A federal court jury deliberated for a little more than two hours before finding five defendants liable for a boiler room securities scheme that fraudulently raised more than $67 million from investors to benefit a Tustin aerospace start-up.

The verdict handed down Friday, Sept. 20, capped a 10-day trial stemming from a 2021 U.S. Securities and Exchange Commission lawsuit involving Elite Aerospace Group, a bankrupt company that purported to design, build and sell components for rockets, spacecraft, aircraft and satellites.

Jurors found Michael P. Owens of Newport Beach, Dawson Davenport of Irvine, Robert Gunton of Tustin, Andrea Lindstrom of Anaheim and Julie Yale of Laguna Hills liable for securities fraud in the “Ponzi-like” scheme that operated from 2014 to 2018.

The lawsuit states Owens operated several media and marketing companies while Davenport and Lindstrom worked as business consultants. Gunton is listed as a media production company owner and Yale is the owner of a bookkeeping service.

Owens also violated federal broker-dealer registration provisions and, with Gunton and Yale, breached securities registration laws, according to the SEC.

Davenport said in a brief phone interview Tuesday that the jury’s verdict is “very disappointing,” adding that he hopes to appeal the decision.

“It’s a horrendous outcome and horrendous experience to try to advocate against the federal government,” he said.

The five defendants could not be reached for comment Tuesday. The SEC did not respond to emails and phone calls seeking information about financial penalties against them.

Separately, the SEC in 2007 charged Owens and Davenport with securities fraud and registration violations in a $50 million “Ponzi-like” scheme involving investor funds associated with another company. The two men later settled the complaint with the SEC.

Owens told Elite officials that he and the co-defendants could take care of fundraising, bookkeeping, information technology, marketing, legal issues and other administrative tasks so the company could focus on growth, according to the complaint.

Elite officials knew about the boiler room activities and agreed to pay Owens a large weekly consulting fee and stock in the company, the suit states.

From 2014 to 2018, Owens’ company controlled Elite’s efforts to raise capital and managed numerous sales representatives, none of whom were registered or associated with SEC-sanctioned broker-dealers.

According to the SEC, the sales representative made unsolicited phone calls to potential investors using leads provided by Owens’ companies and received commissions totaling 15% for each new investment and 10% for reinvestments.

The sales staff also was offered additional incentives — such as vacations, electronics or cash — for meeting specific target goals.

Although Owens was operating the boiler room scheme out of Elite’s offices, he structured the operation so that it appeared to be compliant with the securities laws, according to the SEC.

“Because he had previously been charged by the SEC for acting as an unregistered broker, Owens knew there was potential liability associated with paying unregistered salespeople commissions for soliciting investments,” the suit states. “Instead of calling the salespeople’s compensation commissions, Owens referred to them as discretionary, or performance bonuses, and instructed others to do so as well.”

In the fall of 2016, as Elite was trying to get its financial statements audited in preparation for a public offering, auditors asked for documentation explaining payments that had been made to a few of Elite’s salespeople.

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As a result, Davenport created four different letters on Elite letterhead and sent them to auditors, falsely stating sales personnel were receiving discretionary awards and bonuses suggested by management and based on extraordinary effort or dedication.

Owens also engaged in activities similar to a broker, such as handling investment funds even though he has never registered with the SEC.

“In carrying out the boiler room scheme, Owens knew or was reckless or negligent in not knowing that he was concealing his control of Elite’s capital-raising process, concealing the payment of commissions to unregistered brokers,” the complaint states.