SEC v. Southlake Resources Group, LLC; Cody M. Winters; and Nicholas R. Hamilton, No. LR-23677, Northern District of Texas (Oct. 25, 2016) — Press Release
raw: Southlake Resources Group, LLC, et al.
Southlake Resources Group, LLC, et al., No. LR-23677 (Oct. 25, 2016)
Southlake Resources Group, LLC and its president, Cody M
Southlake Resources Group, LLC and its president, Cody M. Winters, have agreed to pay over $5.4 million to settle SEC charges that they orchestrated an oil-and-gas fraud, raising approximately $5.2 million from over 70 investors in 12 joint ventures. The alleged fraud involved providing investors with offering documents containing untrue and misleading statements, and Winters directing the company to take undisclosed profit and overhead payments. Winters, Southlake, and vice president Nicholas R. Hamilton have agreed to settle the charges without admitting or denying the allegations, and will pay disgorgement, prejudgment interest, and civil penalties totaling $5,235,650, $285,761.70, and $370,000, respectively. The defendants have also consented to permanent injunctions and industry bars. The settlements are subject to court approval.
Southlake Resources Group, LLC and its president, Cody M. Winters, have agreed to pay over $5.4 million to settle SEC charges that they orchestrated an oil-and-gas fraud, raising approximately $5.2 million from over 70 investors in 12 joint ventures. The alleged fraud involved providing investors with offering documents containing untrue and misleading statements, and Winters directing the company to take undisclosed profit and overhead payments. Winters, Southlake, and vice president Nicholas R. Hamilton have agreed to settle the charges without admitting or denying the allegations, and will pay disgorgement, prejudgment interest, and civil penalties totaling $5,235,650, $285,761.70, and $370,000, respectively. The defendants have also consented to permanent injunctions and industry bars. The settlements are subject to court approval. The U.S. Securities and Exchange Commission charged Southlake Resources Group, LLC, its president Cody M. Winters, and vice president Nicholas R. Hamilton with orchestrating a $5.2 million oil-and-gas fraud through 12 fraudulent joint ventures targeting over 70 investors across 26 states. The defendants misled investors with false projections, concealed use of funds, and sold interests at undisclosed discounts, while Winters and Hamilton acted as unregistered brokers. Without admitting or denying guilt, the defendants agreed to settle, with Southlake and Winters paying $5.2 million in disgorgement, $285,761 in prejudgment interest, and $160,000 civil penalties each; Hamilton paid $50,000 in penalties. All three accepted permanent injunctions against securities law violations, and Winters and Hamilton were barred from the securities industry. The settlement is pending court approval. The U.S. Securities and Exchange Commission charged Southlake Resources Group, LLC, its president Cody M. Winters, and vice president Nicholas R. Hamilton with orchestrating a $5.2 million oil-and-gas fraud through 12 fraudulent joint ventures targeting over 70 investors across 26 states. The defendants allegedly used misleading offering documents that falsely portrayed oil production projections, concealed the misuse of investor funds for internal profits and self-acquired working interests, and sold interests at undisclosed discounts. Winters and Hamilton were also charged with acting as unregistered brokers. Without admitting or denying guilt, the defendants agreed to settle, with Southlake and Winters paying $5.2 million in disgorgement, $285,761 in prejudgment interest, and $160,000 civil penalties each, while Hamilton paid $50,000 in penalties and agreed to industry bars. All parties consented to permanent injunctions barring future securities law violations.
Exhibits & Attached Documents (1)
Extracted insights
- $5.40M $5.4 million $1M–$10M
- $5.24M $5,235,650 $1M–$10M
- $5.20M $5.2 million $1M–$10M
- $286K $285,761 $100K–$1M
- $160K $160,000 $100K–$1M
- $50K $50,000 $10K–$100K
- company southlake resources group, llc
- person unregistered broker
- SEC charges Texas Company and Its President
- Texas Company and Its President agreed to pay over $5.4 million
- SEC orchestrated oil-and-gas fraud
- president acted as unregistered broker
- company vice president acted as unregistered broker
- Southlake Resources Group, LLC orchestrated an oil-and-gas fraud an oil-and-gas fraud
- Southlake Resources Group, LLC pay over $5.4 million to settle charges by the Securities and Exchange Commission
- the president acted as unregistered broker unregistered broker
- a company vice president acted as unregistered broker unregistered broker
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 23677 / October 25, 2016 Securities and Exchange Commission v. Southlake Resources Group, LLC, et al., Civil Action No. 16-cv-4:16-00992 (N.D. Tex. Oct. 24, 2016) SEC Charges Texas Company and Its President in Oil-And-Gas Scheme A Texas company and its president have agreed to pay over $5.4 million to settle charges by the Securities and Exchange Commission that they orchestrated an oil-and-gas fraud. The SEC also charged the president and a company vice president with acting as unregistered brokers in the transactions underlying the fraud. According to the SEC's complaint, filed on October 24, 2016, in the U.S. District Court for the Northern District of Texas, Southlake Resources Group, LLC and its founder and president, Cody M. Winters, raised approximately $5.2 million from more than 70 investors in 12 fraudulent oil-and-gas joint ventures. Winters and Southlake employed sales agents, including vice president Nicholas R. Hamilton, to offer and sell joint-venture interests to investors in 26 states from approximately June 2010 through September 2014. The SEC alleges that Winters and Southlake provided investors with offering documents that contained untrue and misleading statements about the investments. For example, the documents misrepresented the use of the offering proceeds, contained unsubstantiated projections regarding future oil production and revenue, and overstated expected well costs, according to the complaint. The SEC also alleges that Winters directed Southlake to engage in conduct that operated as a fraud on investors, including taking undisclosed profit and overhead payments from the offering proceeds, using offering proceeds to acquire working interests for itself, and selling joint-venture interests to certain investors at an undisclosed 50% discount. All three defendants have agreed to settle the SEC's charges without admitting or denying the allegations in the complaint. Southlake and Winters each consented to the entry of permanent injunctions from violating securities-registration and anti-fraud provisions of the federal securities laws, specifically Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Winters and Hamilton each consented to the entry of permanent injunctions from violating the broker-registration requirements of Exchange Act Section 15(a) and have each consented to industry bars in a related administrative proceeding. The defendants have also agreed to pay disgorgement totaling $5,235,650 plus prejudgment interest of $285,761.70. Winters and Southlake also agreed to pay civil penalties of $160,000 each. Hamilton agreed to pay a $50,000 civil penalty. The settlements are subject to court approval. The SEC's investigation was conducted by Jennifer R. Turner and Ty S. Martinez with assistance from Timothy S. McCole, and was supervised by Jonathan P. Scott and David L. Peavler, all of the SEC's Fort Worth office. SEC Complaint
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 23677 / October 25, 2016 Securities and Exchange Commission v. Southlake Resources Group, LLC, et al., Civil Action No. 16-cv-4:16-00992 (N.D. Tex. Oct. 24, 2016) SEC Charges Texas Company and Its President in Oil-And-Gas Scheme A Texas company and its president have agreed to pay over $5.4 million to settle charges by the Securities and Exchange Commission that they orchestrated an oil-and-gas fraud. The SEC also charged the president and a company vice president with acting as unregistered brokers in the transactions underlying the fraud. According to the SEC's complaint, filed on October 24, 2016, in the U.S. District Court for the Northern District of Texas, Southlake Resources Group, LLC and its founder and president, Cody M. Winters, raised approximately $5.2 million from more than 70 investors in 12 fraudulent oil-and-gas joint ventures. Winters and Southlake employed sales agents, including vice president Nicholas R. Hamilton, to offer and sell joint-venture interests to investors in 26 states from approximately June 2010 through September 2014. The SEC alleges that Winters and Southlake provided investors with offering documents that contained untrue and misleading statements about the investments. For example, the documents misrepresented the use of the offering proceeds, contained unsubstantiated projections regarding future oil production and revenue, and overstated expected well costs, according to the complaint. The SEC also alleges that Winters directed Southlake to engage in conduct that operated as a fraud on investors, including taking undisclosed profit and overhead payments from the offering proceeds, using offering proceeds to acquire working interests for itself, and selling joint-venture interests to certain investors at an undisclosed 50% discount. All three defendants have agreed to settle the SEC's charges without admitting or denying the allegations in the complaint. Southlake and Winters each consented to the entry of permanent injunctions from violating securities-registration and anti-fraud provisions of the federal securities laws, specifically Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Winters and Hamilton each consented to the entry of permanent injunctions from violating the broker-registration requirements of Exchange Act Section 15(a) and have each consented to industry bars in a related administrative proceeding. The defendants have also agreed to pay disgorgement totaling $5,235,650 plus prejudgment interest of $285,761.70. Winters and Southlake also agreed to pay civil penalties of $160,000 each. Hamilton agreed to pay a $50,000 civil penalty. The settlements are subject to court approval. The SEC's investigation was conducted by Jennifer R. Turner and Ty S. Martinez with assistance from Timothy S. McCole, and was supervised by Jonathan P. Scott and David L. Peavler, all of the SEC's Fort Worth office. SEC Complaint