Theodore Holbrook, 37, and George Arauz, 45, used the funds for travel, cars and bills

Two Gresham men were sentenced to three years in federal prison Thursday morning, Sept. 27, for defrauding 50 investors of nearly $2.5 million using a sham energy technology start-up company.

Theodore B. Holbrook, 37, and George J. Arauz Jr., 45, were also ordered to pay more than $2.3 million each in restitution and will be on supervised release for three years after completing their prison time.

Holbrook and Arauz both previously plead guilty to one count each of wire fraud and money laundering on March 7 and Oct. 31 respectively.

According to court documents, between 2008 and 2015, Holbrook and Arauz used their companies, Prisidio Capital LLC, Altius Capital Management, LLC and Altius Capital Opportunities Fund, L.P., to solicit investments to develop energy technologies via a start-up company. In return, the partners gave the investors Prisidio stock certificates and promised to convert these shares into the start-up company's shares when it went public.

In addition, Holbrook and Arauz told investors their money would be invested in other emerging technology companies or the stock market directly.

Instead, the two diverted it for their own personal use, funding living expenses, travel, cars, credit card bills, medical bills, lulling payments and other expenses to keep the scheme going.

The pair did not disclose the diversion of funds, and worked to conceal it. Holbrook and Arauz sent investors promotional and investment materials to falsely represent the nature and status of their investment, the U.S. Attorney's Office said.

The case was investigated by IRS Criminal Investigation. It was prosecuted by Scott E. Bradford, Assistant U.S. Attorney for the District of Oregon.

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