The Financial Industry Regulatory Authority announced Tuesday it suspended indefinitely Pinnacle Partners Financial Corp., of San Antonio, Texas, and its president, Brian K. Alfaro, for failing to comply with a FINRA temporary cease and desist order “prohibiting their fraudulent misrepresentations.”

 The suspension resulted from FINRA’s notice of suspension that alleged that Pinnacle and Alfaro continued to make fraudulent oral and written misrepresentations and omissions in connection with their offer and sale of certain oil and gas joint interests. The temporary order was issued on Jan. 21.

"Brian Alfaro and Pinnacle pose a serious risk to the investing public,” said Brad Bennett, FINRA’s executive vice president and chief of enforcement. “Even after the issuance of a temporary cease and desist consent order, Alfaro and Pinnacle continued to market oil and gas offerings through material misrepresentations, with the intent to deceive investors.”

FINRA filed a complaint against Pinnacle and Alfaro on Dec. 3, alleging both operated a “boiler room” in which numerous brokers placed thousands of cold calls on a weekly basis to solicit investments in oil and gas drilling joint ventures Alfaro owned or controlled. 

The complaint said that Pinnacle raised more than $10 million from over 100 investors, and Alfaro diverted some of the funds for unrelated business and personal expenses. 

A hearing on those will be held Sept. 12. The hearing panel will consider the merits of these claims and whether to order additional penalties.

FINRA alleged that Pinnacle and Alfaro grossly inflated natural gas prices, projected natural gas reserves, estimated gross returns and estimated monthly cash flows.

The regulator said Pinnacle and Alfaro “deliberately attempted to mislead investors by deleting unfavorable information from well operator reports and providing them with doctored maps, which omitted numerous dry, plugged or abandoned wells near their projected drilling sites.”

According to the complaint, Alfaro’s misuse of customer funds included attempts to retain the grossly inflated “drilling costs,” which were funds Alfaro obtained by convincing customers to allow him to transfer their money into other fraudulent offerings. In another instance, Alfaro collected more than $500,000 in subscription costs for a well that was never drilled, and used those funds for unrelated personal and business expenses.