© 2017 The Texas Lawbook.
By Mark Curriden
(April 21) – The U.S. Securities and Exchange Commission has charged Plano-based Wayne Energy and its owner with multiple counts of securities fraud, including spending hundreds of thousands of dollars of investor funds on casino gambling, purchasing jewelry and making car and house payments.
The SEC’s Fort Worth Regional Office, in a complaint filed in federal court in Sherman, accuses Matthew W. Fox and his business with providing investors with false and misleading financial materials, misappropriating investor funds and operating a securities fraud scheme.
“We allege that Fox funded his lavish lifestyle using his victims’ investments. Expenditures on vacations and restaurants, for jewelry and merchandise, and for gambling were a major part of the significant misrepresentations that Fox allegedly made to his victims,” SEC Regional Director Shamoil Shipchandler said in a written statement.
Fox represented himself and the company. Efforts to reach him for a comment were unsuccessful.
According to federal court documents, Wayne Energy and Fox agreed to settle the case without admitting or denying the SEC’s allegations.
As part of the agreement, Fox must pay disgorgement, prejudgment interest and civil penalties, which will be determined by the federal court.
“Fox drafted and sent prospective Glover JV investors a Confidential Information Memorandum (CIM) filled with false and misleading statements,” the SEC states in its complaint. “The CIM wasn’t even tailored for the Glover JV. Instead, Fox simply recycled an old Frisco Exploration offering document—sometimes neglecting to swap ‘Wayne Energy’ for ‘Frisco Exploration.’ Notably, Fox failed to update the CIM to analyze the Glover JV’s specific operations, risks, or anticipated costs.”
The SEC also states that Fox claimed that, “the Glover JV would be a separate legal entity from Wayne Energy with no comingling of funds.”
“In reality, Fox did not create a separate bank account for the Glover JV, and investor funds were deposited into the Wayne Energy operating account,” the SEC states in federal documents. “Fox knowingly conducted business unrelated to the Glover JV with funds that flowed in and out of the Wayne Energy operating account and were comingled with Glover JV investor funds.”
Between March 2015 and October 2016, Fox raised more than $900,000 to fund a joint venture formed to rework and recomplete an oil and gas well in Upshur County, Texas.
Rather than use these funds for the Upshur County well, the SEC alleges that Fox spent more than $236,000 in casino gambling charges and cash withdrawals and another $240,000 on house and car payments, vacations, dining and shopping, and jewelry.
To read the official complaint, click here.
The SEC’s investigation was conducted by Sarah S. Mallett and supervised by James E. Etri and David L. Peavler of the Fort Worth Regional Office. Christopher A. Davis will lead the litigation.
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