U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23390 / October 22, 2015
SEC v. John Clifford Williams, 15-cv-819 (W.D. Mo.) (GAF)
SEC Charges John Clifford Williams with Orchestrating Long-Running Misappropriation Scheme and Offering Fraud
On October 20, 2015, the Securities and Exchange Commission charged Gresham, Oregon resident John Clifford Williams with misappropriating and diverting more than $3.1 million in funds that he raised from an investor in the course of securities offerings. According to the SEC's complaint, filed in the U.S. District Court for the Western District of Missouri, Williams took advantage of the trust the investor placed in him and repeatedly solicited and raised money based on representations that the funds would only be used for specific investments.
The SEC's complaint alleges that between February 2009 and May 2014, Williams raised more than $8.1 million from the investor, including at least $2.6 million for Energy Operations Trust ("Energy Operations"), which Williams established to offer revenues derived from gold and manganese mines located in Central America, and $5.5 million for American Hydraulic Power, LLC ("AHP"), which Williams founded to develop and commercialize an energy efficient technology licensed from the U.S. Environmental Protection Agency. According to the complaint, Williams also raised smaller amounts from the investor to develop an island off of the coast of Panama and to secure control of a large foreign bank account to provide additional funding for AHP.
The SEC alleges that Williams failed to inform the investor that he had misappropriated and diverted over $3.1 million, more than 38% of the total funds he had raised from the investor. According to the complaint, among other things, Williams used these funds to pay numerous personal expenses including paying for his daughter's wedding, credit card bills, restaurant and grocery bills, healthcare expenses, holiday gifts and entertainment expenses. The SEC also alleges that Williams diverted investor funds to pay for domestic and international travel, including first class flights and luxury accommodations, and to fund other projects that were not authorized by the investor.
The SEC's complaint charges Williams with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks a permanent injunction, disgorgement with prejudgment interest, and civil penalties against Williams.
The SEC's investigation was conducted by Richard G. Stoltz and Rebecca Bernard, and supervised by Anne C. McKinley in the Chicago Regional Office and the litigation will be led by Alyssa A. Qualls.