Erez Law is currently investigating brokers across the country in connection with losses sustained from participation in a $15 million oil and gas investment Ponzi scheme involving TexStar Energy Corp., Southern Energy Group Inc. and TennStar Energy Inc.
In August 2017, Richard Underwood (CRD# 2459270) and Colin Purcell were charged with conspiracy to commit wire fraud and mail fraud in connection with a $15 million oil investment Ponzi scheme sold to more than 150 investors; these charges carry a maximum sentence of 20 years’ imprisonment and a fine of up to $250,000. The federal indictment alleges that between 2012 and 2016, Underwood and Purcell, as well as David R. Greenlee and David Stewart, who already pled guilty to their involvement in the scheme, claimed to investors nationwide that they operated companies selling investments in oil and natural gas projects in Texas, Oklahoma, and Kansas.
According to the Securities and Exchange Commission complaint filed in August 2017, “Greenlee and Stewart operated their scheme through two Tennessee corporations, Southern Energy Group, Inc. (“SEG”), which is now administratively dissolved, and Black Gold Resources, Inc. (“BGR”), which later changed its name to Tennstar Energy, Inc. (“Tennstar”).” Additionally, “In soliciting investors, Greenlee, Stewart and Underwood represented that the limited partnerships and joint ventures would use investor funds to (a) acquire ‘’working interests’ in various oil wells and (b) employ enhanced oil recovery techniques, such as fracking, to develop and recover oil from the wells. Greenlee, Stewart and Underwood also told investors that the entities would sell the oil in order to earn for investors returns ranging from 15 to 55 percent, or more, per year ‘for decades’.” It is alleged that a portion of investor money was used to produce oil from several wells, but nearly two thirds of the $15 million of investor funds raised was used for their own benefit, to pay salesmen or to advertise for new investors for their scheme.
According to the Department of Justice, U.S. Attorney’s Office of the Southern District of Georgia, “The Defendants assumed false identities during contacts with investors; they provided false information about the experience and background of the management of the companies; they failed to reveal that the individuals truly responsible for the management of the companies were convicted felons who had perpetrated other investment scams; and they repeatedly made other false statements in order to fraudulently obtain over $15 million from investors.”
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, brokerage firms across the country may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against brokers across the country in connection with losses sustained from participation in a $15 million oil and gas investment Ponzi scheme involving TexStar Energy Corp., Southern Energy Group Inc. and TennStar Energy Inc. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.