CBS 5 - KPHO Commission orders biofuel, promissory note schemes stopped

The Arizona Corporation Commission has ordered companies that were fraudulently promoting unregistered investment opportunities to put a stop to the investment schemes before becoming widespread.

Panama Capital Funding, LLC and its managing members, Benjamin Ray O'Toole and Christopher Strickland, both of Tempe, agreed to pay a $5,000 administrative penalty for fraudulently promoting an unregistered investment opportunity involving biofuels.

Through their businesses, Panama Capital Funding and International Funding Network, O'Toole and Strickland sold "shares" in Algaecake Technologies Corporation and Panagreen Bio Fuels, Inc. Neither of the businesses was incorporated, and O'Toole, Strickland and their companies were not registered to offer or sell securities in Arizona, according to the commission.

Through a number of websites, O'Toole and Strickland informed potential investors that their money would be used to build multi-acre, "bio-reactor" farms adjacent to coal-fired power plants and that carbon dioxide emissions from the plants would be captured and fed to algae, enabling the production and later sale of large quantities of oil, the commission said. 

While representing the investment as an opportunity for average investors, O'Toole and Strickland sought individual investments ranging from $100,000 to $500,000. They promised astronomical returns within 30 months, but failed to disclose how the returns were calculated or that investors could lose money, the commission said.

In settling this matter, O'Toole and Strickland neither admitted nor denied the commission's findings, but agreed to the entry of the consent order.

In another case, Donald Tomasian and his Scottsdale-based company, Bella Funding, LLC, agreed to pay a $10,000 administrative penalty for fraudulently promoting an unregistered investment opportunity involving promissory notes secured by deeds of trust.

Tomasian and his company were not registered to offer or sell securities in Arizona, the commission said. Bella Funding solicited prospective investors through a website and newspaper ads, promising a monthly income from accrued interest on a promissory note executed between a borrower and an investor, according to the commission.

The underlying promissory note was secured by a deed of trust to a piece of real estate. The ads described the investment as involving residential and commercial properties with low loan-to-value ratios and included a mortgage broker license number.

The Commission found, however, that the license number was not for Bella Funding but was assigned to First Choice Mortgage, Inc., a licensed mortgage broker that employed Tomasian as a loan officer.

Tomasian was operating a branch office of First Choice Mortgage out of his home, and he further misled investors by failing to disclose the multiple legal actions filed against him, including a bankruptcy, a federal tax lien and several civil judgments, the commission said.

In settling this matter, the Tomasian and his company neither admitted nor denied the Commission's findings, but agreed to the entry of the consent order.

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