SEC Busts Oil Company
HOUSTON (CN) - Houston American Energy Corp. and its CEO pumped its stock price from $5 to $20 with false statements about its South American oil reserves, and the share price "cratered" to 40 cents "under the weight of the fraud," the SEC said Monday.
The SEC on Monday filed a cease and desist order against Houston American Energy Corp., its CEO John F. Terwilliger, and Boca Raton, Fla.-based Undiscovered Equities Inc. and its president and owner Kevin T. McKnight.
Houston American and Terwilliger "fraudulently claimed that a Colombian exploration concession in which Houston American only owned a fractional interest held between 1 billion and 4 billion barrels of oil reserves, and that the reserves were worth more than $100 per share to Houston American's investors," the SEC said in a statement announcing its cease and desist order. "The estimates lacked any reasonable basis and were falsely attributed to the concession's operator, whose actual estimates were much lower."
Houston American raked in $13 million in a public offering in late 2009 and early 2010, the SEC said. During this time, its share price rose from less than $5 to more than $20.
"Contrary to the lofty estimates made by Terwilliger and Houston American, the company participated in drilling multiple unsuccessful wells on the concession from 2010 to 2012, and withdrew from the operation in early 2013 without recovering any oil," the SEC said in a statement. "The company's stock price eventually cratered under the weight of the fraud. Houston American now trades for approximately 40 cents per share, which represents a market capitalization loss of $600 million since it peaked in April 2010."