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SEC Charges Felon and Six Others in Oil-and-Gas Offering Fraud

On April 14, 2021 the Securities and Exchange Commission charged seven individuals, including criminal recidivist Richard Dale Sterritt, Jr., with defrauding investors in a multimillion-dollar oil-and-gas bid racket and related market manipulation scheme.

The SEC’s complaint alleges that, between March 2018 and at least November 2020, Sterritt – who used the pseudonym “Richard Richman” – Michael Greer, Deanna Looney, Robert Magness, Jr., Katie Mathews, James Christopher Pittman, and Mark Ross raised more than $16 million from more than 300 investors through an unregistered private placement of the common stock of Zona Energy Inc., a Dallas-based company that claimed to be focused on the oil and gas industry. According to the complaint, the defendants made various false and misleading statements verbally and in offering materials to solicit investors, including that their funds would be used to support Zona’s operations, namely to develop the mineral rights on a West Texas cattle ranch. The complaint further alleges that instead of using investors’ money to capitalize Zona, Sterritt and his co-defendants misappropriated millions of dollars raised in the offering, using the funds to pay for luxury goods, rental apartments, a car, and to make cash payments to friends, family members, and Sterritt’s girlfriends. Also, according to the complaint, the offering materials falsely claimed that Zona had no debt when the company actually owed millions of dollars in demand notes to various Sterritt-controlled companies.

The Securities and Exchange Commission urges investors to check the background of anyone selling them an investment and to always independently research investment opportunities.  FINRA’s BrokerCheck website is one such source.  When verifiable information is unavailable, generally, one should walk away.