEH would be used to 

pursue funding for the AEH-Energy Company Projects.   

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30. For example, in June 2016, an investor who was a broker-dealer customer of 

Freeze purchased an $180,000 promissory note from ACES that promised a 20% return on 

investment in four months.   

31. Irey falsely told the investor that the money was needed for closing costs on the 

AEH-Energy Company Projects.  No project was ever closed and the money was not used as 

promised. 

32. Emails from Carney also falsely informed investors that their proceeds would be 

used for the AEH-Energy Company Projects.   

33. For example, in a January 2017 email to an investor, Carney wrote, “our intent is 

to use these funds for our ongoing soft and pre-development cost, allowing us a 30-60 day jump 

on each of our current sites.”   

34. In February 2017, Carney told another investor that their money would be used 

for three categories of expenses: 1) a $50,000 engagement fee to a banking group to participate 

in a “carbon credit monetization program”; 2) travel and expenses to set up a second waste-to-

energy site; and 3) legal and accounting expenses for the second site.   

35. After both of these investors purchased promissory notes, most of their money 

was used to pay for Defendants’ personal expenses unrelated to what Carney described, 

including rent, car payments, expensive clothes, credit card payments, and cash withdrawals at 

casino and racetrack locations. 

36. In the majority of the promissory note transactions, Carney, Freeze, and Irey 

withdrew all or most of the investors’ money immediately after it was deposited and divided it 

among themselves.   

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37. Defendants relied on the money obtained through the sale of promissory notes as 

their primary source of income to pay for their personal expenses, as each Defendant had little 

money during the relevant time period.   

38. On May 9, 2017, Carney’s, Freeze’s, and Irey’s personal bank accounts carried 

balances of $1,508, $22, and $104, respectively.  The next day, an investment of $49,999 from 

the sale of a promissory note was deposited into an AEH bank account.   

39. On May 11, 2017, Freeze withdrew $45,000 in cash from that AEH bank account.  

That same day, Freeze, Carney, and Irey each deposited $15,000 into their respective personal 

accounts to pay for expenses unrelated to AEH-Energy Company Projects.     

40. In May 2018, Carney drafted documents called “Advance/Loan Against Future 

Earnings Promissory Agreements” (the “Agreements”) in which he tracked investor funds 

diverted to himself, Irey, and Freeze, labeling the payments “advances.”     

41. Although Carney labeled these payments to Defendants as “advances,” the 

promissory notes did not provide for investor funds to be advanced to the Defendants. 

42. According to Carney’s calculations in the Agreements, at least $1,307,500 of 

investor funds were taken by Defendants, including $414,620 of alleged “estimated advances” to 

Irey, $435,380 to Freeze, and $457,500 to Carney.  Carney also listed in the Agreements a 

purported $592,500 of “estimated company advances.” 

B. Defendants Misrepresented the Ability to Pay the Promised High Returns on 
the Promissory Notes  

43. Four months after Defendants began selling promissory notes in June 2016, AEH 

missed its first note repayment on October 1, 2016.   

44. By the end of 2016, AEH was past due on four promissory notes and owed 

investors more than $480,000.   

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45. By May 2017, not a single investor had been repaid and AEH was late on more 

than $1 million of payments due to investors. 

46. Despite the inability to make any payments on existing promissory notes, 

Defendants continued to solicit AEH investments while promising large, short-term returns.   

47. Defendants knew, or were reckless in not knowing, that AEH could not make 

payments within the terms of the promissory notes—particularly in light of the outstanding 

balances owed to investors and the lack of significant progress in meeting any funding goals for 

the AEH-Energy Company Projects.    

48. AEH had no regular income stream.  More than 90% of the funds flowing into the 

AEH Accounts were proceeds from the promissory notes.   

49. Even if Defendants had financed deals for the AEH-Energy Company Projects, 

which they did not, Defendants could not close the deal and repay investors in accordance with 

the terms of the promissory notes, most of which required repayment within 60 days or less. 

50. In July 2017, an investor purchased a $100,000 promissory note redeemable in 60 

days with $50,000 of interest after Freeze assured the investor that AEH needed his money for 

only one week.   

51. The $100,000 from the sale of the promissory note was deposited into an AEH 

bank account, which, prior to the deposit, had a balance of only $121. 

52. On the same day that the investor purchased the promissory note, AEH owed 

more than $1.6 million to prior investors, had not repaid any prior investors, had no expectation 

of short-term income (other than the sale of promissory notes), and had only $121 in an AEH 

bank account.   

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53. Freeze knew, or was reckless in not knowing, that the investor could not be repaid 

in accordance with the terms of the promissory note. 

54. In February 2018, Irey sent a prospective investor an email, drafted by Carney, 

that offered the investor $50,000 in interest on a $100,000 promissory note, with principal and 

interest to be repaid in full within 30 days.   

55. The email also stated that the investor would receive $30,000 each month for 12 

months, starting on March 4, 2018, for a total return on investment of $410,000.     

56. The investor purchased the $100,000 promissory note and the funds from the sale 

were deposited into an AEH bank account, which, prior to the deposit, had a negative balance.    

57. At this time, AEH owed more than $2 million in principal and interest to 

investors, had only repaid one investor $13,000, and had a negative balance of $842 in an AEH 

bank account. 

58. Carney and Irey knew, or were reckless in not knowing, that there was no 

reasonable expectation that AEH could make these promised payments that would have totaled 

$410,000 in profits owed over the next twelve months—a return of more than four times the 

initial investment.   

59. Defendants sold 26 promissory notes, raising over $1.4 million, while Defendants 

knew, or were reckless in not knowing, that they were past due in repaying prior investors.   

60. Of the limited repayments that Defendants made to investors, none of the 

repayments used revenue from the AEH-Energy Company Projects.  In fact, the AEH-Energy 

Company Projects never generated any revenue. 

61. Defendants made at least one repayment to an existing investor using other 

investors’ money in the form of a Ponzi-like payment. 

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62. Defendants repaid at least two other investors using money obtained from a 

previous AEH investor’s loan to TIG.   

C.  Defendants Misrepresented That They Had Invested Their Own Money in 
AEH and Failed to Disclose Carney’s Criminal Conviction for a Similar 
Fraud 

63. In the course of soliciting investments in AEH during the relevant time period, 

Defendants falsely claimed to have made significant personal investments in AEH and the AEH-

Energy Company Projects.   

64. In or about early 2017, Defendants stated during a meeting with a prospective 

investor that each of them personally had invested in AEH.   

65. In or around May 2016, Carney told an investor that he personally had invested 

$400,000, and that Irey personally had invested $200,000.   

66. In or around May 2017, Carney told an investor that he personally had invested 

$1 million in AEH.  

67. Freeze often told investors during the relevant time period that he invested 

$600,000 with AEH that he had received from a legal settlement.   

68. None of these statements were true.  The Defendants never invested in AEH.   

69. In soliciting investments in AEH, Defendants falsely described to potential 

investors Carney’s “decades of proven experience” in the renewable energy business.   

70. Defendants failed to disclose, however, that in October 2016, Carney was 

convicted in Ohio of grand theft and forgery in connection with his solicitation of a promissory 

note in another alleged renewable energy company.   

71. Carney used AEH investor money to pay a portion of his $5,000 criminal fine. 

72. Defendants did not disclose this criminal matter or criminal sanctions as they 

were actively seeking AEH investors. 

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73. Defendants did not disclose to investors that any investor money would be used to 

pay Carney’s criminal fine. 

II. DEFENDANTS VIOLATED THE FEDERAL SECURITIES LAWS  

74. The promissory notes offered and sold by Defendants (the “Securities”) were 

securities within the meaning of the Securities Act and the Exchange Act.   

75. AEH investors provided Defendants with an investment of money—from June 

2016 through February 2018 approximately 25 investors gave Defendants approximately $2.1 

million. 

76. Defendants pooled investors’ money into the AEH Accounts and represented that 

they would use those funds to operate AEH and grow the business. 

77. Investors considered the promissory notes to be investments and were interested 

in the profits the promissory notes were expected to generate.  In fact, the investors and 

Defendants alike often referred to the promissory notes as “investments.” 

78. The promissory notes were not secured by accounts receivable, liens, or any other 

asset, and there is no other regulatory scheme that would reduce the risk associated the 

promissory notes. 

79. Investors played no role in the management or operations of the business of AEH. 

80. Investors made their investments with a reasonable expectation of profits to be 

derived solely from Defendants’ supposed ability to generate profits without any participation by 

any of its investors.  

81. Defendants engaged in the conduct described herein, including the offer and sale 

of the Securities, by use of the means or instruments of transportation or communication in 

interstate commerce, the instrumentalities of interstate commerce, and/or by use of the mails.  

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82. Defendants solicited investments from investors in at least seven states and 

through the use of the mails. 

83. Defendants knowingly made material untrue statements and omitted material facts 

necessary in order to make the statements made, in light of the circumstances under which they 

were made, not misleading.    

84. A reasonable investor would consider the misrepresented facts and omitted 

information described herein—including, among other things, misrepresentations and omissions 

regarding the high rate of returns on investments, the ability to make payments to investors, 

Carney’s criminal conviction for a similar fraud scheme, and the use of investors’ money to pay 

for Defendants’ personal expenses—important in deciding whether or not to purchase the 

Securities. 

85. The untrue statements of material fact and material omissions described herein 

were made in the offer or sale and in connection with the purchase or sale of Securities. 

86. In connection with the conduct described herein, Defendants acted knowingly or 

recklessly.  Defendants knew, or were reckless in not knowing, that they were making material 

misrepresentations and omitting to state material facts necessary to make certain statements not 

misleading under the circumstances. 

87. Defendants knew, or were reckless in not knowing, that investor funds were not 

being used as promised and that the Defendants had no reasonable basis to believe that they 

could repay investors in accordance with the terms of the promissory notes they were selling. 

88. Defendants obtained money or property by means of untrue statements of material 

fact and omissions of material fact necessary in order to the make the statements made, in light 

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of the circumstances under which they were made, not misleading.  Investors sent money directly 

to the Defendants, and Defendants took the money for their own use and benefit. 

89. Defendants used devices, schemes, and artifices to defraud investors, and engaged 

in acts, transactions, practices, or courses of business that operated as a fraud or deceit upon the 

investors.   

90. In addition to the numerous misrepresentations discussed herein, among other 

things, Defendants misled investors and misappropriated investors’ funds for their personal use 

and benefit. 

FIRST CLAIM FOR RELIEF 
Violations of Section 17(a) of the Securities Act 

(Against All Defendants) 

91. The Commission re-alleges and incorporates by reference each and every 

allegation in paragraphs 1 through 90, above, as if the same were fully set forth herein. 

92. From at least June 2016 through February 2018, as a result of the conduct alleged 

herein, Defendants Carney, Freeze, and Irey knowingly or recklessly or, with respect to subparts 

b and c below, negligently, in the offer or sale of securities, directly or indirectly, singly or in 

concert, by the use of the means or instruments of transportation or communication in interstate 

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

of a national securities exchange: 

a. employed devices, schemes or artifices to defraud; 

b. obtained money or property by means of, or made, untrue statements of 

material fact, or omitted to state material facts necessary in order to make the statements made, 

in light of the circumstances under which they were made, not misleading; and 

c. engaged in acts, transactions, practices, or courses of business that 

operated as a fraud or deceit upon offerees, purchasers, and prospective purchasers of securities. 

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93. By engaging in the foregoing conduct, Defendants Carney, Freeze, and Irey 

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

Securities Act [15 U.S.C. § 77q(a)]. 

SECOND CLAIM FOR RELIEF 
Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 

(Against All Defendants) 

94. The Commission realleges and incorporates by reference each and every 

allegation in paragraphs 1 through 90, above, as if the same were fully set forth herein. 

95. From at least June 2016 through February 2018, as a result of the conduct alleged 

herein, Defendants Carney, Freeze, and Irey, knowingly or recklessly, in connection with the 

purchase or sale of securities, directly or indirectly, by use of the means or instrumentality of 

interstate commerce or of the mails, or a facility of a national securities exchange: 

a. employed devices, schemes or artifices to defraud; 

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

necessary in order to make the statements made, in light of the circumstances under which they 

were made, not misleading; and 

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

operate as a fraud or deceit upon any person in connection with the purchase or sale of any 

security. 

96. By engaging in the foregoing conduct, Defendants Carney, Freeze, and Irey 

violated, and unless restrained and enjoined will continue to violate, Section 10(b) of the 

Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court enter a final 

judgment: 

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I. 

Permanently restraining and enjoining Defendants Carney, Freeze, and Irey from 

violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)] and Section 10(b) of the 

Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]; 

II. 

 Ordering Defendants Carney, Freeze, and Irey to each disgorge any and all ill-gotten 

gains, together with prejudgment interest, derived from the activities set forth in this Complaint. 

III. 

 Ordering Defendants Carney, Freeze, and Irey each to pay a civil penalty pursuant to 

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)]; and 

IV. 

 Granting such other and further relief as the Court may deem just and appropriate. 

JURY DEMAND 

 Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, the Commission hereby 

requests that this case be tried to a jury. 

Respectfully submitted, 
 

SECURITIES AND EXCHANGE COMMISSION  
  

Dated:  June 1, 2021   By: s/ Karen M. Klotz    
Karen M. Klotz (PA88171) (Pro Hac Vice Motion to be filed) 
Jennifer Chun Barry (PA72961) (Pro Hac Vice Motion to be filed) 
Securities and Exchange Commission  
1617 JFK Boulevard, Suite 520 
Philadelphia, PA 19103 
Telephone: (215) 597-3100 
Email: [email protected] 

[email protected] 
 

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