© 2014 The Texas Lawbook.
By Mark Curriden, JD
Senior Writer for The Texas Lawbook
(May 1) – The U.S. Securities and Exchange Commission has charged Southlake-based Guardian Oil and Gas and the company’s principal, Rick D. Mullins, in an allegedly illegal oil and gas offering fraud.
The SEC, in a lawsuit filed in the U.S. District Court for the Northern Division of Texas, claims that Mullins, who is a lawyer, raised about $6.5 million through the fraudulent offering and sale of securities to investors in the firm of limited partnership interests.
The SEC investigation was led by enforcement attorney Akita Adkins, who is a former lawyer at Gibson Dunn & Crutcher; enforcement accountant Ty Martinez; and Jim Etri, an assistant director of the enforcement division in the agency’s Fort Worth Regional Office.
Matthew Gulde, a lawyer on the SEC’s trial team in Fort Worth and a former federal prosecution, is leading the prosecution of the case.
“Mullins and Guardian failed to disclose to investors Guardian’s deteriorating financial condition, including significant amounts owed on pre-existing bank loans,” according to an announcement issued by the SEC.
“Defendants falsely represented to investors that their contributions would be used solely for the specific drilling project in which they had invested but instead, under Mullins’ direction, Guardian redirected investor funds for other unrelated purposes,” the SEC claims.
The SEC’s lawsuit also states that Mullins falsely told investors that they would receive revenue from the sale of any oil and gas production from the project.
“In truth, operators were deducting from production revenue expenses due on other unrelated projects, a process known as ‘net checking,’” the SEC charges.
Efforts to contact Mullins were unsuccessful.
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