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Sunday, April 26, 2015

SEC CHARGES OIL COMPANY, FOUNDER WITH SECURITIES FRAUD

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 
Litigation Release No. 23239 / April 10, 2015
Securities and Exchange Commission v. Mieka Energy Corporation, et al., Civil Action No. 3:15-cv-01097-K (N.D. Tex. Dallas Division)
SEC Charges Texas Oil Company and Its Founder with Securities Fraud

On April 10, 2015, the Securities and Exchange Commission charged Mieka Energy Corporation of Flower Mound, Texas, and its founder and president Daro Ray Blankenship, with fraudulently offering oil and gas-related investments. The SEC also charged Mieka's publicly traded parent company, Vadda Energy Corporation, with fraud and reporting violations for deceptively touting the success of Mieka's investments. Two of Mieka's salesmen, Robert William Myers, Jr. and Stephen Romo, were charged with acting as unregistered brokers.

The SEC alleges that, between September 2010 and October 2011, Blankenship and Mieka raised $4.4 million from approximately 60 investors by selling interests in joint ventures that were to drill and complete two gas wells. The SEC further alleges that, in truth, Blankenship immediately spent all of the offering proceeds on unrelated expenses and projects, leaving no money to drill one of the promised wells, or complete the other well. Blankenship then misled investors about these facts through deceptive "investor update" newsletters and misleading public filings by Vadda, which he signed and certified.

Romo and Myers participated in the scheme by marketing and selling the joint venture interests to the public - for which they together received approximately $190,000 in commissions - without being registered as broker-dealers, or associated with any SEC-registered broker-dealer.

The complaint charges Blankenship and Mieka with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. Vadda is charged with violating Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, and 13a-13 thereunder. Blankenship also faces charges under Exchange Act Rule 13a-14, and for aiding and abetting and being a control person of Mieka and Vadda's violations. The SEC accuses Romo and Myers of violating Section 15(a) of the Exchange Act. The SEC seeks permanent injunctions against all defendants, as well as civil penalties, disgorgement of ill-gotten gains with prejudgment interest, and a bar against Blankenship ever serving as an officer and director of a public company.

The SEC's investigation was conducted by Jeffrey Cohen, Keith Hunter and Jessica Magee of the SEC's Fort Worth Regional Office. David Reece will lead the litigation.

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