[ by Howard Haykin ]

The SEC says a Chicago-based investment firm will pay $1 million to settle civil allegations that it misled investors in private equity offerings about an alternative energy company's finances and loan application to the U.S. Department of Energy.

Advanced Equities, Inc., and Dwight Badger, its co-founder, are charged with having made misstatements about a Silicon Valley-based alternative energy company while they solicited customers for the private offering during a period that spanned from 2009 to 2010. 

Advanced Equities' co-founder Keith Daubenspeck also was charged by the SEC for failing to fulfill his supervisory responsibilities.  He allegedly sat by silently while listening in on in-house sales calls, even while hearing Dwight Badger make misstatements to investors.

SEC Findings and Allegations.  Dwight Badger allegedly told investors the energy company had more than $2 billion of order backlogs, although the backlog actually never exceeded $42 million.  Badger also is alleged to have told investors the company had been granted a loan from the U.S. Department of Energy for more than $250 million.  In fact, the company had only applied for a loan that was for $97 million.  The SEC's complaint does not identify the name of the alternative energy company in the private offerings;  nor does it indicate if the company was ever actually awarded a Department of Energy loan.  In June, however, Crain's Chicago Business reported that the SEC's allegations pertain to the financial  projections of a Sunnydale, California-based fuel-cell maker called Bloom Energy Corp., citing people familiar with the matter.

According to Merri Jo Gillette, Director of the SEC's Chicago Regional Office, stated: "Dwight Badger misled investors by embellishing key facts about the energy company's sales orders and its loan application to the Department of Energy,"   She added that, "The SEC will continue to be vigilant in uncovering fraud in private securities offerings and holding registered securities professionals accountable." 

The Energy Department's renewable energy loans and grants have been the subject of political controversy over the past year, particularly in the presidential elections. Republicans have accused the Obama administration of using the loan program to unfairly pick winners and losers in the private sector.

SEC Sanctions.  The company and both co-founders agreed to settle the SEC's charges without admitting or denying the allegations.  In addition to the firm's $1 million penalty, Badger agreed to pay a $100,000 penalty and be barred from the securities industry for a year.  He stepped down as the company's CEO earlier this year.  Daubenspeck, who is still serving as chairman of the board, agreed to pay a $50,000 penalty. 

For further details, go to:  [Reuters, 9/18/12].