Owners Accused of Misappropriating Nearly $2.7M from Investors
The US Securities and Exchange Commission (SEC) has filed a civil fraud lawsuit accusing APEG Energy, GP, LLC (APEG) and its owners Paul W. Haarman and Patrick E. Duke of fraudulently raising over $17.4M from 115 investors of an oil and gas investment fund.
These investors purchased limited partnership securities in APEG Energy, LP, a fund concentrated in the oil and gas industry. Now, the SEC is alleging misrepresentations and omissions, breach of fiduciary duty, and a deceptive scam that allowed the Fund and its owners to take almost $2.7M from investors.
Contact our securities fraud law firm today if you are an investor of APEG Energy and believe that your financial losses are a result of broker negligence.
SEC Alleges Misrepresentation Among Other Acts of Misconduct
The regulator contends that the defendants misrepresented the risks involved. Additionally, the SEC also claims that investors were misinformed of Duke’s supposed expertise in the oil and gas industry, and how much the owners would earn from managing APEG Energy, LP.
The SEC said that investors were promised guaranteed returns, no risks, and told that investments were hedged against oil drops in the future.
The truth was, said the Commission, not only were there significant risks in investing in the Fund, including uncertainties involving oil-and-gas production revenue and the effect of changing oil prices but also, there were no mechanisms in place to hedge against these price fluctuations.
Also, although Duke was promoted as an expert in oil-and-gas exploration, he actually doesn’t have much experience in that area of the industry.
Contrary to APEG Energy’s PPM and partnership agreement, the Fund’s compensation was supposed to be a 2% fee for management. Instead, its owners set it up so they both ended up getting almost $2.7M in illicit payments that were called “acquisition fees.” These payments were hidden not just from investors but also from the Fund.
Now, the SEC wants injunctions, disgorgement of ill-gotten gains along with prejudgment interest, and civil penalties.
Texas Oil and Gas Investment Fraud Attorneys
At Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com), our Texas oil and gas investment fraud attorneys represent investors who have suffered losses because their broker or financial advisor compelled them to unsuitably invest in oil and gas investments or misrepresented or omitted key risks involved.
Investing in the oil and gas sector can be a high-risk, volatile proposition that isn’t for most conservative investors, inexperienced investors, retail investors, and retirees. SSEK Law Firm has law offices in Houston at (713) 227-2400 and Dallas at (214) 613-5306. We also represent clients throughout the United States.