The United States Securities and Exchange Commission (SEC) is charging KGTA Petroleum, Ltd. (“KGTA”) as well as the officers of KGTA and brokers of KGTA securities, Thomas Abdallah (a/k/a Tom Abraham), Kenneth Grant, Jerry Cicolani, Jr. and Jeffrey Gainer with operating a securities fraud/Ponzi scheme. The SEC alleges that Cicolani and Gainer, stock brokers registered with PrimeSolutions Securities, Inc., a broker/dealer registered with FINRA, perpetrated a type investment scam bilking investors to the tune of over $20,000,000.

The SEC stated in its Complaint:

KGTA’s purported fuel sales were fake. In reality, KGTA did not have the represented customer relationships, did not supply any oil products to customers and did not generate any revenue through the sale of crude oil or other fuel products.

Rather than paying investor returns through bona fide sales revenue, Grant and Abdallah operated KGTA as a Ponzi scheme. They used money raised from new investors to pay returns to old investors. They also pocketed a portion of investor funds for their own personal expenses including car payments, country club dues, and over $200,00 in cash withdrawals, and also used a portion of investor’s cash to pay fees to Defendants Gainer and Cicolani.

Gainer and Cicolani reaped massive fees by selling the bogus, unregistered KGTA Notes to investors. Since October 2012, Gainer has been paid approximately $2 million in fees while Cicolani has taken in over $4 million in fees. In other words, they have been paid approximately 29% of all funds raised from investors for KGTA. For example, an individual who invested $1.5 million received a 1% monthly return while Cicolani received 4% a month in fees.

The Pearl Law Firm, P.A. has represented thousands of victims of both Ponzi schemes and broker misconduct throughout the United States. Having already launched litigation out of its Naples, Florida office for one of the many KGTA/Cicolani victims, The Pearl firm is aggressively pursuing those responsible for orchestrating this Ponzi scheme in order to recover financial losses incurred by KGTA/Cicolani victims.

Our investigation is focused on certain brokerage firms that employed Jerry Cicolani and Jeffrey Gainer. These firms failed to protect their customers from Cicolani and Gainer’s misconduct, thereby permitting them to divert investment funds so as to perpetrate the KGTA scam.

Investors in KGTA and clients of Jerry Cicolani and Jeffrey Gainer should contact The Pearl Law Firm for an evaluation of their potential recovery. The evaluation will be provided for free and without obligation. These cases are brought on a contingency fee basis and The Pearl Law Firm will advance the case costs and will obtain reimbursement and legal fees only in the event of a recovery on behalf of its clients

Read more about KGTA fraud here.

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