The United States Securities and Exchanges Commission (SEC) has filed a lawsuit against Donald G. Blakstad, crypto mining outfit Energy Sources International Corporation (ESI) and vehicle part company Xact Holdings Corporation for scamming investors partly through an allegedly fraudulent cryptocurrency mining operation.
Moreover, according to a statement by the SEC on Jan.8, Blakstad allegedly collected $3.54 million from 14 different investors through a fraudulent offering. Blakstad claimed ownership of three businesses, vending supposed securities in those operations. However, the accused did not put the investors’ money on such securities. Instead, Blakstad used the money for personal gains, purchasing part of a nightclub and a car, among other things, according to the SEC’s complaint.
In addition, the document noted Blakstad used ESI, Xact holdings and energy company Midcontinental Petroleum, Inc. as part of his operation. He sold falsified information to lure investors to participate. Additionally, the mining firm, Energy Sources International Corporation first sprung up in Nevada back in 2015 with Blakstad as its President; and allegedly its sole employee.
Furthermore, from December 2017 to May 2018, the accused purportedly sold securities in the firm; to at least five people, totalling to $550,000. The SEC alleged Blakstad then used at least $270,000 of the money raised for individual expenditures; and issued nearly $60,000 in checks to investors as return on investment despite there being no profit.
Not First of Crimes Committed
Additionally, the SEC also charged Blakstad on the accounts of insider trading back in 2019; according to a July 10 statement by the commission. The SEC claims Blakstad bribed accountant Martha Patricia Bustos to acquire information about her employer, Illumina Inc. Blakstad allegedly used the private information received from Patricia to benefit in the stock market according to the statement.
In conclusion, the complaint is calling for Blakstad to pay back any fraudulently earned gains and pay civil penalties. Additionally, bar him from any officer or director role with any issuer of certain registered securities.