Investor Lawyers Blog
On August 11, 2017, the Securities and Exchange Commission (“SEC”) filed a Complaint against Defendants David R. Greenlee, David A. Stewart, Jr., and Richard “Ric” P. Underwood, in connection with various oil limited partnerships and joint ventures. Specifically, the SEC has alleged that the Defendants engaged in a fraudulent scheme whereby at least $15 million in limited partnership and joint venture interests were sold to more than 150 investors.
According to the SEC Complaint, Defendants Greenlee and Stewart operated the alleged scheme through two Tennessee corporations, Southern Energy Group, Inc. (“SEG”) and Black Gold Resources, Inc. (“BGR”), which later changed its name to Tennstar Energy, Inc. (“Tennstar”). Further, the SEC Complaint alleges that Defendant Underwood substantially assisted in facilitating and perpetuating the scheme by acting as principal salesman, assisting in drafting false offering materials given to potential investors, and overseeing the operations of a ‘boiler room’ sales team that solicited the oil investments.
In soliciting funds from prospective investors, the SEC has alleged that the Defendants represented that the limited partnerships and joint ventures would use investor funds in order to acquire “working interests” in various oil wells, as well as employ enhanced oil recovery techniques, such as fracking, to develop and recover oil from the wells. Moreover, the SEC has alleged that the Defendants represented to investors that the entities would sell enough oil to earn investors returns ranging from 15-55%, or more, per year “for decades.”