There’s One Born Every Minute, SEC Says

DALLAS (CN) – Two Dallas-area men, one of them a felon, defrauded people of $2 million in supposed gas and oil joint ventures, the SEC claims in court.
     The SEC sued Matthew O. Madison, of Lewisville; Dwight McGhee, of Irving; and Infinity Exploration LLC, also of Irving, in Federal Court.
     McGhee was convicted of a felony in 2007, but the men didn’t disclose that to their investors, the SEC says in the complaint.
     According to the complaint: “Between March and October of 2008, Infinity and its principals, Madison and McGhee, offered and sold securities in the form of joint ventures interests (‘JV interests’) involving oil-and-gas exploration programs, raising over $2 million from at least 40 investors. Madison prepared Infinity’s fraudulent offering documents and drafted misleading investor updates, while McGhee in the offer and sale of the JV interests made verbal misrepresentations to investors. The offering documents stated that Infinity was raising funds for oil-and-gas exploration, but failed to disclose that Infinity’s joint ventures would merely hold JV interests
     purchased from another company, Giant Operating, LLC (‘Giant’). The offering documents falsely described Madison as experienced and successful in the oil-and-gas industry, and failed to disclose McGhee’s 2007 federal felony conviction. McGhee enticed investors by misrepresenting potential production and revenue, well management, the timing of drilling operations, and past successes. Finally, Madison and McGhee sent written updates to investors that created the false appearance that Infinity controlled the drilling operations when, in reality, Giant had full control.”
     Giant is not a party to the lawsuit.
     The SEC seeks disgorgement, penalties and an injunction.

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