The SEC’s complaint was filed under seal on December 1st, 2021, and later unsealed. In it, the SEC describes multiple defendants including five individuals that were affiliated with Heartland Group Ventures LLC, Heartland Production and Recovery, LLC., and others affiliated with Heartland. The SEC is requesting a jury trial.
Silver Law Group represents victims of these types of frauds frequently pursuing claims against the financial advisors, insurance agents and unregistered brokers who sell these investments to small and retail investors. Unfortunately, there has been a rise in claims against unregistered financial advisors selling unregistered securities, which in many cases turn out to be Ponzi schemes.
The Investment Fraud
Four individuals affiliated with Heartland were charged in connection with the offerings of five fraudulent unregistered oil and gas offerings that totaled an excess of $122 million.
The complaint was unsealed on December 8th, 2021. In it, the SEC described that the defendants (both entities and individuals) fraudulently raised more than $122 million from more than 700 investors throughout the nation. The money was allegedly raised for working over existing oil wells or drilling for new wells in the state of Texas. The defendants used five unregistered security offerings which consisted of two equity funds and three debt funds.
Like most Ponzi schemes, one of the defendants had other plans for the money they raised. About half of the funds raised from investors were used on oil and gas projects that generated collectively less than $500,000 in revenue. But beginning in at least 2019, The Heartland affiliated defendants used approximately $26 million to pay “interest” to debt fund investors. They also made “material misrepresentations and omissions” to these investors regarding the oil and gas projects they were involved with.
The complaint continues that the defendants that were Heartland affiliated sent more than $54 million of the investors’ money to ArcoOil, and Barron Petroleum and a third entity, Dallas Resources Inc. for alleged projects involving drilling new wells for oil or existing wells. A defendant repeatedly refused requests by investors for information about these projects and the use of investor funds for them.
In fact, most of the investor funds were not used for any oil and gas related project. In reality, the investor funds were used to purchase a helicopter, a private jet, real estate in the Bahamas, and other unrelated personal expenditures.
A defendant made material misrepresentations to heartland, company investors, and individuals who solicited prospective investors about working existing wells and drilling potential new wells. He provided statements that reflected inaccurate, inflated or fraudulent oil production revenues for some of the wells which had not produced anything.
In a reserve report that reflected incorrect valuation for company gas reserves, a defendant also made misrepresentations about projections of production from a gas well to Heartland personnel, the people who solicited the investors (called “finders”), and one or more investors that attended a field trip to the drill site in April 2021. Some of the “finders” were previously barred by FINRA.
The SEC is seeking disgorgement of all gotten gains by all the defendants. The full complaint is available here.
The SEC Defendants
Ten defendant entities are named in the SEC’s petition:
- The Heartland Group Ventures LLC
- Heartland Production and Recovery LLC
- Heartland Production and Recovery Fund LLC
- Heartland Production and Recovery Fund II LLC
- The Heartland Group Fund III LLC
- Heartland Drilling Fund I LP
- Carson Oil Field Development Fund II LP
- Alternative Office Solutions LLC (these are collectively known as “the Heartland-Affiliated Entities”)
- ArcoOil Corporation
- Barron Petroleum LLC
- James Ikey
- John Muratore
- Thomas Brad Pearsey
- Rustin Brunson
The petition also names these relief defendants:
- Dodson Prairie Oil & Gas LLC
- Panther City Energy LLC
- Muratore Financial Services, Inc.
- Bridy Ikey, wife of James Ikey
- Encypher Bastion, LLC
- IGroup Enterprises, LLC
- Harprit Sahota
- Monrose Sahota
- Sunny Sahota
- Barron Energy Corporation
- Dallas Resources, Inc.
- Leading Edge Energy, LLC
- Sahota Capital LLC
- 1178137 BC LTD, a Canadian entity
Did You Invest With Heartland Or Its Subsidiaries?
Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.