Southlake Resources Group, an oil and gas company based in Fort Worth, has agreed to pay more than $5.4 million to settle allegations that it defrauded more than 70 investors, the Securities and Exchange Commission announced Tuesday.
An SEC complaint alleged that from 2010 to 2014 the company raised more than $5.2 million by selling stakes in 12 oil-and-gas ventures to the investors.
But the offerings, the SEC alleged, were false and misleading and included exaggerated projections of future earnings and expected costs.
“[Southlake Resources Group] stated that certain well revenue was being directed to well operators, when, in fact, [Southlake Resources Group] retained the revenue,” the complaint said.
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The complaint said the company kept about 30 percent of the investments for profit.
None of the offerings to investors were registered with the SEC, Neither were any of the salespeople hired by the company to cold-call investors, the complaint said.
Cody M. Winters, president of Southlake Resources, and Nicholas R. Hamilton, the company’s vice president, are accused of orchestrating the alleged scheme.
“According to our complaint, defendants used unlicensed sales staff to cold call investors and they significantly overstated how much of investors’ money would actually be used to drill for oil and gas,” Shamoil Shipchandler, director of the SEC’s Fort Worth office, said in a statement.
The agreement reached this week requires the company to pay back $5,235,650 collected from investors, plus $285,761.70 in interest.
Neither Winters or Hamilton denied or admitted to the allegations.
Winters agreed to pay a $160,000 civil penalty. Hamilton agreed to pay a $50,000 civil penalty.