Content of Penalty:
The Securities and Exchange Commission has charged a Dallas-based oil-and-gas company and two of its executives with defrauding investors out of at least $950,000 through a string of fraudulent oil-and-gas securities offerings.
The SEC’s complaint, which was filed yesterday in federal court in the Northern District of Texas, alleges that Shezad Akbar used his company, Americrude, Inc., to defraud multiple investors in seven securities offerings that purportedly raised funds to acquire working interests in oil-and-gas prospects. The SEC alleges that Americrude, Akbar, and Daniel Waite, who was Americrude’s nominal President, used a combination of cold calls, high-pressure sales pitches, and false and misleading statements to lure investors into Americrude’s fraudulent offerings. The defendants misrepresented Americrude’s track record, the reserve potential of its oil-and-gas prospects, and its intended use of proceeds from the offerings. Akbar is also alleged to have used an alias to conceal his involvement in the offering fraud and to hide his prior felony convictions from potential investors.
“Cold calls and high-pressure sales tactics are commonly used in offering frauds,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. “Investors should always use caution and never be induced to abandon their common sense.” The SEC encourages investors to check the backgrounds of people selling investments by using the SEC’s investor.gov website to quickly identify whether they are registered professionals and confirm their identity.
According to the complaint, while investors only received back approximately $2,500 of their principal, Americrude and Akbar misused and misappropriated more than $196,000 of investor funds, which were allegedly spent on, among other things, retail and entertainment expenses.
The SEC’s complaint charges Americrude, Akbar, and Waite with violating Section 17(a)(2) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b) thereunder. Additionally, the SEC’s complaint charges Waite with violating Section 15(a) of the Exchange Act based on his alleged role as an unregistered broker.
Waite consented, without admitting or denying the SEC’s allegations, to the entry of a final judgment that permanently restrains and enjoins him from violating Sections 5(a), 5(c) and 17(a)(2) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5(b) thereunder; restrains and enjoins him from participating in the issuance, purchase, offer, or sale of any oil-and-gas related securities, provided however that such injunction does not prevent Waite from purchasing or selling oil-and-gas related securities for his own personal account; and orders him to pay disgorgement of ill-gotten gains totaling $32,409.52, prejudgment interest of $1,763.30, and a penalty of $100,000.
The SEC’s investigation was conducted by Christopher Reynolds and Melvin Warren and supervised by Scott F. Mascianica and David Reece. The SEC’s litigation against Americrude and Akbar will be led by Matthew Gulde.