Tucson solar firm, exec ordered to pay $8.7M for unregistered stock sales

A Tucson solar installation company and one of its principals have been ordered to pay restitution of $7.7 million and a $1 million fine for allegedly selling unregistered securities to foreign investors in violation of Arizona law.

The Arizona Corporation Commission on Tuesday approved the order against ABCO Energy, related companies including ABCO Solar, and company principal David Shorey, after approving a similar restitution order against another company executive in 2021.

The Tuesday order was approved on a 4-0 vote, with member Lea Márquez Peterson recusing herself because she was acquainted with Shorey 20 years ago.

The ACC’s Securities Division filed a cease-and-desist order in May 2021, alleging that ABCO and Shorey offered and sold unregistered securities while not registered as dealers or salesmen, in violation of state law.

Neither Shorey nor his attorney immediately responded to a request for comment Tuesday.

Specifically, the Securities Division alleged that between 2011-19, Shorey, as a “control person” for ABCO Energy, entered into an agreement with United Kingdom-based Intuition Capital Corp. to raise capital for ABCO by soliciting foreign investors, agreeing to pay Intuition an estimated 65% of the proceeds.

Investigators alleged the respondents offered and sold unregistered securities to 81 foreign investors in 491 transactions totaling $7,699,546.

None of the investors resided in the U.S., and they were mainly in the U.K. and Spain, the ACC said.

The Securities Division also alleged that ABCO and Shorey engaged in fraud by failing to disclose or misrepresenting the high commissions paid to Intuition, and that Shorey had been ordered to pay restitution and penalties in two different prior commission cases.

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In February 2013, the ACC found that Shorey had engaged in fraudulent securities sales involving a wireless company he headed and ordered Shorey and others involved to halt the sales and pay $130,000 in restitution, plus a $9,000 fine.

A month later, the commission ruled that Shorey and others had fraudulently sold unregistered securities in Westcap Energy Inc. — which later became ABCO — to 24 foreign investors. The regulators ordered Shorey and Westcap to offer to buy back $388,495 worth of the shares and pay an administrative penalty of $10,000.

The order approved Tuesday follows a June 2021 ACC consent order requiring ABCO executive Charles O’Dowd to pay $7.7 million in restitution and a $75,000 penalty for his part in the securities sales made through Intuition Capital cited in Shorey’s case.

In both cases, the respondents contended that the investments were exempt from registration and other regulation under federal Regulation S because the securities were offered and sold outside the U.S.

But the Securities Division disagreed, citing Shorey’s failed appeal of his 2013 ACC case involving the wireless firm, Cell Wireless.

Agreeing with a lower-court decision, the Arizona Court of Appeals upheld the commission’s order in 2015, ruling that Regulation S doesn’t exempt securities from state laws, including registration requirements and anti-fraud laws.

Meanwhile, ABCO Energy has expanded beyond solar to lighting installation and air-conditioning work, and Shorey remains listed on the company’s licenses with the Arizona Registrar of Contractors.