WICHITA (CN) – Four men led a securities scam and Ponzi scheme that took $156 million from 1,300 investors, the SEC claims in Federal Court. Lead defendants Michael McNaul II, Lloyd Nunns, Gregg Krause, and Dale Lucas, all of whom refused to speak to the SEC, took the money, purportedly for oil ventures, through “numerous misrepresentations, omissions, half-truths and outright falsehoods,” the SEC says.
In summarizing its 67-page complaint, the SEC says, “This case involves a nationwide securities offering fraud that raised $156 million from over 1,300 investors nationwide and in Canada, through the use of 22 purported oil-and-gas equipment-leasing and pipeline joint ventures structures to evade the securities law. In truth, however, the investments offered were not joint ventures, but investment contracts, which meet the statutory definition of securities.
“Defendants sold these securities by making numerous misrepresentations, omissions, half-truths and outright falsehoods, concerning, among other things, the purported success and profitability of the ventures, the background and experience of management, and the safety and risks of the investment. Defendants lured potential investors with the promise of annual returns of 25-40% and an even more lucrative initial public offering resulting in returns as high as 3-8 times their investments.
“Contrary to the purported lavish returns, defendants have returned only $7 million to investors over the four-year period of the scheme. And of that $7 million, approximately $1 million consisted of funds diverted from later investors to pay earlier ones, i.e., Ponzi payments. Moreover, almost half of the funds fraudulently raised went to pay sales commissions to agents who promoted the investments.”
Here are the defendants: Michael McNaul, Dale Lucas, Gregg Krause, Lloyd Nunns, Russell Kilgariff, Steven Tallman, Freddie Hembree, Raymond Leonard, Mid Western Natural Gas Inc., and Mark DuBoise.
Here are the relief defendants: Alliance Leasing LLC, Consolidated Management Group LLC, Golden Management LLC, Forrest Energy LLC, Warren Drilling LLC, Warrick Drilling LC, Pawnee Iron Works LLC, Mid Kan Operating LLC, T&D Oil Service LLC, Consumer Information Network Inc.