The Texas Securities Commission issued a cease and desist order Friday to stop Dallas-based SourceRock Energy Phoenix Prospect and its two executives from further efforts to raise $4.4 million from investors for an oil and gas project.
State officials claim that SourceRock and executives Jason A. Gilbert and Parker R. Hallam sought investors to help them develop a well field in Kansas, but “intentionally failed to disclose one or more material facts,” including that Hallam was charged by the U.S. Securities and Exchange Commission of fraud in 2016 and that both men have hundreds of thousands of dollars in federal tax liens pending against them.
In a six-page order issued by Texas Securities Commissioner Travis J. Iles, the state declares that SourceRock, Gilbert and Hallam are not licensed to sell securities, are misrepresenting key facts about the costs of the drilling operation and must immediately stop seeking money from investors.
Gilbert and Hallam are “representing that $3.4 million of investor funds will be used to purchase the lease and as compensation for the obligations under the Turnkey Operating Agreement, which is a misrepresentation of a relevant fact as the total amount for lease payments and other turnkey costs is $750,000,” the order states.
Texas Securities officials state that the IRS has filed $548,041 in tax liens against Gilbert and $142,672 in tax liens against Hallam – neither of which was disclosed to potential investors.
“Intentionally failing to disclose material information about an investment or persons offering the investment violates the anti-fraud provisions of the Texas Securities Act,” Iles states in a press release.