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SEC charges individuals, entities in $122 million oil, gas fraud

Graham ArcoOil Corp. alleged to be part of fraudulent, unregistered oil, gas offerings over $122 million

The US Security and Exchange Commission announced in December fraud charges against The Heartland Group Ventures, LLC, Heartland Production and Recovery, LLC, six other Heartland-affiliated entities, four Heartland-affiliated individuals and multiple oil and gas operators. The alleged charges are in connection with five fraudulent and unregistered oil and gas offerings totaling over $122 million, including an operator in Graham.

The SEC complaint filed in the Fort Worth Division of the U.S. District Court for the Northern District of Texas on Dec. 1 and unsealed Dec. 8, claims that since at least October 2019, the Heartland-affiliated defendants fraudulently raised approximately $122 million from more than 700 investors nationwide through five unregistered securities. The funds were raised for working over existing oil wells or drilling new oil wells in Texas.

“The complaint alleges that the Heartland-affiliated Defendants spent only about half of the investor funds they raised on oil and gas projects, which collectively generated less than $500,000 in revenue,” the SEC stated in a litigation release Dec. 8. “The complaint also alleges that beginning in at least 2019, the Heartland-affiliated Defendants used investor monies to make more than $26 million in Ponzi payments to debt fund investors, and made material misrepresentations and omissions to investors regarding the oil and gas projects.”

The Heartland-affiliated individuals charged are James Ikey, John Muratore, Thomas Brad Pearsey, Rustin Brunson, and the oil and gas operators are Manjit Singh (or Roger) Sahota, ArcoOil Corp. and Barron Petroleum LLC. The U.S. District Court for the Northern District of Texas issued a temporary restraining order against all of the defendants and relief defendants. The court also issued an order freezing assets of certain defendants and relief defendants. The court also placed a receiver over the assets of the entity of the defendants as well as certain relief defendants.

“As further alleged in the complaint, the Heartland-affiliated Defendants sent a total of more than $54 million of Heartland investors’ money to Defendants Sahota, ArcoOil, and Barron Petroleum and a third Sahota entity, Relief Defendant Dallas Resources Inc., for oil and gas projects,” the SEC stated in the release. “The Sahota-related Defendants made material misrepresentations about the existing and potential production of wells, and used millions of dollars in Heartland investor funds to purchase a private jet, a helicopter, real estate in the Bahamas, and on other non-oil and gas expenditures for themselves, according to the complaint."

For the rest of the story, see the Jan. 15 edition of The Graham Leader.

The Graham Leader

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