Linus Unah – Fourth Estate Contributor
Washington, DC, United States (4E) – The U.S. Securities and Exchange Commission (SEC) has charged a Plano, Texas-based company, Wayne Energy LLC and its manager Matthew W. Fox with defrauding investors and misappropriating investor funds.
The SEC said in a release on Wednesday that it was charging them with securities fraud arising from a failed offering of interests in a joint venture formed to drill and operate an oil and gas well well in Upshur County, Texas.
The SEC’s complaint, filed in a Texas federal district court, alleged that Fox raised about $950,000 from at least nine investors by selling interests in this joint venture between March 2015 and October 2016.
The complaint alleged that Fox had previously operated another oil and gas company – Frisco Exploration Company – but formed Wayne Energy in March 2015, after Frisco Exploration failed.
Wayne Energy was to be the manager of the joint venture, the SEC said.
The SEC further alleged that, to raise funds for the joint venture, Fox simply reused offering documents he had used at Frisco Exploration.
But, according to the SEC’s complaint, other than occasionally changing the names of the entities, Fox did not customize the offering documents to the joint venture’s business or risks.
In addition, the SEC alleged that Fox spent $500,000 of investor money on personal expenses, including more than $236,000 in casino gambling charges and cash withdrawals and about $240,000 on house and car payments, vacations, dining and shopping, and jewelry.
Without admitting or denying the allegations in the SEC’s complaint, Fox and Wayne Energy have agreed to a settlement that requires them to pay disgorgement and prejudgment interest as determined by the court upon the SEC’s motion.
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