Jonathan Douglas Freeze (also known as Jon Freeze) a former stockbroker of Fortune Financial Services Inc. and representative of Alternative Energy Holdings Inc. has been charged by Securities and Exchange Commission (SEC) with defrauding twenty-five customers through fraudulent promissory notes transactions. Securities and Exchange Commission v. Jonathan D. Freeze et al. Case No. 2:21-cv-720 (June 1, 2021).
According to the Complaint, between June of 2016 and February of 2018, 25 investors were persuaded by Freeze and defendants Kevin T. Carney and Robert J. Irey to collectively invest $2,100,000.00 in securities that were fraudulent. The securities came in the form of promissory notes which either Alternative Energy Holdings (AEH) issued or which one of Irey’s companies issued.
SEC contends that Freeze did not use money in the way that he described to investors. The Complaint alleges that the investors were told that the funds would go towards expenses incurred through AEH’s waste-to-energy projects. Instead, Freeze and others purportedly used investor funds to benefit themselves and to meet one investor’s redemption request. Many of Freeze’s customers were told that he was personally invested in AEH which was allegedly untrue.
Investors were allegedly deceived through being promised big returns on promissory notes when there was no source of revenue coming in for AEH and there was no reasonable likelihood of AEH making payments to customers in a timely manner. The investors’ proceeds were allegedly divvied up between Freeze and the other defendants as soon as they were received from investors. Those funds went towards meals, vacations, lavish clothing, and trips to the casino according to SEC.
SEC claims that Freeze violated Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, and Securities Act of 1933 Section 17(a).
Freeze has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon findings that Freeze refused to comply with FINRA while he was investigated for making unsuitable recommendations to annuity customers. Letter of Acceptance Waiver and Consent No. 2017052701401 (Aug. 14, 2017). According to the AWC, Freeze violated FINRA Rules 2010 and 8210 for refusing to respond to FINRA’s requests for information and documents.
FINRA Public Disclosure reveals that Freeze has been identified in nine customer initiated investment related disputes concerning allegations of his wrongdoing when employed by Fortune Financial Services. On December 11, 2017, a customer filed an investment related complaint concerning Freeze’s activities in which the customer requested $165,000.00 in damages founded on accusations that they were placed into unsuitable promissory notes by Freeze during the period that he was associated with Fortune Financial Services.
Freeze is also the subject of a customer initiated investment related FINRA securities arbitration claim where the customer sought $175,000.00 in damages supported by allegations of Freeze causing a withdrawal from their Fortune Financial Services account for a promissory note purchase. FINRA Arbitration No. 19-01612 (June 14, 2019).
On March 24, 2021, another customer initiated investment related FINRA securities arbitration claim involving Freeze’s conduct was resolved for $16,742.00 in damages based upon accusations that the customer sustained losses by investing in Alternative Energy Holdings. FINRA Arbitration No. 19-00435. Also on March 24, 2021, a customer initiated investment related FINRA securities arbitration claim regarding Freeze’s conduct was settled for $15,522.00 in damages founded on allegations of bad direct investments including direct participation programs and limited partnership interests. FINRA Arbitration No. 19-00444.
Freeze is also referenced in a customer initiated investment related FINRA securities arbitration claim which was settled for $18,626.00 in damages based on accusations of the customer being solicited for a securities transaction that Freeze executed away from Fortune Financial Services. FINRA Arbitration No. 19-00607 (Mar. 24, 2021). Another customer initiated investment related FINRA securities arbitration claim concerning Freeze’s conduct was resolved for $102,305.00 in damages supported by allegations of Freeze’s private securities transactions that resulted in losses. FINRA Arbitration No. 19-00650 (Mar. 24, 2021).
The stockbroker’s registration with Fortune Financial Services was terminated on April 17, 2017.