Escalating oil and gas prices leading to stock scamsadmin
The U.S. Securities and Exchange Commission is warning investors to avoid potential stock scams based on promises of quick profits from high oil and gas prices.
“Rising fuel prices make investors across the nation particularly susceptible to oil and gas scams,” said Katherine Addleman, an enforcement official in the agency’s Fort Worth, Texas, office. “Oil and gas investments are highly speculative and complex and many unscrupulous individuals use that complexity to enrich themselves with the investors’ funds.”
The SEC sued two securities promoters yesterday, claiming they cheated at least 70 investors across the U.S. out of $2.2 million by selling so-called “participation interests” in revenue from oil and gas wells.
The SEC’s complaint, filed in federal court in Dallas, accuses Ivan Dearaujo, 45, and Wesley Harbison Jr., 54, of selling interests in oil and gas wells between August 2002 and April of last year through PetroSite Assets Inc., a company in Irvine, Calif. The men failed to tell investors PetroSite didn’t own the stakes they claimed to be selling, the SEC said. Dearaujo, who worked as a telemarketer for another California oil and gas company, continued to direct the alleged fraud after he was jailed on unrelated charges in January, the SEC said. Harbison, who previously worked as an oil and gas telemarketer, has a criminal record that includes two felony convictions, the agency said.
Kristin Cano, a lawyer for Dearaujo and Harbison in Newport Beach, Calif., didn’t return a call seeking comment on the SEC suit.
Regulators have increased efforts to thwart scams linked to headline-grabbing events, such as the steep rise in energy costs.
The National Association of Securities Dealers, which oversees more than 5,000 brokerage firms, advised investors in December to be wary of promoters touting companies offering products that combat bird flu, which has infected at least 241 people in 10 countries, killing 141.
Last September, the SEC and NASD also warned of frauds linked to Hurricane Katrina.