SHERMAN, Texas (CN) - A felon and his "hand-selected team of associates" sold millions of dollars of "virtually worthless" stock after making up a major oil strike in Belize, the SEC claims in court.
The SEC sued defendant Ronald L. Blackburn et al. on Monday in Federal Court.
The SEC describes Blackburn as a "convicted felon," and claims he controlled, and may still control, co-defendant Treaty Energy Corp.
It accuses Blackburn and five others of manipulating the price of Treaty stock in a fraudulent campaign that included the announcement of a bogus oil strike in Belize.
Blackburn et al. raised $4.9 million through their shenanigans, the SEC says.
Blackburn, 68, of New Orleans, served 33 months in federal prison for income tax evasion, and was released in August 2002, the SEC says. A bankruptcy trustee sued him in 2009 for fraudulent transfers to himself from another company, and he agreed to pay $1.3 million, according to the SEC complaint.
In its Dec. 15 lawsuit, the SEC also sued Andrew V. Reid, 45, of New Orleans, Treaty's CEO; Bruce A. Gwyn, 54, of New Orleans, Treaty's co-CEO and COO; Michael A. Mulshine, 75, of Brielle, N.J., Treaty's corporate secretary ; Lee C. Schlesinger, 45, of New Orleans, Treaty's chief investment officer ; and Samuel E. Whitley, 38, a Houston-based attorney.
The SEC claims that Whitley, serving as Treaty's outside corporate and securities, wrote more than 100 opinion letters about the tradability of Treaty stock.
The SEC seeks disgorgement, penalties and injunctions.
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