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Sunday, April 19, 2015

SEC CHARGES COMPANY WITH CONDUCTING FRAUDULENT OIL AND GAS SCHEME

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 
Litigation Release No. 23230 / April 6, 2015
Securities and Exchange Commission v. Team Resources, Inc., et al., Civil Action No. 3:15-CV-1045 (NDTX, April 6, 2015)
SEC Charges California Companies with Running a $33 Million Oil and Gas Scheme

The Securities and Exchange Commission today filed suit in the U.S. District Court for the Northern District of Texas against two California oil-and-gas companies, their principal, and four sales associates, for conducting a long-term fraudulent oil and gas scheme.

The SEC alleges that, from 2007 through 2012, Team Resources, Inc. and Fossil Energy Corp. raised over $33 million from approximately 475 investors nationwide through eight unregistered offerings of oil-and-gas partnership interests. Kevin Albert Boyles controlled both companies, and used his sales staff of Philip Adam Dressner, Michael James Eppy, Andrew Stitt, and John M. Olivia to cold-call potential investors and mislead them into buying the partnership interests. The complaint alleges that the defendants misled investors about such material information as potential returns, the success of past offerings, and how offering proceeds would be used. In addition, Boyles paid large and undisclosed commissions to the salesmen — ranging from 25% to 35% — even though none of them was registered as a broker or associated with a registered broker-dealer. After raising sufficient funds from investors, Team Resources and Fossil Energy contracted with third parties to drill the wells, all of which failed to produce oil and gas in the amounts projected by the defendants.

The SEC charges Team, Fossil, Boyles, Dressner, Eppy and Stitt with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act"), and Sections 10(b) and 15(a) of the Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. Olivia is charged with violating Sections 5(a) and 5(c) of the Securities Act and Section 15(a) of the Exchange Act. The SEC seeks civil penalties and disgorgement plus prejudgment interest from each defendant, as well as other relief.

To settle the SEC's charges, Team, Fossil, and Boyles have consented to judgments permanently enjoining them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. Olivia has consented to a permanent injunction against violations of Sections 5(a) and 5(c) of the Securities Act, and Section 15(a) of the Exchange Act. Team, Fossil, Boyles, and Olivia have consented to disgorge their ill-gotten gains and to pay civil penalties in amounts to be determined by the court. Boyles and Olivia have also agreed to consent to an administrative order barring each from associating with any broker, dealer, investment adviser, municipal advisor, transfer agent, or nationally recognized statistical rating organization, or from participating in an offering of penny stock.

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