$1 Million Settlement in Energy Securities Scam

     DALLAS (CN) – A man tied to a $22 million unregistered oil and gas securities scam has agreed to settle the charges against him for $1.1 million.
     Christopher Chad Wilbourn, 38, of Southlake, had worked for Halek Energy and CBO Energy, and allegedly ran an unregistered securities offering for several Texas oil and gas projects, raising more than $22 million from over 300 investors.
     “Halek Energy and CBO Energy offering materials contained materially false and misleading statements about the risks of the oil and gas projects, the use of investor funds, and potential returns from the investments,” the complaint said.
     Prosecutors said the owner of those companies, Jason Halek, 38, knew these representations were false and that the projected returns were wholly speculative.
     U.S. District Judge Ed Kinkeade found Halek and his companies Southlake liable Thursday for $21.45 million in disgorgement and more than $5.04 million in prejudgment interest. He also entered a permanent injunction against the Southlake-based Halek in the final judgment.
     Wilbourn consented Friday to a final judgment against him, agreeing to pay more than $1.05 million in disgorgement and over $116,000 in prejudgment interest.
     The Securities and Exchange Commission said the defendants solicited investors through cold calls and various websites created and controlled by Halek, that the defendants sold 75 percent of a project’s working interest and kept the remaining 25 percent.
     “Halek Energy and CBO Energy misused offering proceeds by commingling funds from numerous projects into one account, rather than segregating funds by project as represented in the subscription agreements,” the complaint said. “In many cases, cost overruns on one project were paid from funds raised for a completely new project.”
     The SEC said the projections the defendants made on returns were “wholly speculative,” and that the projects were “wildcat” plays in areas not known for significant oil or gas production. An unqualified employee with no oil and gas experience allegedly formulated the numbers using unreliable methods.
     “For at least four prospects, the defendants projected returns based in part on the sale of natural gas to be produced on the prospects, despite the fact that those prospects had no nearby pipelines,” the complaint said. “Indeed, one CBO Energy PPM falsely stated the prospect wells were near a pipeline.”
     Without the pipeline, the defendants had no way to sell the gas, rendering the revenue projections fraudulent, the SEC said.
     “To date, there are still no pipelines in these areas and investors in these projects have received no returns on their investments,” the complaint said. “Halek knew there was no pipeline prior for these projects, but did not disclose this information to investors.”
     The defendants also sold pre-IPO shares of Southlake Energy, raising more than $688,000 from at least 16 investors. The SEC said the defendants represented the company would be transferred interests in Halek Energy and CBO Energy wells, but they ended up transferring the interests to others, leaving Southlake Energy with no ongoing operations and investors with no return of their money.

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