SEC v. Stephen L. Bailey; Sapphire Exploration LLC; and Harris Exploration Inc., No. LR-25851, Northern District of Texas (Sept. 25, 2023) — Press Release
raw: Stephen L. Bailey, Sapphire Exploration LLC, and Harris Exploration Inc.
Stephen L. Bailey, Sapphire Exploration LLC, and Harris Exploration Inc., No. 3:23-cv-2130 (Sept. 25, 2023)
summary
Stephen L. Bailey and his companies, Sapphire Exploration and Harris Exploration, face SEC charges for a multi-million dollar oil-and-gas fraud involving the misappropriation of $5 million.
paragraph
The SEC charged Stephen L. Bailey and his entities with orchestrating a fraudulent scheme that raised $7.8 million through various oil-and-gas securities offerings. Defendants allegedly misappropriated $5 million, using $4.1 million for personal expenses and $670,000 for Ponzi-like investor payments. The charges include violations of antifraud provisions under the Securities Act of 1933 and the Securities Exchange Act of 1934.
narrative
Between November 2017 and May 2023, oil-and-gas promoter Stephen L. Bailey and his companies, Sapphire Exploration LLC and Harris Exploration, Inc., raised $7.8 million through fraudulent securities offerings. The SEC alleges that the defendants misrepresented fund usage and falsely touted management capabilities and company acquisitions. Of the total funds raised, $5 million was misappropriated, including $4.1 million for personal expenses and $670,000 for Ponzi-like payments to existing investors. The defendants face charges for violating antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC is seeking permanent injunctions, disgorgement with interest, and civil penalties. Additionally, the commission seeks an officer-and-director bar and a penny-stock bar against Bailey.
Classified financial-fraud(confidence 95%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 67% / precision 23%. detection rule →
Parties
Securities and Exchange CommissionStephen L. BaileySapphire Exploration LLCHarris Exploration Inc.
Keywords
explorationbaileybailey sapphiresapphire explorationharris explorationsapphireharrissecstephen baileysecurities exchangeoil-and-gasexchange commissionsecuritiesmillionstephen
Exhibits & Attached Documents (1)
Extracted insights
Dollar amounts 4
- $7.80M $7.8 million $1M–$10M
- $5.00M $5 million $1M–$10M
- $4.10M $4.1 million $1M–$10M
- $670K $670,000 $100K–$1M
Entities 12
- person Stephen L. Bailey ×2
- person Ayesha Ahmed
- person b. david fraser
- person Christopher W. Ahart
- person Eric Werner
- organization Fort Worth Regional Office
- organization Harris Exploration, Inc.
- person Jim Etri
- person matthew j. gulde
- organization Sapphire Exploration LLC
- agency Securities and Exchange Commission
- organization U.S. District Court For The Northern District Of Texas
Triples 6
- Securities And Exchange Commission charged Stephen L. Bailey, Sapphire Exploration LLC, and Harris Exploration, Inc. for orchestrating a series of fraudulent oil-and-gas offerings and for misusing $5 million of the $7.8 million raised from investors
- Stephen L. Bailey misappropriated and misused $5 million of the $7.8 million raised from investors, including $4.1 million to pay for personal expenses and nearly $670,000 to make Ponzi-like payments to investors
- Stephen L. Bailey falsely touted Sapphire’s management team
- Stephen L. Bailey misrepresented Harris’s purported acquisition of an oil-and-gas company in Oklahoma
- Securities And Exchange Commission charges Bailey, Sapphire Exploration, and Harris Exploration with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder
- Securities And Exchange Commission seeks permanent injunctions and disgorgement with prejudgment interest against Bailey, Sapphire, and Harris, as well as civil penalties, an officer-and-director bar, and a penny-stock bar against Bailey
PDF (from attached: complaint)
Text layers
Extracted body text (2,420c)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25851 / September 25, 2023 Securities and Exchange Commission v. Stephen L. Bailey, Sapphire Exploration LLC, and Harris Exploration, Inc., No. 3:23-cv-2130 (N.D. Tex. filed September 25, 2023) SEC Sues Texas-based Oil-and-Gas Promoter for Multi-Million Dollar Fraud The Securities and Exchange Commission today charged oil-and-gas promoter Stephen L. Bailey and two companies that he controls, Sapphire Exploration LLC (Sapphire) and Harris Exploration, Inc. (Harris), for orchestrating a series of fraudulent oil-and-gas offerings and for misusing $5 million of the $7.8 million raised from investors. According to the SEC’s complaint, from approximately November 2017 through May 2023, the defendants raised money from investors for various oil-and-gas projects and properties through the sale of promissory notes, limited-partnership interests, common stock, and working interests in oil-and-gas wells. The SEC’s complaint alleges that the relevant offering documents stated that investor funds would be used for specific oil-and-gas investments, acquisitions, or related expenses. However, according to the SEC’s complaint, Bailey misappropriated and misused $5 million of the $7.8 million raised from investors, including $4.1 million to pay for personal expenses and nearly $670,000 to make Ponzi-like payments to investors. The SEC’s complaint also alleges that Bailey furthered the fraudulent scheme by falsely touting Sapphire’s management team and misrepresenting Harris’s purported acquisition of an oil-and-gas company in Oklahoma. The SEC’s complaint, filed in U.S. District Court for the Northern District of Texas, charges Bailey, Sapphire Exploration, and Harris Exploration with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The complaint seeks permanent injunctions and disgorgement with prejudgment interest against Bailey, Sapphire, and Harris, as well as civil penalties, an officer-and-director bar, and a penny-stock bar against Bailey. The SEC’s continuing investigation is being conducted by Christopher W. Ahart and Ayesha Ahmed of the Fort Worth Regional Office, and supervised by Jim Etri and Eric Werner. The litigation will be conducted by Matthew J. Gulde and supervised by B. David Fraser. SEC complaint
OCR text (2,420c · html-text · 99% conf)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25851 / September 25, 2023 Securities and Exchange Commission v. Stephen L. Bailey, Sapphire Exploration LLC, and Harris Exploration, Inc., No. 3:23-cv-2130 (N.D. Tex. filed September 25, 2023) SEC Sues Texas-based Oil-and-Gas Promoter for Multi-Million Dollar Fraud The Securities and Exchange Commission today charged oil-and-gas promoter Stephen L. Bailey and two companies that he controls, Sapphire Exploration LLC (Sapphire) and Harris Exploration, Inc. (Harris), for orchestrating a series of fraudulent oil-and-gas offerings and for misusing $5 million of the $7.8 million raised from investors. According to the SEC’s complaint, from approximately November 2017 through May 2023, the defendants raised money from investors for various oil-and-gas projects and properties through the sale of promissory notes, limited-partnership interests, common stock, and working interests in oil-and-gas wells. The SEC’s complaint alleges that the relevant offering documents stated that investor funds would be used for specific oil-and-gas investments, acquisitions, or related expenses. However, according to the SEC’s complaint, Bailey misappropriated and misused $5 million of the $7.8 million raised from investors, including $4.1 million to pay for personal expenses and nearly $670,000 to make Ponzi-like payments to investors. The SEC’s complaint also alleges that Bailey furthered the fraudulent scheme by falsely touting Sapphire’s management team and misrepresenting Harris’s purported acquisition of an oil-and-gas company in Oklahoma. The SEC’s complaint, filed in U.S. District Court for the Northern District of Texas, charges Bailey, Sapphire Exploration, and Harris Exploration with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The complaint seeks permanent injunctions and disgorgement with prejudgment interest against Bailey, Sapphire, and Harris, as well as civil penalties, an officer-and-director bar, and a penny-stock bar against Bailey. The SEC’s continuing investigation is being conducted by Christopher W. Ahart and Ayesha Ahmed of the Fort Worth Regional Office, and supervised by Jim Etri and Eric Werner. The litigation will be conducted by Matthew J. Gulde and supervised by B. David Fraser. SEC complaint