SEC v. CAROL J. WAYLAND; JOHN C. MUELLER; KENTUCKY-TENNESSEE 50 WELLS/400 BBLPD BLOCK, LIMITED PARTNERSHIP; HP OPERATIONS, LLC; C.A.R. LEASING, LLC; MITCHELL B. DOW, et al., No. 8:17-cv-01156, Central District of California (July 7, 2017) — Complaint

COMPLAINT
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LYNN M. DEAN (Cal. Bar No. 205562)
Email:  [email protected]
MARISA G. WESTERVELT (Cal. Bar No. 217172)
Email:  [email protected]

Attorneys for Plaintiff
Securities and Exchange Commission
Michele Wein Layne, Regional Director
Alka Patel, Associate Regional Director
Amy J. Longo, Regional Trial Counsel
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: (323) 965-3998
Facsimile: (213) 443-1904
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,

vs.
CAROL J. WAYLAND, JOHN C.
MUELLER, KENTUCKY-
TENNESSEE 50 WELLS/400 BBLPD
BLOCK, LIMITED PARTNERSHIP,
HP OPERATIONS, LLC, C.A.R.
LEASING, LLC, MITCHELL B.
DOW, BARRY LISS, AND STEVE G.
BLASKO,
Defendants.

    Case    No.    8:17-CV-01156

COMPLAINT

Plaintiff Securities and Exchange Commission (“SEC”) alleges:
JURISDICTION AND VENUE
1. The Court has jurisdiction over this action pursuant to Sections 20(b),
20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§
77t(b), 77t(d)(1) & 77v(a), and Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the

COMPLAINT
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Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1),
78u(d)(3)(A), 78u(e) & 78aa(a).
2. Defendants have, directly or indirectly, made use of the means or
instrumentalities of interstate commerce, of the mails, or of the facilities of a national
securities exchange in connection with the transactions, acts, practices and courses of
business alleged in this complaint.
3. Venue is proper in this district pursuant to Section 22(a) of the Securities
Act, 15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a)
because certain of the transactions, acts, practices, and courses of conduct
constituting violations of the federal securities laws occurred within this district.  In
addition, venue is proper in this district because Defendants Wayland, Mueller, Liss,
and Blasko reside in this district.
SUMMARY
4. This matter involves a $2.4 million offering fraud by Kentucky-
Tennessee 50 Wells/400 BBLPD Block Limited Partnership (“K-T 50 Wells”) and its
founders, Carol J. Wayland and her son, John C. Mueller.  From approximately May
2014 to February 2016, K-T 50 Wells fraudulently offered and sold unregistered
securities to investors using a boiler room operation.  Defendants misrepresented to
KT-50 Wells investors that their monies would be used to fund the development and
operation of oil wells for high returns; instead, Defendants misappropriated investors’
funds for personal expenses, as well as to make Ponzi payments, resulting in loss of
investors’ principal.  In addition, Defendants used investor funds to pay business
expenses in excess of those set forth in the offering documents.
5. Wayland and Mueller operated K-T 50 Wells and conducted the offering
through two other entities that they wholly owned and controlled, HP Operations,
LLC and C.A.R. Leasing, LLC.
6. To solicit investors, Wayland and Mueller set up a boiler room under the
fictitious name of “Sahara Wealth Advisors.”  The boiler room employed numerous

COMPLAINT
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salespeople, including Defendants Mitchell B. Dow, Barry Liss, and Steve G. Blasko,
all of whom had prior experience working in boiler rooms.  Dow, Liss, and Blasko
were the principal “closers” for the K-T Wells offerings and earned the largest
amount of sales commissions.
7. K-T 50 Wells raised approximately $2.4 million from 41 investors
nationwide, claiming it would use the money to develop and operate oil wells.  In
reality, however, the company had little legitimate business activity.  Wayland and
Mueller spent only about 13% of the money raised from investors on oil well drilling
expenses.  They also took at least $871,463, or 36%, of investor money to pay for
personal expenses, including groceries, restaurant dining, car payments, the purchase
of a rare coin, and cash.  They also used some investor funds to make Ponzi payments
to certain investors.
8. In addition, Defendants made false promises regarding the amount of
returns that K-T 50 Wells investors would receive from their investments.  Although
the K-T 50 Wells Private Placement Memorandum (“PPM”) stated that net revenue
interest would be paid to investors at .075% (or .75%) per unit, and the investment
brochure entitled “Kentucky-Tennessee 50 Well/400 BBLPD Block Executive
Summery” [sic] (“Executive Summary”) projected annual returns ranging from a
minimum $43,200 (or 43.20%), to a maximum of $345,000 (or 345%), for each
$100,000 unit of investment, most investors received smaller returns.  In fact, at least
one investor received payments as low as $17.
9. Finally, Defendants Wayland, Mueller, K-T 50 Wells, and HP
Operations made false claims that Wayland and Mueller had extensive experience
managing oil and gas investment projects, when in fact they had none.
THE DEFENDANTS
10. Carol J. Wayland (a/k/a Jodi Wayland, J. Wayland), age 80, of
Newport Beach, California, is Mueller’s mother, a co-founder and member of K-T 50
Wells, managing member of HP Operations and C.A.R. Leasing, and a member of

COMPLAINT
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MS Operating, LLC, a related party described in paragraph 18, below.  Wayland
worked with Mueller to operate K-T 50 Wells and conduct the offering.  Wayland has
a California real estate broker license, but holds no securities licenses.
11. John C. Mueller (a/k/a John Clark, Bob Allison), age 53, of Newport
Beach, California, is Wayland’s son, a co-founder and member of K-T 50 Wells, a
member of HP Operations, and a member and/or employee of MS Operating, LLC.
Mueller worked with Wayland to operate K-T 50 Wells and conduct the offering.
Mueller holds no securities licenses.
12. Kentucky-Tennessee 50 Wells/400 BBLPD Block, Limited
Partnership (a/k/a Warren County 200 Well/1,600 BBLPD Block, Kentucky-
Tennessee 200 Well/1600 BBLPD Block) is a Wyoming limited partnership,
purportedly headquartered in Cheyenne, Wyoming, with its actual place of business
in Newport Beach, California.  Wayland and Mueller founded K-T 50 Wells and
operated it through managing general partner HP Operations.  K-T 50 Wells has
never been registered with the SEC in any capacity.  K-T 50 Wells filed a Form D on
July 30, 2014, claiming a Regulation D, Rule 506(c) exemption.
13. HP Operations, LLC is a Wyoming limited liability company,
purportedly headquartered in Cheyenne, Wyoming, with its actual place of business
in Newport Beach, California.  HP Operations was the managing general partner of
K-T 50 Wells, with sole discretion over the business of K-T 50 Wells.
HP Operations has never been registered with the SEC in any capacity.
14. C.A.R. Leasing, LLC is a Wyoming limited liability company,
purportedly headquartered in Cheyenne, Wyoming, with its actual place of business
in Huntington Beach, California.  Wayland operated C.A.R. Leasing and used it to
perform administrative and other tasks for K-T 50 Wells, including the administration
of investments received in advance of the K-T 50 Wells Form D filing in July 2014,
which were later rolled into the K-T 50 Wells offering.  C.A.R. Leasing has never
been registered with the SEC in any capacity.

COMPLAINT
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15. Mitchell B. Dow (a/k/a Dave Baker), CRD# 2355743, age 54, is a
resident of Long Beach, California.  Dow was a salesperson for the K-T 50 Wells
offering from approximately November 2014 to at least March 2016.  Dow held
Series 15 and 63 licenses, with no record of disciplinary history.  He was last
associated with a registered broker-dealer in 1995.  In 1999, Dow pleaded guilty to
two counts of felony wire fraud in federal court in connection with a telemarketing
scam.
16. Barry Liss, age 59, is a resident of Orange, California.  Liss was a
salesperson for the K-T 50 Wells offering from approximately August 2014 to March
2016.  Liss holds no securities licenses.
17. Steve G. Blasko (a/k/a Steve Gerald), age 47, is a resident of Costa
Mesa, California.  Blasko was a salesperson for the K-T 50 Wells offering from
approximately June 2014 to February 2015.  Blasko holds no securities licenses.
RELATED PARTY
18. MS Operating, LLC (d/b/a AMS Drilling, Allison Drilling, Apple Oil
Field Development & Drilling, Apple Development Oil Field Development &
Drilling, Apple Oil Field Development, Apple Oil Development) is a Wyoming
limited liability company with its principal place of business in Newport Beach,
California.  Wayland and Mueller operated MS Operating and used it to conduct oil
well-related business and other business for K-T 50 Wells.  MS Operating has never
been registered with the SEC in any capacity.
THE ALLEGATIONS
A. The K-T 50 Wells Offering
19. From approximately May 2014 to February 2016, K-T 50 Wells raised at
least $2,417,257 from 41 investors nationwide in an unregistered securities offering
of limited partnership units.  Investors sent checks payable to K-T 50 Wells or wired
funds directly to K-T 50 Wells bank accounts that were controlled by Wayland, or
jointly by Wayland and Mueller.

COMPLAINT
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20. The stated goal of the K-T 50 Wells offering was to raise up to $10
million for the development and operation of oil wells.  The K-T 50 Wells offering
ceased in early February 2016.
21. The K-T 50 Wells PPM offered 100 limited partnership units for
$100,000, each of which represented a 1% “working interest” in the limited
partnership and a “net revenue interest” per unit of 0.075%.
1
  The net revenue
interest, or investor return per unit, was purportedly based on the production (barrels
per day) of the oil wells and the price of oil, net of costs.  Investors typically invested
in fractional units and received a “working interest” and a “net revenue interest”
proportional to the amount of their investment.
22. One K-T 50 Wells PPM dated July 21, 2014 represented that investor
funds would be used for business expenses and oil well drilling expenses.  The PPM
addressed the use of investor funds assuming that the offering would raise the $10
million maximum offering amount, and stated that “[t]here will be deducted from the
proceeds to the Partnership amounts not in excess of $3,500,000 [35%] payable to the
Managing General Partner [HP Operations] for filing, legal, bonds/insurance,
advertising/marketing, sales commissions and accounting/administrative.”  The PPM
further stated that the remaining net proceeds of “an estimated $6,500,000 [65%]
shall go toward all drilling efforts . . . .”  Although the PPM appears to have been
revised multiple times, the representations regarding the use of investor funds did not
substantively change.  Wayland and Mueller leased and operated at least one well for
K-T 50 Wells.
23. A few early investors, whose investments pre-dated the July 2014 K-T
50 Wells PPM, invested in C.A.R. Leasing lease positions in an oil and gas project
known as “Warren County 200 Well/1600 BBLPD Block.”  The C.A.R. Leasing

1
  Although the PPM initially states that “Net Revenue per unit is .075%,” a different
part of the PPM states that the net revenue interest is 0.75% per unit, and the
Executive Summary states that the net revenue interest is 75% per 100 units.

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offering documents stated that the offering was to raise money to develop and operate
oil wells.  The lease positions purportedly gave investors a fractional “working
interest” in the project proportional to the amount of their investment, and investors
were supposed to receive quarterly payments based on oil well production, net of
costs.  These investors wired funds or sent checks to C.A.R. Leasing accounts
controlled by Wayland and received an “Interim Division Order” memorializing their
lease position.
24. The C.A.R. Leasing
 offering overlapped the K-T 50 Wells offering for a
period of time in the summer of 2014.  Wayland and Mueller later rolled the C.A.R.
Leasing investors into the K-T 50 Wells offering on the premise that K-T 50 Wells
was part of the larger 200 well project they had invested in.  These investors received
payments from C.A.R. Leasing and/or K-T 50 Wells bank accounts.
B. The Solicitation of Investors
25. To solicit investors, Wayland and Mueller set up a boiler room in Irvine,
California under the fictitious name of “Sahara Wealth Advisors.”  Wayland and
Mueller commissioned a website for Sahara Wealth Advisors
(www.saharawealth.com) as well as other websites (including www.shopoil.net and
www.ordersshopoil.com) which they set up as “landing pages” to attract and obtain
information from potential investors.
26. Mueller and Wayland also set up LinkedIn and Facebook accounts for
Sahara Wealth Advisors and issued at least two press releases in its name that were
dated December 11, 2014 and October 15, 2015 and published online at
www.pdrnewswire.com and www.thefreelibrary.com, respectively.
27. Mueller and Wayland also purchased lead lists.  The boiler room
salespeople called individuals identified through the websites and lead lists.  Mueller
and Wayland paid the salespeople commissions from accounts in the names of K-T
50 Wells, HP Operations and/or C.A.R. Leasing.
28. The salespeople were generally divided into “fronters” and “closers.”

COMPLAINT
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Fronters made the initial calls and generally followed a written sales script.  Closers
discussed the investment in more detail, fielded questions, and encouraged potential
investors to send in promised investments.  Closers also distributed or caused to be
distributed documents to potential investors, including the PPM and the Executive
Summary.  In addition, closers solicited existing investors for additional investments
in K-T 50 Wells.
29. Salespeople received large sales commissions, which sometimes
amounted to as much as 20% of an investor’s total investment.  Dow, Liss, and
Blasko – all of whom had prior experience working in boiler rooms – were the
principal closers and earned the largest total amounts of commissions – $198,478,
$160,751, and $59,461, respectively.  They had frequent communications with
prospective and actual investors via telephone and sometimes email.  Dow used the
alias “Dave Baker” for all such communications.
30. Wayland and Mueller supervised all of the K-T 50 Wells sales efforts.
Mueller maintained an office at the Sahara Wealth Advisors boiler room and
salespeople often overheard him speaking with Wayland on the telephone about K-T
50 Wells.  Both Wayland and Mueller communicated directly with salespeople.
31. In addition, Mueller revised the PPM and Executive Summary several
times, and Wayland assisted the salespeople with the distribution of these documents.
32. Mueller also drafted or revised, and Wayland reviewed or revised, other
written documents for the K-T 50 Wells offering, including the subscription
agreement and accredited investor representation letter that was supposed to be
completed for each investment.  Wayland also communicated directly with potential
investors and existing investors.  Salespeople and Wayland looked to Mueller for
guidance in handling and responding to investor questions or concerns.
C. Violations of the Antifraud Provisions
1. Misappropriation of Investor Funds
33. Wayland and Mueller misappropriated K-T 50 Wells investor funds.

COMPLAINT
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From approximately May 2014 to February 2016, K-T 50 Wells raised at least
$2,417,257 from 41 investors, which was deposited in bank accounts under Wayland
and/or Mueller’s control.  During this time, an additional $216,620 from unknown
sources was deposited in bank accounts under Wayland and/or Mueller’s control, for
a total of $2,633,877.  These bank accounts also had beginning balances from
unknown sources.
34. From May 2014 to October 2016, Wayland and Mueller spent
approximately $2,646,848 from the bank accounts that directly or indirectly received
investor funds.  They spent these funds in ways that were contrary to the use of
proceeds set forth in the K-T 50 Wells PPM.  Specifically, the PPM specified that
65% of the funds raised were to go to development of oil wells, with the remaining
35% to go to business expenses.  Instead, Defendants spent a mere 13% of the
amount raised on oil well development, and spent 42% on expenses that included
internet advertising and sales commissions.  In addition, they spent at least 36% of
the amount raised on the personal expenses of Wayland and Mueller, and another
2.5% on Ponzi payments, though the PPM made no provision for such expenditures.
35. Specifically, contrary to the representations in the K-T 50 Wells PPM
regarding the use of investor funds, Wayland and Mueller used at least $871,463 of
investor funds for their own personal expenses – including, but not limited to,
groceries, restaurant meals, rent payments, car payments, and the purchase of a
$26,000 rare coin – and to make cash payments to themselves.  Wayland and Mueller
therefore personally misappropriated at least $871,463, or 36%, of K-T 50 Wells
investor funds.
36. Furthermore, Wayland and Mueller used approximately $59,377, or
2.5%, of the K-T 50 Wells investor funds to make “royalty payments” to other K-T
50 Wells investors—essentially, Ponzi payments.  These funds came directly from
other investors, and not from income from oil well production or any other source.
This use of investor funds was not disclosed in the PPM.

COMPLAINT
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37. In addition, Wayland and Mueller spent approximately $1,007,276 on
business expenses, including telephone and web hosting services, advertising and
lead lists, and sales commissions.  Wayland and Mueller spent $495,743 of this
amount on sales commissions and used at least $95,000 of this amount for Internet
ads alone.  Pursuant to the PPM, because K-T 50 Wells raised approximately
$2,417,257 from investors, Wayland and Mueller should have used a maximum of
35% of that amount, or $846,040, for business expenses.
38. Wayland and Mueller spent $430,054 on oil well drilling expenses and
other expenses.  Pursuant to the PPM, because K-T 50 Wells raised approximately
$2,417,257 from investors, Wayland and Mueller should have used approximately
65% of that amount, or $1,571,217, for the development of oil wells.  In actuality,
however, Wayland and Mueller spent only about $313,755, or only 13%, on oil well
drilling expenses.
39. Wayland and Mueller were each signatories on one or more of the bank
accounts that received K-T 50 Wells investor funds, either directly, or indirectly
through transfers from the bank accounts that directly received investor funds.  As of
October 2016, the funds in those accounts totaled approximately $13,689.
40. K-T 50 Wells investors were not aware that K-T 50 Wells investor funds
were being used:  (1) to pay Wayland and Mueller’s personal expenses; (2) to pay
other K-T 50 Wells investors; or (3) to pay sales commissions and other business
expenses in excess of what was represented in the PPM.  Investors would have
considered it important in their investment decision to know that funds raised from
K-T 50 Wells investors were being used for purposes other than the stated purposes.
41. Wayland, Mueller, K-T 50 Wells, HP Operations and C.A.R. Leasing
engaged in a fraudulent offering scheme.  Wayland and Mueller created and
controlled K-T 50 Wells and C.A.R. Leasing, which were essentially sham entities
with little legitimate business activity.  They created and controlled the Sahara
Wealth Advisors boiler room.  Wayland and Mueller drafted, revised, reviewed

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and/or distributed false and misleading offering and marketing materials, including
the PPM and Executive Summary.  Finally, Wayland and Mueller misappropriated
investor funds for undisclosed purposes including payment of their personal expenses
and Ponzi payments to other investors.  In addition, K-T 50 Wells, its managing
partner HP Operations, and C.A.R. Leasing not only issued the securities to the
investors, but received investor money which was ultimately misused.
2. False Promises of High Returns
42. K-T 50 Wells made false promises regarding the amount of returns that
K-T 50 Wells investors would receive from their investments.  The Executive
Summary projected annual returns ranging from a minimum $43,200 (or 43.20%), to
a maximum of $345,000 (or 345%), for each $100,000 unit of investment, depending
on factors including the amount of oil production (barrels per day) and the price of
oil.  Defendants had no reasonable basis for these projections, because Defendants
misappropriated funds and therefore did not spend the required minimum on oil
production.  Indeed, most investors received smaller returns.  At least one investor
received payments as low as $17.  When that investor complained, Wayland blamed
the low payments on low oil prices or bad weather interfering with oil production.
Moreover, some K-T 50 Wells investors received “returns” that were Ponzi payments
from funds raised from other K-T 50 Wells investors.
43. Investors would have considered it important in their investment
decision to know that the returns would be significantly lower than expected, at least
in part because defendants failed to spend the required minimum on oil production,
and in part because certain returns were from Ponzi payments.
3. Misrepresentations Regarding Management Experience
44. K-T 50 Wells misrepresented Wayland and Mueller’s experience with
managing oil and gas investment projects.  The “Executive Management” section of a
K-T 50 Wells PPM dated July 21, 2014 represented that the “directors” of HP
Operations had a “combined 80 years” of experience with oil investment projects,

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“plus 34 years’ experience on the geological end.”  The PPM also claimed that “J.
Wayland (Managing Member)” had “extensive experience in oil and gas
administration.”  Wayland and Mueller are the only members of HP Operations, thus
this reference to “directors” appears to refer to them.

45. In reality, neither Wayland nor Mueller had the kind of experience
described in the offering materials.  Wayland and Mueller have operated and/or
worked for a variety of businesses – including real estate investment, a car wash, a
photography and talent management company, and a limousine company – none of
which are related to oil and gas investment projects.

46. Investors would have considered it important in their investment
decision to know that neither Wayland nor Mueller had the experience in the oil and
gas industry that they described.  Investors were dependent upon Wayland and
Mueller’s business acumen in the industry for their returns, and their lack of
experience in the field would have been important to investors to know.
47. K-T 50 Wells, HP Operations, Wayland, and Mueller obtained money by
means of misrepresentations.  As discussed above, K-T 50 Wells, and its manager,
HP Operations, raised approximately $2,417,257 from investors in the offering
through materially false and misleading statements in the PPM and Executive
Summary.  In addition, Wayland and Mueller personally obtained over $800,000 of
investor money by means of these same materially false and misleading statements.
D. Defendants’ Misrepresentations Were Material and Made With Scienter
48. All of the false and misleading statements in the K-T 50 Wells PPM and
Executive Summary were material.  A reasonable investor would have considered it
important to know that K-T 50 Wells had little legitimate business activity; that
Wayland and Mueller lacked the management experience described in the PPM; and
that investors would receive returns that were much smaller than those described in
the Executive Summary.  In addition, a reasonable investor would have considered it
important to know that K-T 50 Wells investor funds would be used for payment of

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Wayland and Mueller’s personal expenses and other purposes not disclosed in the
PPM.
49. Wayland and Mueller acted with scienter.  Wayland and Mueller knew,
or were reckless in not knowing, that K-T 50 Wells had little legitimate business
activity.  They also knew that K-T 50 Wells solicited investors through website
“landing sites” and the Sahara Wealth boiler room.  In addition, Wayland and
Mueller knew or were reckless in not knowing that the PPM contained false and
misleading statements about their management experience.  Moreover, Wayland and
Mueller each controlled one or more of the bank accounts that received K-T 50 Wells
investor funds; thus, they knew, or were reckless in not knowing, that they were
misappropriating K-T 50 Wells investor funds for their own personal expenses and
other undisclosed purposes.
50. In addition, Wayland, Mueller, K-T 50 Wells, HP Operations, and
C.A.R. Leasing failed to exercise reasonable care by, among other things,
misappropriating investor funds and making materially misleading representations,
and thus were negligent.
E. Registration Violations:  Sections 5(a) and 5(c) of the Securities Act
51. The K-T 50 Wells and C.A.R. Leasing offerings were not registered with
the SEC.  Both offerings were part of a single financing scheme to operate oil wells
and the assets of both offerings were commingled.  The C.A.R. Leasing offering
documents were silent as to any registration exemption, but the K-T 50 Wells PPM
represented that the offering was relying on a Rule 506(c) exemption.  Accordingly,
all of the investors in the K-T 50 Wells offering had to be accredited investors.
Although salespeople asked potential investors if they were accredited investors,
several investors told salespeople that they did not meet the criteria for accredited
investor status but were allowed to invest anyway.  In addition, Wayland sometimes
attempted to obtain third party verification of accredited status after the fact.
52. K-T 50 Wells and C.A.R. Leasing are liable for the registration

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violations because they were the issuers, respectively, of the limited partnership units
and lease positions.  HP Operations is liable for directly offering and selling the K-T
50 Wells limited partnership units because, as stated in the K-T 50 Wells PPM,
HP Operations, the managing general partner of K-T 50 Wells, “is offering to sell 100
UNITS of the [K-T 50 Wells] Partnership.”  HP Operations was the managing
general partner of K-T 50 Wells, K-T 50 Wells paid the boiler room salespeople,
investors sent funds to K-T 50 Wells bank accounts, and investors sent funds to
C.A.R. Leasing bank accounts.
53. Wayland and Mueller are liable under Section 5 of the Securities Act
because they were intricately involved in the offer and sale of the K-T 50 Wells
limited partnership units.  Those units were sold through the website “landing pages”
that Wayland and Mueller set up to attract investors.  Wayland also communicated
directly with potential investors.  Additionally, Wayland and Mueller set up the
fictitious Sahara Wealth boiler room and supervised the sales efforts.  Each
communicated directly with the salespeople.  Mueller also maintained an office at the
boiler room, and the salespeople looked to Mueller for guidance in handling and
responding to investor concerns.  Wayland and Mueller also revised various offering
documents, including the subscription agreement and accredited investor
representation letter that was supposed to be completed for each investment.
54. Dow, Liss, and Blasko are liable for the Section 5 violations because
they communicated directly with potential investors by phone and email.  As closers,
they discussed the investment with potential investors, fielded investor questions, and
encouraged potential investors to send funds.  Each of them also distributed, or
caused to be distributed, documents to potential investors, including the K-T 50 Wells
PPM and Executive Summary.
F. Violation of Section 15(a) of the Exchange Act
55. Wayland, Mueller, Dow, Liss, and Blasko acted as unregistered brokers
for the K-T 50 Wells offering.

COMPLAINT
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56. Wayland and Mueller set up the Sahara Wealth Advisors boiler room,
commissioned websites, and purchased lead lists to solicit potential investors for the
K-T 50 Wells offering.  They also drafted and/or distributed K-T 50 Wells offering
documents, supervised the salespeople, and were involved in handling and
responding to investor concerns.  Neither Wayland nor Mueller was registered with
the Commission as a broker-dealer in accordance with Section 15(b) of the Exchange
Act, or associated with a registered broker-dealer.
57. Dow, Liss, and Blasko also acted as unregistered brokers for K-T 50
Wells.  As the principal closers for the K-T 50 Wells offering, Dow, Liss and Blasko
solicited investors by phone, answered investor questions, distributed offering
documents, and recommended the purchase of the offering.  In addition, K-T 50
Wells, HP Operations and/or C.A.R. Leasing paid each of them commissions based
on their sales of securities.  All three also had prior boiler room experience selling
securities for other issuers.  None of them were registered with the SEC as a broker-
dealer in accordance with Section 15(b) of the Exchange Act, or associated with a
registered broker-dealer, at the time that those sales took place.
FIRST CLAIM FOR RELIEF
Fraud in Connection with the Purchase or Sale of Securities
Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c)
(against Defendants Wayland, Mueller, K-T 50 Wells,
HP Operations, and C.A.R. Leasing)
58. The SEC realleges and incorporates by reference paragraphs 1 through
57 above.
59. Wayland, Mueller, K-T 50 Wells, HP Operations and C.A.R. Leasing
engaged in a fraudulent offering scheme.  Wayland and Mueller created and
controlled K-T 50 Wells and C.A.R. Leasing, which were essentially sham entities
with little legitimate business activity.  They created and controlled the Sahara
Wealth Advisors boiler room.  Wayland and Mueller drafted, revised, reviewed

COMPLAINT
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and/or distributed false and misleading offering and marketing materials, including
the PPM and Executive Summary.  Finally, Wayland and Mueller misappropriated
investor funds for undisclosed purposes including payment of their personal expenses
and Ponzi payments to other investors.  In addition, K-T 50 Wells, its managing
partner HP Operations, and C.A.R. Leasing not only issued the securities to the
investors, but received investor money which was ultimately misused.
60. By engaging in the conduct described above, Defendants Wayland,
Mueller, K-T 50 Wells, HP Operations, and C.A.R. Leasing, and each of them,
directly or indirectly, in connection with the purchase or sale of a security, and by the
use of means or instrumentalities of interstate commerce, of the mails, or of the
facilities of a national securities exchange:  (a) employed devices, schemes, or
artifices to defraud; and (b) engaged in acts, practices, or courses of business which
operated or would operate as a fraud or deceit upon other persons.
61. Defendants Wayland and Mueller are control persons for K-T 50 Wells
and HP Operations, and Wayland is a control person for C.A.R. Leasing because they
possessed, directly or indirectly, the power to direct or cause the direction of the
management and policies of these Defendants.  Accordingly, pursuant to Section
20(a) of the Exchange Act, 15 U.S.C. § 78t(a), Defendants Wayland and Mueller are
liable to the SEC to same extent as each of Defendants K-T 50 Wells, HP Operations,
and C.A.R. Leasing would be liable for each of their respective violations of Section
10(b) of the Exchange Act and Rule 10b-5 thereunder.
62. By engaging in the conduct described above, Defendants Wayland,
Mueller, K-T 50 Wells, HP Operations, and C.A.R. Leasing violated, and unless
restrained and enjoined will continue to violate, Section 10(b) of the Exchange Act,
15 U.S.C. § 78j(b), and Rules 10b-5(a) and 10b-5(c) thereunder, 17 C.F.R. §§
240.10b-5(a) & 240.10b-5(c).

COMPLAINT
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SECOND CLAIM FOR RELIEF
Fraud in the Offer or Sale of Securities
Violations of Section 17(a)(2) of the Securities Act
(against Defendants K-T 50 Wells, HP Operations, Wayland, and Mueller)
63. The SEC realleges and incorporates by reference paragraphs 1 through
57 above.
64. K-T 50 Wells, HP Operations, Wayland, and Mueller obtained money by
means of material misrepresentations.  As discussed above, K-T 50 Wells, and its
manager, HP Operations, raised approximately $2,417,257 from investors in the
offering through materially false and misleading statements in the PPM and
Executive Summary.
65. By engaging in the conduct described above, Defendants K-T 50 Wells,
HP Operations, Wayland, and Mueller and each of them, directly or indirectly, in the
offer or sale of securities, and by the use of means or instruments of transportation or
communication in interstate commerce or by use of the mails directly or indirectly:
obtained money or property by means of untrue statements of a material fact or by
omitting to state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading.
66. By engaging in the conduct described above, Defendants K-T 50 Wells,
HP Operations, Wayland, and Mueller violated, and unless restrained and enjoined
will continue to violate, Section 17(a)(2) of the Securities Act, 15 U.S.C. § 77q(a)(2).
THIRD CLAIM FOR RELIEF
Fraud in the Offer or Sale of Securities
Violations of Sections 17(a)(1) and (3) of the Securities Act
(against Defendants Wayland, Mueller, K-T 50 Wells, HP Operations, and
C.A.R. Leasing)
67. The SEC realleges and incorporates by reference paragraphs 1 through
56 above.

COMPLAINT
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68. Wayland, Mueller, K-T 50 Wells, HP Operations and C.A.R. Leasing
engaged in a fraudulent offering scheme.  Wayland and Mueller created and
controlled K-T 50 Wells and C.A.R. Leasing, which were essentially sham entities
with little legitimate business activity.  They created and controlled the Sahara
Wealth Advisors boiler room.  Wayland and Mueller drafted, revised, reviewed
and/or distributed false and misleading offering and marketing materials, including
the PPM and Executive Summary.  Finally, Wayland and Mueller misappropriated
investor funds for undisclosed purposes including payment of their personal expenses
and Ponzi payments to other investors.  In addition, K-T 50 Wells, its managing
partner HP Operations, and C.A.R. Leasing not only issued the securities to the
investors, but received investor money which was ultimately misused.
69. By engaging in the conduct described above, Defendants Wayland,
Mueller, K-T 50 Wells, HP Operations, and C.A.R. Leasing, and each of them,
directly or indirectly, in the offer or sale of securities, and by the use of means or
instruments of transportation or communication in interstate commerce or by use of
the mails directly or indirectly:  (a) employed devices, schemes, or artifices to
defraud; and (b) engaged in transactions, practices, or courses of business which
operated or would operate as a fraud or deceit upon the purchaser.
70. By engaging in the conduct described above, Defendants Wayland,
Mueller, K-T 50 Wells, HP Operations, and C.A.R. Leasing violated, and unless
restrained and enjoined will continue to violate, Sections 17(a)(1) and 17(a)(3) of the
Securities Act, 15 U.S.C. §§ 77q(a)(1) & 77q(a)(3).
FOURTH CLAIM FOR RELIEF
Unregistered Offer and Sale of Securities
Violations of Sections 5(a) and 5(c) of the Securities Act
(Against All Defendants)
71. The SEC realleges and incorporates by reference paragraphs 1 through
57 above.

COMPLAINT
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72. The K-T 50 Wells offering was not registered with the Commission.
The K-T 50 Wells PPM represented that the offering was relying on a Rule 506(c)
exemption, but Defendants permitted unaccredited investors to invest in it.
73. By engaging in the conduct described above, Defendants, and each of
them, directly or indirectly, singly and in concert with others, has made use of the
means or instruments of transportation or communication in interstate commerce, or
of the mails, to offer to sell or to sell securities, or carried or caused to be carried
through the mails or in interstate commerce, by means or instruments of
transportation, securities for the purpose of sale or for delivery after sale, when no
registration statement had been filed or was in effect as to such securities, and when
no exemption from registration was applicable.
74. By engaging in the conduct described above, Defendants have violated,
and unless restrained and enjoined, will continue to violate, Sections 5(a) and 5(c), 15
U.S.C. §§ 77e(a) & 77e(c).
FIFTH CLAIM FOR RELIEF
Unregistered Broker-Dealer
Violation of Section 15(a) of the Exchange Act
(against Defendants Wayland, Mueller, Dow, Liss, and Blasko)
75. The SEC realleges and incorporates by reference paragraphs 1 through
57 above.
76. Wayland, Mueller, Dow, Liss, and Blasko acted as unregistered brokers
for the K-T 50 Wells offering.  Wayland and Mueller set up the boiler room, solicited
investors, supervised salespeople, drafted and/or distributed offering documents, and
were involved in handling and responding to investor concerns.  Dow, Liss, and
Blasko solicited investors by phone, answered investor questions, distributed offering
documents, and recommended the purchase of the offering in exchange for
commissions.  None of these Defendants were registered with the Commission as a
broker-dealer in accordance with Section 15(b) of the Exchange Act, or associated

COMPLAINT
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with a registered broker-dealer.
77. By engaging in the conduct described above, Defendants Wayland,
Mueller, Dow, Liss, and Blasko, and each of them, made use of the mails and means
or instrumentalities of interstate commerce to effect transactions in, and induced and
attempted to induce the purchase or sale of, securities (other than exempted securities
or commercial paper, bankers' acceptances, or commercial bills) without being
registered with the SEC in accordance with Section 15(b) of the Exchange Act, 15
U.S.C. § 78o(b), and without complying with any exemptions promulgated pursuant
to Section 15(a)(2), 15 U.S.C. § 78o(a)(2).
78. By engaging in the conduct described above, Defendants Wayland,
Mueller, Dow, Liss, and Blasko have violated, and unless restrained and enjoined,
will continue to violate, Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a).

PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue findings of fact and conclusions of law that Defendants committed the
alleged violations.
II.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Wayland, Mueller, K-T 50 Wells, HP
Operations, and C.A.R. Leasing, and their officers, agents, servants, employees and
attorneys, and those persons in active concert or participation with any of them, who
receive actual notice of the judgment by personal service or otherwise, and each of
them, from violating Section 17(a) of the Securities Act [15 U.S.C. §77q(a)], and
Section 10(b) of the Exchange Act [15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder
[17 C.F.R. § 240.10b-5].

COMPLAINT
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III.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Defendants Wayland, Mueller, Dow, Liss,
Blasko, K-T 50 Wells, HP Operations, and C.A.R. Leasing, and their officers, agents,
servants, employees and attorneys, and those persons in active concert or
participation with any of them, who receive actual notice of the judgment by personal
service or otherwise, and each of them, from violating Sections 5(a) and 5(c) of the
Securities Act [15 U.S.C. §§ 77e(a), 77e(c)].
IV.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently enjoining Defendants Wayland, Mueller, Dow, Liss,
and Blasko, and their officers, agents, servants, employees and attorneys, and those
persons in active concert or participation with any of them, who receive actual notice
of the judgment by personal service or otherwise, and each of them, from violating
Section 15(a) of the Exchange Act [15 U.S.C. §§ 78o(a)].
V.
Order Defendants to disgorge all funds received from their illegal conduct,
together with prejudgment interest thereon.
VI.
Order Defendants to pay civil penalties under Section 20(d) of the Securities
Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. §
78u(d)(3)].
VII.
Retain jurisdiction of this action in accordance with the principles of equity and
the Federal Rules of Civil Procedure in order to implement and carry out the terms of
all orders and decrees that may be entered, or to entertain any suitable application or
motion for additional relief within the jurisdiction of this Court.

COMPLAINT
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VIII.
Grant such other and further relief as this Court may determine to be just and
necessary.
Dated:  July 6, 2017

/s/ Lynn M. Dean
Lynn M. Dean
Marisa G. Westervelt
Attorney for Plaintiff
Securities and Exchange Commission

Complaints and Other Initiating Documents
8:17-cv-01156 Securities and Exchange Commission v. Wayland et al
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Notice of Electronic Filing
The following transaction was entered by Dean, Lynn on 7/6/2017 at 2:47 PM PDT and filed on
7/6/2017
Case Name:Securities and Exchange Commission v. Wayland et al
Case Number:8:17-cv-01156
Filer:Securities and Exchange Commission
Document Number:1
Docket Text:
COMPLAINT No Fee Required - US Government, filed by Plaintiff Securities and
Exchange Commission. (Attorney Lynn M Dean added to party Securities and Exchange
Commission(pty:pla))(Dean, Lynn)
8:17-cv-01156 Notice has been electronically mailed to:
Lynn M Dean     [email protected], [email protected], [email protected], [email protected]
8:17-cv-01156 Notice has been delivered by First Class U. S. Mail or by other means BY THE
FILER to :
The following document(s) are associated with this transaction:
Document description:Main Document
Original filename:C:\Users\MitchellS\Desktop\Complaint.pdf
Electronic document Stamp:
[STAMP cacdStamp_ID=1020290914 [Date=7/6/2017] [FileNumber=23821253-0]
[a75b870bfb3bc499bf944a4f7e0c9c6cf782a29a2c93a03ff2d37c68e0a22809af53
daa2caacedb5acd05aa789331f88f93ae58e7909ccaf2f1928ff7157d00b]]

COMPLAINT 1 
 

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LYNN M. DEAN (Cal. Bar No. 205562) 
Email:  [email protected] 
MARISA G. WESTERVELT (Cal. Bar No. 217172) 
Email:  [email protected] 
 
Attorneys for Plaintiff 
Securities and Exchange Commission 
Michele Wein Layne, Regional Director 
Alka Patel, Associate Regional Director 
Amy J. Longo, Regional Trial Counsel 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-3998 
Facsimile: (213) 443-1904 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 
 

vs. 

CAROL J. WAYLAND, JOHN C. 
MUELLER, KENTUCKY-
TENNESSEE 50 WELLS/400 BBLPD 
BLOCK, LIMITED PARTNERSHIP, 
HP OPERATIONS, LLC, C.A.R. 
LEASING, LLC, MITCHELL B. 
DOW, BARRY LISS, AND STEVE G. 
BLASKO, 

Defendants. 
 

 Case No. 8:17-CV-01156 
 
COMPLAINT 
 

 
 

Plaintiff Securities and Exchange Commission (“SEC”) alleges: 

JURISDICTION AND VENUE 

1. The Court has jurisdiction over this action pursuant to Sections 20(b), 

20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 

77t(b), 77t(d)(1) & 77v(a), and Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the 

Case 8:17-cv-01156   Document 1   Filed 07/06/17   Page 1 of 22   Page ID #:1



 

COMPLAINT 2 
 

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Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1), 

78u(d)(3)(A), 78u(e) & 78aa(a). 

2. Defendants have, directly or indirectly, made use of the means or 

instrumentalities of interstate commerce, of the mails, or of the facilities of a national 

securities exchange in connection with the transactions, acts, practices and courses of 

business alleged in this complaint.  

3. Venue is proper in this district pursuant to Section 22(a) of the Securities 

Act, 15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a) 

because certain of the transactions, acts, practices, and courses of conduct 

constituting violations of the federal securities laws occurred within this district.  In 

addition, venue is proper in this district because Defendants Wayland, Mueller, Liss, 

and Blasko reside in this district. 

SUMMARY 

4. This matter involves a $2.4 million offering fraud by Kentucky-

Tennessee 50 Wells/400 BBLPD Block Limited Partnership (“K-T 50 Wells”) and its 

founders, Carol J. Wayland and her son, John C. Mueller.  From approximately May 

2014 to February 2016, K-T 50 Wells fraudulently offered and sold unregistered 

securities to investors using a boiler room operation.  Defendants misrepresented to 

KT-50 Wells investors that their monies would be used to fund the development and 

operation of oil wells for high returns; instead, Defendants misappropriated investors’ 

funds for personal expenses, as well as to make Ponzi payments, resulting in loss of 

investors’ principal.  In addition, Defendants used investor funds to pay business 

expenses in excess of those set forth in the offering documents.    

5. Wayland and Mueller operated K-T 50 Wells and conducted the offering 

through two other entities that they wholly owned and controlled, HP Operations, 

LLC and C.A.R. Leasing, LLC.   

6. To solicit investors, Wayland and Mueller set up a boiler room under the 

fictitious name of “Sahara Wealth Advisors.”  The boiler room employed numerous 

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COMPLAINT 3 
 

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salespeople, including Defendants Mitchell B. Dow, Barry Liss, and Steve G. Blasko, 

all of whom had prior experience working in boiler rooms.  Dow, Liss, and Blasko 

were the principal “closers” for the K-T Wells offerings and earned the largest 

amount of sales commissions.   

7. K-T 50 Wells raised approximately $2.4 million from 41 investors 

nationwide, claiming it would use the money to develop and operate oil wells.  In 

reality, however, the company had little legitimate business activity.  Wayland and 

Mueller spent only about 13% of the money raised from investors on oil well drilling 

expenses.  They also took at least $871,463, or 36%, of investor money to pay for 

personal expenses, including groceries, restaurant dining, car payments, the purchase 

of a rare coin, and cash.  They also used some investor funds to make Ponzi payments 

to certain investors.   

8. In addition, Defendants made false promises regarding the amount of 

returns that K-T 50 Wells investors would receive from their investments.  Although 

the K-T 50 Wells Private Placement Memorandum (“PPM”) stated that net revenue 

interest would be paid to investors at .075% (or .75%) per unit, and the investment 

brochure entitled “Kentucky-Tennessee 50 Well/400 BBLPD Block Executive 

Summery” [sic] (“Executive Summary”) projected annual returns ranging from a 

minimum $43,200 (or 43.20%), to a maximum of $345,000 (or 345%), for each 

$100,000 unit of investment, most investors received smaller returns.  In fact, at least 

one investor received payments as low as $17.  

9. Finally, Defendants Wayland, Mueller, K-T 50 Wells, and HP 

Operations made false claims that Wayland and Mueller had extensive experience 

managing oil and gas investment projects, when in fact they had none. 

THE DEFENDANTS 

10. Carol J. Wayland (a/k/a Jodi Wayland, J. Wayland), age 80, of 

Newport Beach, California, is Mueller’s mother, a co-founder and member of K-T 50 

Wells, managing member of HP Operations and C.A.R. Leasing, and a member of 

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COMPLAINT 4 
 

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MS Operating, LLC, a related party described in paragraph 18, below.  Wayland 

worked with Mueller to operate K-T 50 Wells and conduct the offering.  Wayland has 

a California real estate broker license, but holds no securities licenses.   

11. John C. Mueller (a/k/a John Clark, Bob Allison), age 53, of Newport 

Beach, California, is Wayland’s son, a co-founder and member of K-T 50 Wells, a 

member of HP Operations, and a member and/or employee of MS Operating, LLC.  

Mueller worked with Wayland to operate K-T 50 Wells and conduct the offering.  

Mueller holds no securities licenses.   

12. Kentucky-Tennessee 50 Wells/400 BBLPD Block, Limited 

Partnership (a/k/a Warren County 200 Well/1,600 BBLPD Block, Kentucky-

Tennessee 200 Well/1600 BBLPD Block) is a Wyoming limited partnership, 

purportedly headquartered in Cheyenne, Wyoming, with its actual place of business 

in Newport Beach, California.  Wayland and Mueller founded K-T 50 Wells and 

operated it through managing general partner HP Operations.  K-T 50 Wells has 

never been registered with the SEC in any capacity.  K-T 50 Wells filed a Form D on 

July 30, 2014, claiming a Regulation D, Rule 506(c) exemption. 

13. HP Operations, LLC is a Wyoming limited liability company, 

purportedly headquartered in Cheyenne, Wyoming, with its actual place of business 

in Newport Beach, California.  HP Operations was the managing general partner of 

K-T 50 Wells, with sole discretion over the business of K-T 50 Wells.  

HP Operations has never been registered with the SEC in any capacity.  

14. C.A.R. Leasing, LLC is a Wyoming limited liability company, 

purportedly headquartered in Cheyenne, Wyoming, with its actual place of business 

in Huntington Beach, California.  Wayland operated C.A.R. Leasing and used it to 

perform administrative and other tasks for K-T 50 Wells, including the administration 

of investments received in advance of the K-T 50 Wells Form D filing in July 2014, 

which were later rolled into the K-T 50 Wells offering.  C.A.R. Leasing has never 

been registered with the SEC in any capacity. 

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COMPLAINT 5 
 

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15. Mitchell B. Dow (a/k/a Dave Baker), CRD# 2355743, age 54, is a 

resident of Long Beach, California.  Dow was a salesperson for the K-T 50 Wells 

offering from approximately November 2014 to at least March 2016.  Dow held 

Series 15 and 63 licenses, with no record of disciplinary history.  He was last 

associated with a registered broker-dealer in 1995.  In 1999, Dow pleaded guilty to 

two counts of felony wire fraud in federal court in connection with a telemarketing 

scam. 

16. Barry Liss, age 59, is a resident of Orange, California.  Liss was a 

salesperson for the K-T 50 Wells offering from approximately August 2014 to March 

2016.  Liss holds no securities licenses. 

17. Steve G. Blasko (a/k/a Steve Gerald), age 47, is a resident of Costa 

Mesa, California.  Blasko was a salesperson for the K-T 50 Wells offering from 

approximately June 2014 to February 2015.  Blasko holds no securities licenses. 

RELATED PARTY 

18. MS Operating, LLC (d/b/a AMS Drilling, Allison Drilling, Apple Oil 

Field Development & Drilling, Apple Development Oil Field Development & 

Drilling, Apple Oil Field Development, Apple Oil Development) is a Wyoming 

limited liability company with its principal place of business in Newport Beach, 

California.  Wayland and Mueller operated MS Operating and used it to conduct oil 

well-related business and other business for K-T 50 Wells.  MS Operating has never 

been registered with the SEC in any capacity.  

THE ALLEGATIONS 

A. The K-T 50 Wells Offering 

19. From approximately May 2014 to February 2016, K-T 50 Wells raised at 

least $2,417,257 from 41 investors nationwide in an unregistered securities offering 

of limited partnership units.  Investors sent checks payable to K-T 50 Wells or wired 

funds directly to K-T 50 Wells bank accounts that were controlled by Wayland, or 

jointly by Wayland and Mueller.   

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20. The stated goal of the K-T 50 Wells offering was to raise up to $10 

million for the development and operation of oil wells.  The K-T 50 Wells offering 

ceased in early February 2016. 

21. The K-T 50 Wells PPM offered 100 limited partnership units for 

$100,000, each of which represented a 1% “working interest” in the limited 

partnership and a “net revenue interest” per unit of 0.075%.1  The net revenue 

interest, or investor return per unit, was purportedly based on the production (barrels 

per day) of the oil wells and the price of oil, net of costs.  Investors typically invested 

in fractional units and received a “working interest” and a “net revenue interest” 

proportional to the amount of their investment. 

22. One K-T 50 Wells PPM dated July 21, 2014 represented that investor 

funds would be used for business expenses and oil well drilling expenses.  The PPM 

addressed the use of investor funds assuming that the offering would raise the $10 

million maximum offering amount, and stated that “[t]here will be deducted from the 

proceeds to the Partnership amounts not in excess of $3,500,000 [35%] payable to the 

Managing General Partner [HP Operations] for filing, legal, bonds/insurance, 

advertising/marketing, sales commissions and accounting/administrative.”  The PPM 

further stated that the remaining net proceeds of “an estimated $6,500,000 [65%] 

shall go toward all drilling efforts . . . .”  Although the PPM appears to have been 

revised multiple times, the representations regarding the use of investor funds did not 

substantively change.  Wayland and Mueller leased and operated at least one well for 

K-T 50 Wells. 

23. A few early investors, whose investments pre-dated the July 2014 K-T 

50 Wells PPM, invested in C.A.R. Leasing lease positions in an oil and gas project 

known as “Warren County 200 Well/1600 BBLPD Block.”  The C.A.R. Leasing 

                                           
1  Although the PPM initially states that “Net Revenue per unit is .075%,” a different 
part of the PPM states that the net revenue interest is 0.75% per unit, and the 
Executive Summary states that the net revenue interest is 75% per 100 units.   

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offering documents stated that the offering was to raise money to develop and operate 

oil wells.  The lease positions purportedly gave investors a fractional “working 

interest” in the project proportional to the amount of their investment, and investors 

were supposed to receive quarterly payments based on oil well production, net of 

costs.  These investors wired funds or sent checks to C.A.R. Leasing accounts 

controlled by Wayland and received an “Interim Division Order” memorializing their 

lease position.   

24. The C.A.R. Leasing offering overlapped the K-T 50 Wells offering for a 

period of time in the summer of 2014.  Wayland and Mueller later rolled the C.A.R. 

Leasing investors into the K-T 50 Wells offering on the premise that K-T 50 Wells 

was part of the larger 200 well project they had invested in.  These investors received 

payments from C.A.R. Leasing and/or K-T 50 Wells bank accounts. 

B. The Solicitation of Investors 

25. To solicit investors, Wayland and Mueller set up a boiler room in Irvine, 

California under the fictitious name of “Sahara Wealth Advisors.”  Wayland and 

Mueller commissioned a website for Sahara Wealth Advisors 

(www.saharawealth.com) as well as other websites (including www.shopoil.net and 

www.ordersshopoil.com) which they set up as “landing pages” to attract and obtain 

information from potential investors.   

26. Mueller and Wayland also set up LinkedIn and Facebook accounts for 

Sahara Wealth Advisors and issued at least two press releases in its name that were 

dated December 11, 2014 and October 15, 2015 and published online at 

www.pdrnewswire.com and www.thefreelibrary.com, respectively.  

27. Mueller and Wayland also purchased lead lists.  The boiler room 

salespeople called individuals identified through the websites and lead lists.  Mueller 

and Wayland paid the salespeople commissions from accounts in the names of K-T 

50 Wells, HP Operations and/or C.A.R. Leasing. 

28. The salespeople were generally divided into “fronters” and “closers.”  

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Fronters made the initial calls and generally followed a written sales script.  Closers 

discussed the investment in more detail, fielded questions, and encouraged potential 

investors to send in promised investments.  Closers also distributed or caused to be 

distributed documents to potential investors, including the PPM and the Executive 

Summary.  In addition, closers solicited existing investors for additional investments 

in K-T 50 Wells. 

29. Salespeople received large sales commissions, which sometimes 

amounted to as much as 20% of an investor’s total investment.  Dow, Liss, and 

Blasko – all of whom had prior experience working in boiler rooms – were the 

principal closers and earned the largest total amounts of commissions – $198,478, 

$160,751, and $59,461, respectively.  They had frequent communications with 

prospective and actual investors via telephone and sometimes email.  Dow used the 

alias “Dave Baker” for all such communications.   

30. Wayland and Mueller supervised all of the K-T 50 Wells sales efforts.  

Mueller maintained an office at the Sahara Wealth Advisors boiler room and 

salespeople often overheard him speaking with Wayland on the telephone about K-T 

50 Wells.  Both Wayland and Mueller communicated directly with salespeople.   

31. In addition, Mueller revised the PPM and Executive Summary several 

times, and Wayland assisted the salespeople with the distribution of these documents.   

32. Mueller also drafted or revised, and Wayland reviewed or revised, other 

written documents for the K-T 50 Wells offering, including the subscription 

agreement and accredited investor representation letter that was supposed to be 

completed for each investment.  Wayland also communicated directly with potential 

investors and existing investors.  Salespeople and Wayland looked to Mueller for 

guidance in handling and responding to investor questions or concerns. 

C. Violations of the Antifraud Provisions 

1. Misappropriation of Investor Funds 

33. Wayland and Mueller misappropriated K-T 50 Wells investor funds.  

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From approximately May 2014 to February 2016, K-T 50 Wells raised at least 

$2,417,257 from 41 investors, which was deposited in bank accounts under Wayland 

and/or Mueller’s control.  During this time, an additional $216,620 from unknown 

sources was deposited in bank accounts under Wayland and/or Mueller’s control, for 

a total of $2,633,877.  These bank accounts also had beginning balances from 

unknown sources.   

34. From May 2014 to October 2016, Wayland and Mueller spent 

approximately $2,646,848 from the bank accounts that directly or indirectly received 

investor funds.  They spent these funds in ways that were contrary to the use of 

proceeds set forth in the K-T 50 Wells PPM.  Specifically, the PPM specified that 

65% of the funds raised were to go to development of oil wells, with the remaining 

35% to go to business expenses.  Instead, Defendants spent a mere 13% of the 

amount raised on oil well development, and spent 42% on expenses that included 

internet advertising and sales commissions.  In addition, they spent at least 36% of 

the amount raised on the personal expenses of Wayland and Mueller, and another 

2.5% on Ponzi payments, though the PPM made no provision for such expenditures.   

35. Specifically, contrary to the representations in the K-T 50 Wells PPM 

regarding the use of investor funds, Wayland and Mueller used at least $871,463 of 

investor funds for their own personal expenses – including, but not limited to, 

groceries, restaurant meals, rent payments, car payments, and the purchase of a 

$26,000 rare coin – and to make cash payments to themselves.  Wayland and Mueller 

therefore personally misappropriated at least $871,463, or 36%, of K-T 50 Wells 

investor funds.   

36. Furthermore, Wayland and Mueller used approximately $59,377, or 

2.5%, of the K-T 50 Wells investor funds to make “royalty payments” to other K-T 

50 Wells investors—essentially, Ponzi payments.  These funds came directly from 

other investors, and not from income from oil well production or any other source.  

This use of investor funds was not disclosed in the PPM. 

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37. In addition, Wayland and Mueller spent approximately $1,007,276 on 

business expenses, including telephone and web hosting services, advertising and 

lead lists, and sales commissions.  Wayland and Mueller spent $495,743 of this 

amount on sales commissions and used at least $95,000 of this amount for Internet 

ads alone.  Pursuant to the PPM, because K-T 50 Wells raised approximately 

$2,417,257 from investors, Wayland and Mueller should have used a maximum of 

35% of that amount, or $846,040, for business expenses.   

38. Wayland and Mueller spent $430,054 on oil well drilling expenses and 

other expenses.  Pursuant to the PPM, because K-T 50 Wells raised approximately 

$2,417,257 from investors, Wayland and Mueller should have used approximately 

65% of that amount, or $1,571,217, for the development of oil wells.  In actuality, 

however, Wayland and Mueller spent only about $313,755, or only 13%, on oil well 

drilling expenses.   

39. Wayland and Mueller were each signatories on one or more of the bank 

accounts that received K-T 50 Wells investor funds, either directly, or indirectly 

through transfers from the bank accounts that directly received investor funds.  As of 

October 2016, the funds in those accounts totaled approximately $13,689. 

40. K-T 50 Wells investors were not aware that K-T 50 Wells investor funds 

were being used:  (1) to pay Wayland and Mueller’s personal expenses; (2) to pay 

other K-T 50 Wells investors; or (3) to pay sales commissions and other business 

expenses in excess of what was represented in the PPM.  Investors would have 

considered it important in their investment decision to know that funds raised from 

K-T 50 Wells investors were being used for purposes other than the stated purposes. 

41. Wayland, Mueller, K-T 50 Wells, HP Operations and C.A.R. Leasing 

engaged in a fraudulent offering scheme.  Wayland and Mueller created and 

controlled K-T 50 Wells and C.A.R. Leasing, which were essentially sham entities 

with little legitimate business activity.  They created and controlled the Sahara 

Wealth Advisors boiler room.  Wayland and Mueller drafted, revised, reviewed 

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and/or distributed false and misleading offering and marketing materials, including 

the PPM and Executive Summary.  Finally, Wayland and Mueller misappropriated 

investor funds for undisclosed purposes including payment of their personal expenses 

and Ponzi payments to other investors.  In addition, K-T 50 Wells, its managing 

partner HP Operations, and C.A.R. Leasing not only issued the securities to the 

investors, but received investor money which was ultimately misused. 

2. False Promises of High Returns 

42. K-T 50 Wells made false promises regarding the amount of returns that  

K-T 50 Wells investors would receive from their investments.  The Executive 

Summary projected annual returns ranging from a minimum $43,200 (or 43.20%), to 

a maximum of $345,000 (or 345%), for each $100,000 unit of investment, depending 

on factors including the amount of oil production (barrels per day) and the price of 

oil.  Defendants had no reasonable basis for these projections, because Defendants 

misappropriated funds and therefore did not spend the required minimum on oil 

production.  Indeed, most investors received smaller returns.  At least one investor 

received payments as low as $17.  When that investor complained, Wayland blamed 

the low payments on low oil prices or bad weather interfering with oil production.  

Moreover, some K-T 50 Wells investors received “returns” that were Ponzi payments 

from funds raised from other K-T 50 Wells investors.   

43. Investors would have considered it important in their investment 

decision to know that the returns would be significantly lower than expected, at least 

in part because defendants failed to spend the required minimum on oil production, 

and in part because certain returns were from Ponzi payments. 

3. Misrepresentations Regarding Management Experience 

44. K-T 50 Wells misrepresented Wayland and Mueller’s experience with 

managing oil and gas investment projects.  The “Executive Management” section of a 

K-T 50 Wells PPM dated July 21, 2014 represented that the “directors” of HP 

Operations had a “combined 80 years” of experience with oil investment projects, 

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“plus 34 years’ experience on the geological end.”  The PPM also claimed that “J. 

Wayland (Managing Member)” had “extensive experience in oil and gas 

administration.”  Wayland and Mueller are the only members of HP Operations, thus 

this reference to “directors” appears to refer to them.   

45. In reality, neither Wayland nor Mueller had the kind of experience 

described in the offering materials.  Wayland and Mueller have operated and/or 

worked for a variety of businesses – including real estate investment, a car wash, a 

photography and talent management company, and a limousine company – none of 

which are related to oil and gas investment projects.  

46. Investors would have considered it important in their investment 

decision to know that neither Wayland nor Mueller had the experience in the oil and 

gas industry that they described.  Investors were dependent upon Wayland and 

Mueller’s business acumen in the industry for their returns, and their lack of 

experience in the field would have been important to investors to know. 

47. K-T 50 Wells, HP Operations, Wayland, and Mueller obtained money by 

means of misrepresentations.  As discussed above, K-T 50 Wells, and its manager, 

HP Operations, raised approximately $2,417,257 from investors in the offering 

through materially false and misleading statements in the PPM and Executive 

Summary.  In addition, Wayland and Mueller personally obtained over $800,000 of 

investor money by means of these same materially false and misleading statements.   

D. Defendants’ Misrepresentations Were Material and Made With Scienter  

48. All of the false and misleading statements in the K-T 50 Wells PPM and 

Executive Summary were material.  A reasonable investor would have considered it 

important to know that K-T 50 Wells had little legitimate business activity; that 

Wayland and Mueller lacked the management experience described in the PPM; and 

that investors would receive returns that were much smaller than those described in 

the Executive Summary.  In addition, a reasonable investor would have considered it 

important to know that K-T 50 Wells investor funds would be used for payment of 

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Wayland and Mueller’s personal expenses and other purposes not disclosed in the 

PPM.  

49. Wayland and Mueller acted with scienter.  Wayland and Mueller knew, 

or were reckless in not knowing, that K-T 50 Wells had little legitimate business 

activity.  They also knew that K-T 50 Wells solicited investors through website 

“landing sites” and the Sahara Wealth boiler room.  In addition, Wayland and 

Mueller knew or were reckless in not knowing that the PPM contained false and 

misleading statements about their management experience.  Moreover, Wayland and 

Mueller each controlled one or more of the bank accounts that received K-T 50 Wells 

investor funds; thus, they knew, or were reckless in not knowing, that they were 

misappropriating K-T 50 Wells investor funds for their own personal expenses and 

other undisclosed purposes.   

50. In addition, Wayland, Mueller, K-T 50 Wells, HP Operations, and 

C.A.R. Leasing failed to exercise reasonable care by, among other things, 

misappropriating investor funds and making materially misleading representations, 

and thus were negligent.   

E. Registration Violations:  Sections 5(a) and 5(c) of the Securities Act 

51. The K-T 50 Wells and C.A.R. Leasing offerings were not registered with 

the SEC.  Both offerings were part of a single financing scheme to operate oil wells 

and the assets of both offerings were commingled.  The C.A.R. Leasing offering 

documents were silent as to any registration exemption, but the K-T 50 Wells PPM 

represented that the offering was relying on a Rule 506(c) exemption.  Accordingly, 

all of the investors in the K-T 50 Wells offering had to be accredited investors.  

Although salespeople asked potential investors if they were accredited investors, 

several investors told salespeople that they did not meet the criteria for accredited 

investor status but were allowed to invest anyway.  In addition, Wayland sometimes 

attempted to obtain third party verification of accredited status after the fact.   

52. K-T 50 Wells and C.A.R. Leasing are liable for the registration 

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violations because they were the issuers, respectively, of the limited partnership units 

and lease positions.  HP Operations is liable for directly offering and selling the K-T 

50 Wells limited partnership units because, as stated in the K-T 50 Wells PPM,  

HP Operations, the managing general partner of K-T 50 Wells, “is offering to sell 100 

UNITS of the [K-T 50 Wells] Partnership.”  HP Operations was the managing 

general partner of K-T 50 Wells, K-T 50 Wells paid the boiler room salespeople, 

investors sent funds to K-T 50 Wells bank accounts, and investors sent funds to 

C.A.R. Leasing bank accounts. 

53. Wayland and Mueller are liable under Section 5 of the Securities Act 

because they were intricately involved in the offer and sale of the K-T 50 Wells 

limited partnership units.  Those units were sold through the website “landing pages” 

that Wayland and Mueller set up to attract investors.  Wayland also communicated 

directly with potential investors.  Additionally, Wayland and Mueller set up the 

fictitious Sahara Wealth boiler room and supervised the sales efforts.  Each 

communicated directly with the salespeople.  Mueller also maintained an office at the 

boiler room, and the salespeople looked to Mueller for guidance in handling and 

responding to investor concerns.  Wayland and Mueller also revised various offering 

documents, including the subscription agreement and accredited investor 

representation letter that was supposed to be completed for each investment. 

54. Dow, Liss, and Blasko are liable for the Section 5 violations because 

they communicated directly with potential investors by phone and email.  As closers, 

they discussed the investment with potential investors, fielded investor questions, and 

encouraged potential investors to send funds.  Each of them also distributed, or 

caused to be distributed, documents to potential investors, including the K-T 50 Wells 

PPM and Executive Summary.   

F. Violation of Section 15(a) of the Exchange Act 

55. Wayland, Mueller, Dow, Liss, and Blasko acted as unregistered brokers 

for the K-T 50 Wells offering.   

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56. Wayland and Mueller set up the Sahara Wealth Advisors boiler room, 

commissioned websites, and purchased lead lists to solicit potential investors for the 

K-T 50 Wells offering.  They also drafted and/or distributed K-T 50 Wells offering 

documents, supervised the salespeople, and were involved in handling and 

responding to investor concerns.  Neither Wayland nor Mueller was registered with 

the Commission as a broker-dealer in accordance with Section 15(b) of the Exchange 

Act, or associated with a registered broker-dealer. 

57. Dow, Liss, and Blasko also acted as unregistered brokers for K-T 50 

Wells.  As the principal closers for the K-T 50 Wells offering, Dow, Liss and Blasko 

solicited investors by phone, answered investor questions, distributed offering 

documents, and recommended the purchase of the offering.  In addition, K-T 50 

Wells, HP Operations and/or C.A.R. Leasing paid each of them commissions based 

on their sales of securities.  All three also had prior boiler room experience selling 

securities for other issuers.  None of them were registered with the SEC as a broker-

dealer in accordance with Section 15(b) of the Exchange Act, or associated with a 

registered broker-dealer, at the time that those sales took place.   

FIRST CLAIM FOR RELIEF 

Fraud in Connection with the Purchase or Sale of Securities 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) 

(against Defendants Wayland, Mueller, K-T 50 Wells,  

HP Operations, and C.A.R. Leasing) 

58. The SEC realleges and incorporates by reference paragraphs 1 through 

57 above. 

59. Wayland, Mueller, K-T 50 Wells, HP Operations and C.A.R. Leasing 

engaged in a fraudulent offering scheme.  Wayland and Mueller created and 

controlled K-T 50 Wells and C.A.R. Leasing, which were essentially sham entities 

with little legitimate business activity.  They created and controlled the Sahara 

Wealth Advisors boiler room.  Wayland and Mueller drafted, revised, reviewed 

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and/or distributed false and misleading offering and marketing materials, including 

the PPM and Executive Summary.  Finally, Wayland and Mueller misappropriated 

investor funds for undisclosed purposes including payment of their personal expenses 

and Ponzi payments to other investors.  In addition, K-T 50 Wells, its managing 

partner HP Operations, and C.A.R. Leasing not only issued the securities to the 

investors, but received investor money which was ultimately misused. 

60. By engaging in the conduct described above, Defendants Wayland, 

Mueller, K-T 50 Wells, HP Operations, and C.A.R. Leasing, and each of them, 

directly or indirectly, in connection with the purchase or sale of a security, and by the 

use of means or instrumentalities of interstate commerce, of the mails, or of the 

facilities of a national securities exchange:  (a) employed devices, schemes, or 

artifices to defraud; and (b) engaged in acts, practices, or courses of business which 

operated or would operate as a fraud or deceit upon other persons. 

61. Defendants Wayland and Mueller are control persons for K-T 50 Wells 

and HP Operations, and Wayland is a control person for C.A.R. Leasing because they 

possessed, directly or indirectly, the power to direct or cause the direction of the 

management and policies of these Defendants.  Accordingly, pursuant to Section 

20(a) of the Exchange Act, 15 U.S.C. § 78t(a), Defendants Wayland and Mueller are 

liable to the SEC to same extent as each of Defendants K-T 50 Wells, HP Operations, 

and C.A.R. Leasing would be liable for each of their respective violations of Section 

10(b) of the Exchange Act and Rule 10b-5 thereunder. 

62. By engaging in the conduct described above, Defendants Wayland, 

Mueller, K-T 50 Wells, HP Operations, and C.A.R. Leasing violated, and unless 

restrained and enjoined will continue to violate, Section 10(b) of the Exchange Act, 

15 U.S.C. § 78j(b), and Rules 10b-5(a) and 10b-5(c) thereunder, 17 C.F.R. §§ 

240.10b-5(a) & 240.10b-5(c). 

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SECOND CLAIM FOR RELIEF 

Fraud in the Offer or Sale of Securities 

Violations of Section 17(a)(2) of the Securities Act 

(against Defendants K-T 50 Wells, HP Operations, Wayland, and Mueller) 

63. The SEC realleges and incorporates by reference paragraphs 1 through 

57 above. 

64. K-T 50 Wells, HP Operations, Wayland, and Mueller obtained money by 

means of material misrepresentations.  As discussed above, K-T 50 Wells, and its 

manager, HP Operations, raised approximately $2,417,257 from investors in the 

offering through materially false and misleading statements in the PPM and 

Executive Summary.   

65. By engaging in the conduct described above, Defendants K-T 50 Wells, 

HP Operations, Wayland, and Mueller and each of them, directly or indirectly, in the 

offer or sale of securities, and by the use of means or instruments of transportation or 

communication in interstate commerce or by use of the mails directly or indirectly:  

obtained money or property by means of untrue statements of a material fact or by 

omitting to state a material fact necessary in order to make the statements made, in 

light of the circumstances under which they were made, not misleading. 

66. By engaging in the conduct described above, Defendants K-T 50 Wells, 

HP Operations, Wayland, and Mueller violated, and unless restrained and enjoined 

will continue to violate, Section 17(a)(2) of the Securities Act, 15 U.S.C. § 77q(a)(2). 

THIRD CLAIM FOR RELIEF 

Fraud in the Offer or Sale of Securities 

Violations of Sections 17(a)(1) and (3) of the Securities Act 

(against Defendants Wayland, Mueller, K-T 50 Wells, HP Operations, and 

C.A.R. Leasing) 

67. The SEC realleges and incorporates by reference paragraphs 1 through 

56 above. 

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68. Wayland, Mueller, K-T 50 Wells, HP Operations and C.A.R. Leasing 

engaged in a fraudulent offering scheme.  Wayland and Mueller created and 

controlled K-T 50 Wells and C.A.R. Leasing, which were essentially sham entities 

with little legitimate business activity.  They created and controlled the Sahara 

Wealth Advisors boiler room.  Wayland and Mueller drafted, revised, reviewed 

and/or distributed false and misleading offering and marketing materials, including 

the PPM and Executive Summary.  Finally, Wayland and Mueller misappropriated 

investor funds for undisclosed purposes including payment of their personal expenses 

and Ponzi payments to other investors.  In addition, K-T 50 Wells, its managing 

partner HP Operations, and C.A.R. Leasing not only issued the securities to the 

investors, but received investor money which was ultimately misused. 

69. By engaging in the conduct described above, Defendants Wayland, 

Mueller, K-T 50 Wells, HP Operations, and C.A.R. Leasing, and each of them, 

directly or indirectly, in the offer or sale of securities, and by the use of means or 

instruments of transportation or communication in interstate commerce or by use of 

the mails directly or indirectly:  (a) employed devices, schemes, or artifices to 

defraud; and (b) engaged in transactions, practices, or courses of business which 

operated or would operate as a fraud or deceit upon the purchaser. 

70. By engaging in the conduct described above, Defendants Wayland, 

Mueller, K-T 50 Wells, HP Operations, and C.A.R. Leasing violated, and unless 

restrained and enjoined will continue to violate, Sections 17(a)(1) and 17(a)(3) of the 

Securities Act, 15 U.S.C. §§ 77q(a)(1) & 77q(a)(3). 

FOURTH CLAIM FOR RELIEF 

Unregistered Offer and Sale of Securities 

Violations of Sections 5(a) and 5(c) of the Securities Act 

(Against All Defendants) 

71. The SEC realleges and incorporates by reference paragraphs 1 through 

57 above. 

Case 8:17-cv-01156   Document 1   Filed 07/06/17   Page 18 of 22   Page ID #:18



 

COMPLAINT 19 
 

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72. The K-T 50 Wells offering was not registered with the Commission.  

The K-T 50 Wells PPM represented that the offering was relying on a Rule 506(c) 

exemption, but Defendants permitted unaccredited investors to invest in it.   

73. By engaging in the conduct described above, Defendants, and each of 

them, directly or indirectly, singly and in concert with others, has made use of the 

means or instruments of transportation or communication in interstate commerce, or 

of the mails, to offer to sell or to sell securities, or carried or caused to be carried 

through the mails or in interstate commerce, by means or instruments of 

transportation, securities for the purpose of sale or for delivery after sale, when no 

registration statement had been filed or was in effect as to such securities, and when 

no exemption from registration was applicable. 

74. By engaging in the conduct described above, Defendants have violated, 

and unless restrained and enjoined, will continue to violate, Sections 5(a) and 5(c), 15 

U.S.C. §§ 77e(a) & 77e(c). 

FIFTH CLAIM FOR RELIEF 

Unregistered Broker-Dealer 

Violation of Section 15(a) of the Exchange Act 

(against Defendants Wayland, Mueller, Dow, Liss, and Blasko) 

75. The SEC realleges and incorporates by reference paragraphs 1 through 

57 above. 

76. Wayland, Mueller, Dow, Liss, and Blasko acted as unregistered brokers 

for the K-T 50 Wells offering.  Wayland and Mueller set up the boiler room, solicited 

investors, supervised salespeople, drafted and/or distributed offering documents, and 

were involved in handling and responding to investor concerns.  Dow, Liss, and 

Blasko solicited investors by phone, answered investor questions, distributed offering 

documents, and recommended the purchase of the offering in exchange for 

commissions.  None of these Defendants were registered with the Commission as a 

broker-dealer in accordance with Section 15(b) of the Exchange Act, or associated 

Case 8:17-cv-01156   Document 1   Filed 07/06/17   Page 19 of 22   Page ID #:19



 

COMPLAINT 20 
 

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with a registered broker-dealer.  

77. By engaging in the conduct described above, Defendants Wayland, 

Mueller, Dow, Liss, and Blasko, and each of them, made use of the mails and means 

or instrumentalities of interstate commerce to effect transactions in, and induced and 

attempted to induce the purchase or sale of, securities (other than exempted securities 

or commercial paper, bankers' acceptances, or commercial bills) without being 

registered with the SEC in accordance with Section 15(b) of the Exchange Act, 15 

U.S.C. § 78o(b), and without complying with any exemptions promulgated pursuant 

to Section 15(a)(2), 15 U.S.C. § 78o(a)(2).  

78. By engaging in the conduct described above, Defendants Wayland, 

Mueller, Dow, Liss, and Blasko have violated, and unless restrained and enjoined, 

will continue to violate, Section 15(a) of the Exchange Act, 15 U.S.C. § 78o(a). 

 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that Defendants committed the 

alleged violations. 

II. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Wayland, Mueller, K-T 50 Wells, HP 

Operations, and C.A.R. Leasing, and their officers, agents, servants, employees and 

attorneys, and those persons in active concert or participation with any of them, who 

receive actual notice of the judgment by personal service or otherwise, and each of 

them, from violating Section 17(a) of the Securities Act [15 U.S.C. §77q(a)], and 

Section 10(b) of the Exchange Act [15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder 

[17 C.F.R. § 240.10b-5]. 

Case 8:17-cv-01156   Document 1   Filed 07/06/17   Page 20 of 22   Page ID #:20COMPLAINT 21 
 

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III. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Defendants Wayland, Mueller, Dow, Liss, 

Blasko, K-T 50 Wells, HP Operations, and C.A.R. Leasing, and their officers, agents, 

servants, employees and attorneys, and those persons in active concert or 

participation with any of them, who receive actual notice of the judgment by personal 

service or otherwise, and each of them, from violating Sections 5(a) and 5(c) of the 

Securities Act [15 U.S.C. §§ 77e(a), 77e(c)]. 

IV. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Defendants Wayland, Mueller, Dow, Liss, 

and Blasko, and their officers, agents, servants, employees and attorneys, and those 

persons in active concert or participation with any of them, who receive actual notice 

of the judgment by personal service or otherwise, and each of them, from violating 

Section 15(a) of the Exchange Act [15 U.S.C. §§ 78o(a)]. 

V. 

Order Defendants to disgorge all funds received from their illegal conduct, 

together with prejudgment interest thereon. 

VI. 

Order Defendants to pay civil penalties under Section 20(d) of the Securities 

Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 

78u(d)(3)]. 

VII. 

Retain jurisdiction of this action in accordance with the principles of equity and 

the Federal Rules of Civil Procedure in order to implement and carry out the terms of 

all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court. 

Case 8:17-cv-01156   Document 1   Filed 07/06/17   Page 21 of 22   Page ID #:21



 

COMPLAINT 22 
 

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VIII. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

Dated:  July 6, 2017  

 /s/ Lynn M. Dean 
Lynn M. Dean 
Marisa G. Westervelt 
Attorney for Plaintiff 
Securities and Exchange Commission 

 
 

Case 8:17-cv-01156   Document 1   Filed 07/06/17   Page 22 of 22   Page ID #:22



Complaints and Other Initiating Documents 
8:17-cv-01156 Securities and Exchange Commission v. Wayland et al

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Notice of Electronic Filing

The following transaction was entered by Dean, Lynn on 7/6/2017 at 2:47 PM PDT and filed on 
7/6/2017 
Case Name: Securities and Exchange Commission v. Wayland et al
Case Number: 8:17-cv-01156
Filer: Securities and Exchange Commission
Document Number: 1

Docket Text:
COMPLAINT No Fee Required - US Government, filed by Plaintiff Securities and 
Exchange Commission. (Attorney Lynn M Dean added to party Securities and Exchange 
Commission(pty:pla))(Dean, Lynn) 

8:17-cv-01156 Notice has been electronically mailed to: 

Lynn M Dean     [email protected], [email protected], [email protected], [email protected] 

8:17-cv-01156 Notice has been delivered by First Class U. S. Mail or by other means BY THE 
FILER to : 

The following document(s) are associated with this transaction:

Document description:Main Document 
Original filename:C:\Users\MitchellS\Desktop\Complaint.pdf
Electronic document Stamp:
[STAMP cacdStamp_ID=1020290914 [Date=7/6/2017] [FileNumber=23821253-0]
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