A Bluffton businessman is being investigated by the S.C. Attorney General Office's Securities Division, five months after the office ordered him to stop selling shares of his company.
On Feb. 25, the office ordered Peter Iodice and two other agents to stop selling shares of the Myrtle Beach-based Compass Energy Holdings, which had allegedly sold about $2 million worth of stock. The company planned to acquire and operate convenience stores along the East Coast, or lease them to other operators.
The cease-and-desist order alleges that Iodice, president and chief executive officer of the company, misled potential investors by withholding information about his fraud conviction in 2007.
One of the company's agents, George Heffernan of Myrtle Beach, had been banned for life from the securities business in South Carolina, according to the order.
The order also says the company failed to file a renewal notice to continue selling stock, and Iodice, Heffernan and another Compass agent were not properly registered to conduct such sales in the state.
According to the order, the company was authorized to sell $500,000 worth of securities through January 2010.
The company, however, continued to sell and issue stock without properly registering with the federal Securities and Exchange Commission after January 2010, the order said. By October 2012, Iodice and Compass Energy had sold about $2 million worth of shares and planned to issue a total of $5 million worth of stock, the order said.
The order also said Iodice pleaded guilty to felony obtaining goods under false pretenses in 2007 after he solicited a $100,000 investment in a car dealership in Chesterfield County without the authority to do so.
Iodice was sentenced to five years' probation, with a suspended 10-year sentence, and he was ordered to pay $120,000 in restitution.
Despite Iodice's conviction, Compass Energy's last S-1 stock offering form, filed with the SEC in February of 2012, reported that none of the executive officers of the company had any criminal convictions in the previous 10 years.
On Wednesday, the attorney general's spokesman, Mark Powell, confirmed that an investigation into Iodice was ongoing, but that he could not comment further.
The investigation also includes Heffernan, the director of business development for Compass Energy, who was banned from selling securities in February 2007 by the attorney general. Compass Energy was aware of his ban and employed him in 2009 expressly to sell shares, according to this year's cease-and-desist order.
According to the order, Heffernan and his company, Index Analysis Pool, were fined and permanently banned from engaging in the securities business or providing investment advice in the state.
Additionally, Heffernan was ordered by the U.S. District Court in Florence to pay $650,000 in sanctions for committing commodity fraud, according to a 2008 news release from the U.S. Commodity Futures Trading Commission. According to the release, Heffernan solicited clients by claiming his trading methods were more profitable than they actually were.
The cease-and-desist order states that Iodice could accept the Securities Division's findings and pay $30,000. Heffernan could do the same and pay a $50,000 fine. And Compass Energy Holdings could pay a $90,000 fine.
In the alternative, they could request a hearing to dispute the allegations, but they would have to pay $10,000 for each violation they are found guilty of.
Powell could not confirm whether Iodice chose to pay the fine or requested a hearing, citing the ongoing investigation. Attempts to reach Iodice for comment were unsuccessful.
Follow reporter Matt McNab at twitter.com/IPBG_Matt.