HAMILTON COUNTY, Ind. — A Fishers man has been charged with fraud after a number of Indiana residents reportedly lost thousands of dollars through fraudulent means by investing in a company based out of New Mexico.
According to an affidavit for probable cause filed Wednesday by the securities division of the Indiana Secretary of State’s Office, officials are alleging that Akamai Physics Inc., (API) as well as one of its subsidiaries Porrima Photonix, Inc., (PPI), defrauded eight Indiana investors, as well as other investors across the country.
According to court documents filed in Hamilton County, Darrin Blaine, the chief legal officer of API and a Fishers resident, was charged with:
- Three counts of fraudulent or deceitful act in the offer, sale or purchase of a security, a Level 5 felony;
- One count of unlawful sale of a security def. sells or offers to sell a security in Indiana, a Level 5 felony;
- One count of unregistered broker-dealer def. transacts business in Indiana as a broker-dealer, a Level 5 felony;
- One count of unregistered securities agent, a Level 5 felony;
- One count of unregistered investment adviser, a Level 5 felony;
- One count of money laundering the value of the proceeds or funds is at least $50,000, a Level 5 felony;
- One count of corrupt business influence, a Level 5 felony.
“In total, eight Indiana investors lost approximately $680,000 entrusted to Blaine as part of his fraudulent securities offering,” the affidavit reads. “$1,425,086.53 in funds were collected from investors across several states into API and PPI accounts.”
According to a news release from the Indiana Secretary of State’s office, Blaine was arrested at his home on Thursday and was booked into the Hamilton County Jail.
One of the Indiana residents, a Carmel man who was reportedly defrauded, also fought back in Hamilton County Superior Court after the company reportedly defaulted on his investment. In June, Matthew Zalewski filed a civil lawsuit against PPI and four API employees, including:
- Allen Geiger, chief executive officer of API;
- Marguerite Kimball-King, chief financial officer of API.
Earlier this month, a Hamilton County judge granted summary judgment in the matter and awarded Zalewski more than $1.7 million in damages, court costs and attorney’s fees.
What is the company and what are the claims?
API, according to its website which is currently “under construction,” is a laser systems development and applied physics company in New Mexico. Its website states that the company develops multi-tasking, active sensor systems using fiber laser, microchip and new coating technologies to obtain tactical intelligence by gathering multi-wavelength 3-D imaged data from targets of interest.
Documents specifically related to PPI state that the subsidiary is involved in “active laser sensor technology to identify and locate chemical issues,” the affidavit read. However, investigators found “repeated use of PPI investor money to pay API expenses and to make payments to PPI and API investors.”
Officials said API was first incorporated in New Mexico in 2001. The company filed for Chapter 11 (reorganization) federal bankruptcy protection in late 2020, reporting more than $630,000 in debt at that time.
The affidavit states that PPI was created in Granbury, Texas in July 2019, right before API filed for bankruptcy. All of API’s technology was then placed under API, which the affidavit states shielded the technology from API investor’s lawsuits.
Officials said Blaine created the Laser Tech Investment Club as a way to draw new investors to API/PPI. The affidavit claims the goal of the club was to sell its $1,000,000 promissory note from API.
However, the affidavit claims that Blaine, as the club’s chairman, did not pool the $1,000,000 from the investors into the club and purchase the note. Officials said Blaine reportedly wired each partner’s investment directly to API, to PPI or to himself.
Through these transactions, the securities division believes that securities fraud occurred. Officials said the company “intentionally” omitted the disclosure of bankruptcy to the investors and portions of the invested money were used to pay personal loans, previous investors and kickbacks to the leadership of API/PPI. The affidavit also claims that money was laundered through multiple accounts.
What happened in Zalewski’s case?
Zalewski was first introduced to Blaine when he was reportedly looking for a patent lawyer in 2020. The affidavit said that, during their conversations, Blaine reportedly began to introduce PPI to him, showing him videos and providing him with educational materials, which led Zalewski to believe that it was real.
During their conversations, the affidavit said that Blaine encouraged Zalewski to “be a part of the team.” Blaine also reported that he had multi-million-dollar contracts with governments and other entities.
“All of this led to the credibility of the investment proposal Blaine was offering,” the affidavit read.
On Aug. 5, 2020, Zalewski initiated a promissory note with PPI and invested $300,000 into the company. The affidavit reads that there was an expectation of receiving a 5% return on his investment. However, the affidavit stressed that Blaine was not certified to sell securities in Indiana or in the United States.
“(Blaine) told (Zalewski), prior to investing, PPI had $42 million in contractual agreements, which was a false statement,” the affidavit read. “Blaine also knew API and PPI had little income, but had numerous outstanding debts to previous API investors. It would also be reasonable for Blaine to know API was nearing bankruptcy since they filed paperwork on Dec. 18, 2020.
“On Aug. 6, 2020, Zalewski wired $300,000 to PPI through Pioneer Bank. Blaine sold Zalewski a security.”
After PPI reportedly failed to pay Zalewski the $315,000 laid out in the promissory note, the entities entered into multiple settlement and release agreements, many of which the company either defaulted on or asked for an extension on.
In April 2023, Zalewski, PPI and the employees entered into a sixth settlement and release agreement, where PPI agreed to pay him $1.725 million. Each of the employees at API listed as defendants in the suit also reportedly executed a “personal guaranty guaranteeing PPI’s payment obligations to Zalewski.”
The lawsuit stated that PPI and the four employees listed as defendants have failed to make payments to Zalewski, per the sixth settlement agreement. Through the lawsuit, Zalewski brought forward a breach of contract claim, as well as an unjust enrichment claim. In a response to the lawsuit, the defendants admitted that the agreement was made, but denied that it was “fully executed and enforceable.”
In the summary judgment, signed earlier this month, Zalewski was awarded $1,795,737.85 from the defendants, including damages, court costs and attorneys’ fees.
According to the affidavit, seven other Indiana residents were defrauded out of $380,000 by the company. Officials said none of the individuals received any money back from their investment into API/PPI. The affidavit reads that other investors into API/PPI have been reported in Colorado, Florida, Michigan, New Mexico, Nevada, Virginia and Alberta, Canada.
“The financial investors in this case placed their hard-earned money into the hands of someone
whom they thought they could trust. Instead, the victims’ money fell into the hands of a bad actor who used the investors’ funds for personal use,” Indiana Secretary of State Diego Morales said in a news release from the office. Our office will continue to seek justice for these Hoosier investors and hopefully restore some trust back to the victims.”
FOX59/CBS4 have reached out to the parties involved in the lawsuit for comment regarding this summary judgment in Hamilton County. This story will be updated if they return the request for comment.
Officials with the Indiana Secretary of State’s office said that anyone who may have invested with Blaine, API, PPI or the Laser Tech Investment Club is asked to contact the Indiana Securities Division on their website or by calling (317) 232-6681.