In the U.S. District Court for the Western District of Texas, Petroforce Energy LLC and its founder William Veasey have consented to pay almost $300K to resolve charges brought by the Securities and Exchange Commission in an oil-and-gas offering fraud. The Austin-based company and Veasy raised close to $3.9M from about 80 investors in four allegedly fraudulent offerings. Some investors backed more than one offering.
According to the regulator’s complaint, Veasy and Petroforce gave materials to investors that included misleading and false statements regarding the investments. These inaccurate statements allegedly misrepresented certain operational issues that had impacted an earlier offering, overstated the wells’ profitability, and understated certain expenses. Other key information, including tax benefits involving the offerings, were also allegedly misrepresented.
The Commission is accusing two Petroforce sales agents of acting as unregistered brokers in the oil and gas offering fraud. Javier Avarado and Ivan Turrentine, along with Veasey, offered and sold limited partnership and joint venture interests to investors in Petroforce securities. All of them made money from the sales.
Petroforce and the three men have settled the Commission’s charges but without denying or admitting to the allegations. Veasey will pay over $58K of disgorgement plus prejudgment interest and $90K of civil penalties. Petroforce will pay penalties of $150K. Alvarado will pay $10,800 of disgorgement plus prejudgment interest.
The court must approve the agreed upon settlements, which resolve SEC charges that they violated certain sections of the Securities Act of 1933 and the Securities Exchange Act of 1934.
Texas Securities Fraud
Our Texas oil and gas fraud lawyers at Shepherd Smith Edwards and Kantas, LTD LLP represent investors that are fighting to get back their investment losses. Please contact our securities law firm today to request your free, no obligation consultation.
A day after the SEC announced that the fraud charges against Petroforce and the three men were settled, the regulator announced separate charges against Citadel Energy and its founder Joey Stanton Dodson of California in an unrelated case. Citadel Energy is a collection of businesses that provide the oil and gas industry with fluid management solutions in North Dakota.
The regulator accused Dodson of misleading investors about compensation details and other key details. He is accused of commingling money between three ventures that separate investor groups had funded and misappropriating at least $1.7M for himself and family members, as well to make Ponzi-like payments to investors. The Commission said that about 50 investors sustained investment losses.
Now, Dodson, who is also settling but without denying or admitting to the SEC’s allegations, will pay over $1.7M of disgorgement, prejudgment interest of more than $189K, and an $859K civil penalty.
Oil and Gas Investment Fraud
On its website, the SEC warns that while there are oil and gas investments that are “legitimate” there are many that are scams. The regulator offers a list of “red flags” that may be signs of possible oil and gas investment fraud, including:
· Sales pitches that push a current event news headline, such as when gas prices are “volatile,” in order to add a sense of urgency to an investment opportunity so that the prospective investor buy now.
· Guarantees of very high returns.
· Receiving investment materials that you never solicited.
· Investment “opportunities” touted as available only for a limited amount of time or for a limited number of investors.
· Not being allowed to discuss the oil and gas investment opportunity with anyone, including a financial professional or a lawyer.
Contact our Texas securities law firm today.