A Tennessee man whose father once served prison time for an oil-and-gas fraud has been indicted on allegations that he orchestrated a coal-mining Ponzi scheme that may have duped investors out of over $15 million. Brian Rose, a/k/a John Haskins, was indicted on federal fraud charges along with eight other individuals, with authorities alleging that Rose was the ringleader of a coal mining venture that in reality was a devastating Ponzi scheme. In addition to Rose, authorities also charged Robert McGregor a/k/a Jim Robinson III, Dallas McRae, Hugh Sackett, James Robinson, Brett Loveall, Jason Smith, Ray Spears a/k/a Brock Hamilton, and Jennifer Key. Each of the nine face charges of conspiracy to commit wire fraud and mail fraud.
According to the indictment, Rose operated numerous mining and coal companies including New Century Coal ("New Century"). New Century was marketed as an issuer/sponsor of various partnerships that were each assigned to the performance of a specific coal mine, distributing marketing materials to potential investors that touted "turnkey" mining operations set to commence after raising sufficient capital. Investors were promised 6% quarterly returns while capital was being raised for operations, and 100% annual returns during the first year that mining operations commenced. New Century is alleged to have employed "fronters" who identified potential investors from broker lists, publicly available information, and even victim lists of prior financial schemes. After the fronters initially reached out, "closers" would then contact the potential investors with additional information and provide subscription documents.
According to authorities, the New Century venture was nothing more than an intricate Ponzi scheme. The indictment alleges that the documents provided to potential investors were fabricated, and that the defendants created "ghost" vendor companies to give the impression that New Century actually explored, developed, and mined coal. Additionally, investors received fabricated financial statements, mining expenses, proof of existence of coal mines, and documentation of the existence of the coal. Investors were not told that 20% of their investment was immediately paid to the applicable "closer," and that a significant portion of the remainder was diverted to sustain Rose's lavish lifestyle that included gambling trips to Las Vegas, horse racing, and to support Rose's NASCAR racing team.
A simple Google search shows that the Rose family has had an extensive history with civil and criminal authorities related to the sale of securities. Rose's father, David G. Rose, was indicted in 2008 on multiple fraud charges related to two oil-and-gas projects that were alleged to be fraudulent. The elder Rose subsequently pleaded guilty and was sentenced to a four-year term. In August 2007, Brian Rose and his brother, Jason Rose, were the subject of a permanent restraining order obtained by the Kentucky Office of Financial Institutions that prohibited the company
from selling securities in Kentucky unless they disclosed in writing the negative legal history associated with any businesses run by members of the Rose family.
Several of the defendants are accused of providing false sworn testimony after the Securities and Exchange Commission opened an investigation in 2013. Additionally, `Rose, McGregor, and Spears are accused of using false identities to evade detection by law enforcement, including Spears' and McGregor's legal changing of their names.
The Indictment is below: