Costa Mesa bar owner must pay penalty and surrender commission from investment deal in Ponzi scheme

A Costa Mesa bar owner who has worked as a paid city consultant will have to pay a hefty fine for breaking federal regulations when he helped persuade a Newport Beach businessman to invest $3 million in a company that turned out to be a Ponzi scheme.

Roland Barrera, who owns local bars Casa and Maison, must pay a $150,000 penalty and give up a sizable commission he earned on the 2012 sale, a federal judge in Austin, Texas, said in an opinion Friday.

U.S. Magistrate Judge Mark Lane wrote that he will finalize his decision after the U.S. Securities and Exchange Commission files additional paperwork by Sept. 4.

The SEC accused Barrera of persuading the businessman to invest in a Texas firm that promised to buy oil and gas rights and pay out profits it earned from the royalties.

Instead, the firm’s owners — Robert Helms and Janniece Kaelin — used more than $8 million of investors’ money on personal expenses like a 23-day trip around the world, according to the SEC.

“According to Helms, he and Kaelin relaxed on the beach in Fiji, swam with dolphins in Hawaii, met elephants in Thailand while staying at a Four Seasons overlooking an elephant reserve, attended a fireworks display at the rajah’s palace in India, spotted elephants in Tanzania and rode camels in Jordan,” Lane wrote.

When the royalties they collected weren’t enough to cover payments they owed their clients, Helms and Kaelin used new investors’ money to close the gap, essentially becoming a Ponzi scheme, according to the SEC. Nearly 130 clients invested more than $31 million in Helms and Kaelin’s business, court documents said.

Lane wrote that he will order Helms and Kaelin to pay a $4.2 million penalty in addition to returning the money.

In a written statement, Barrera characterized his role in the situation as “very limited.”

According to Barrera, he only introduced a prospective investor to a childhood friend named Deven Sellers, who was working for Helms and Kaelin.

“That their transaction escalated into a litigated matter is unfortunate, but it in no way involves me,” Barrera wrote.

Court papers say Sellers offered Barrera the chance to sell securities in the Texas firm in 2012, though neither of them had the proper SEC registration to do so.

Lane wrote that Barrera and Sellers either misrepresented the truth or were “severely reckless” when they sold a $3 million investment to the Newport Beach businessman without disclosing their $423,500 commission on the deal.

Instead, the pair presented their compensation as “small” and showed documents that implied they couldn’t earn more than $50,000, according to the SEC.

Barrera has become a controversial local figure in recent years.

In 2013, Costa Mesa paid him and his marketing company at least $127,000 to book bands for the city’s 60th anniversary party. The event drew criticism when its price tag ballooned past the original estimate of $315,000 to more than a half-million dollars.

City officials eventually identified musical acts and related expenses as the largest budget-busting factor but did not accuse Barrera of any impropriety.

This year, Barrera drew complaints from neighbors over unpermitted musical acts at his nightclub Maison, on West 19th Street. Officials red-tagged the business after finding building and fire code violations.

The city also cracked down on illegal burlesque shows at his bar Casa, also on West 19th Street.