Rolled for $25 Million, Investors Say

HOUSTON (CN) - More than 120 investors claim a Florida man and his companies took them for $25 million in phony gas and oil joint ventures. Justin Solomon, of Deerfield Beach, promised "monthly production payments" of $10,000 to $15,000 from Texas oil wells, but they got nothing back, the investors say.

The plaintiffs say Solomon and his companies, including various Seisma Oil Research, Seisma Energy Research and Permian Asset Management, used "high-pressure salesman located in offshore boiler rooms to contact investors."

The defendants pushed their scam to investors from 32 countries, claiming the joint ventures would buy working interests in oil and gas wells in Yoakum, Webb, Liberty and Live Oak Counties in Texas, the complaint states.

It adds: "In soliciting investors, defendants and their salesman, at various times, made the following false and misleading statements, among others: (a) investors would receive a quick return of their investment; (b) the wells were already producing or would quickly begin production; (c) investors would receive monthly production payments of $10,000 to $15,000 (d) Credit Suisse, ExxonMobil, and sovereign wealth funds were investing in the joint ventures wells or were partnering with the well operators; (e) investors can sell their units for three or four times their purchase price; and (f) sales commissions were just 1% percent of the investments; (g) the joint venture would be formed, and (h) the joint ventures would own working interests in the wells set forth in the subscription agreements.

"In reality: (a) investors received nothing on their investments; (b) defendants did not acquire any working interest in the wells associated with two of the six ventures; (c) of the $25 million raised from investors, just $9.5 million (38%) was used to acquire working interests in oil and gas wells on behalf of the defendants, $10 million (40%) was used to pay commissions and marketing expenses, and the remaining $5.5 million (22%) was expended on boating, automobile and various expenses associated with running the scheme; (d) neither Credit Suisse, Exxon Mobil, nor sovereign wealth funds invested/partnered in any of the wells."

The SEC sued Solomon and his companies for securities fraud in June 2010, and they acknowledged their violations and agreed to pay back investors, according to the complaint.

The plaintiffs seek damages for RICO violations, deceptive trade, breach of contract, breach of fiduciary duty, securities fraud, conversion and conspiracy.

Here are the defendants: 4G Companies; 4G Private Equity LLC; 4G Global Alternatives LLC; 4G New Global Energy LP; 4G Alternative Energy LLC; Enermax Inc.; Seisma Oil Research LLC; Seisma Energy Research AVV aka Seisma Oil Research, AVV: Justin Solomon; Bret Boteler; Steve Rackley; Brian Gunn; Lavon Evans; Evans Energy LLC; and S. Lavon Evans Jr. Operating Co.

The plaintiffs are represented by Lori Hood.

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