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Univ. of Toledo College of Law

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Thursday, August 28, 2008

SEC Settles Charges Involving Fractional Interests in Oil & Gas

The SEC filed a civil action in the United States District Court for the District of Colorado against Donald H. Allen and his two wholly-owned companies, H&M Petroleum Corporation (“H&M”) and American Energy Resources Corporation (“AER”), for violations of the antifraud and registration provisions of the federal securities laws.  In its Complaint, the SEC alleges that, between March 2002 and December 2006, Allen, H&M, and AER raised approximately $9.9 million from at least 355 investors nationwide through a series of unregistered offerings of fractional interests in oil and gas projects. These projects were marketed to the public through cold call telephone solicitations and “seminars” advertised in local newspapers. According to the Complaint, Allen, H&M, and AER diverted over $2.3 million to Allen’s personal use. The defendants also misrepresented or omitted material information about their track record, projected return on the investments, and their own investment in the offerings. Allen, AER, and H&M agreed to settle the SEC’s charges without admitting or denying the allegations in the Complaint. Relief includes payment of $510,000 in disgorgement to harmed investors.

 

http://lawprofessors.typepad.com/securities/2008/08/sec-settles-cha.html

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