Ex-CEO of Powder River must pay for scheme, judge says
BY ROD WALTON World Staff Writer
Tuesday, November 06, 2012
11/06/12 at 7:03 AM
A Tulsa federal judge ordered former Powder River Petroleum International Inc. CEO and Chairman Brian Fox to pay back $320,000 in profits and at least $159,000 in interest and penalties stemming from his part in misleading Asian investors and federal regulators about the dissolved company.
U.S. District Judge Claire Eagan ruled that Fox must make those payments and cannot serve as an officer or director of any company offering securities registered under rules of the Securities Exchange Act.
"Defendant recruited Asian investors and intentionally misrepresented the nature of these investments in public filings," Eagan wrote in her order. "Defendants continued to recruit investors and essentially created a Ponzi scheme of paying existing obligations from new investments."
Fox also misrepresented Powder River's revenues and proven reserves in public filings and press releases, the judge said.
Powder River was based in Calgary, Alberta, Canada, but maintained an investment office in Tulsa, according to reports.
"The court finds that defendant engaged in fraudulent and deceitful conduct causing substantial losses to Powder River's investors," Eagan wrote.
Powder River was accused of reporting $33.5 million as revenue when it was actually borrowings during a period from late 2004 to the first quarter of 2008, according to reports. Powder River allegedly paid $4.4 million in interest payments to some investors in 2007, but at least $3.3 million came from later investors, the U.S. Securities and Exchange Commission stated in its April 2011 complaint.
The company marketed leasehold working interests on oil and gas properties in Oklahoma, Texas and Louisiana, according to reports.
Powder River filed for Chapter 11 bankruptcy protection and reorganization in December 2008, but the petition was later changed to a Chapter 7 liquidation.
Original Print Headline: Judge: Ex-CEO of Powder River must pay
Rod Walton 918-581-8457