William Alexander Swell and his 7S Oil & Gas, which is a Texas-based oil and gas company, will pay $750K for allegedly misleading investors about commissions and administrative costs and for misappropriating a significant amount of their money. According to the US Securities and Exchange Commission, the oil and gas company and its CEO raised nearly $7M from at least 70 investors in the US via unregistered offerings in oil and gas projects. Securities were sold to investors as units in eight of these joint venture projects. All of the projects were based in Texas.
In its complaint, the regulator accused Sewell and 7S of bringing in investors through sales agents and YouTube videos, one of which guaranteed “some type of return.” Meantime, offering documents in the alleged Texas securities fraud purportedly stated that no more than 10% of investor funds would go toward marketing costs, commissions, and salaries, while 85% would be used on oil and gas operations.
Instead, the SEC is claiming, sales agents received up to 35% in commissions from investor proceeds while only 57% maximum of investor money went to the wells. Sewell and 7S are accused of using over $90K of investor funds on entertainment bills, his children’s school tuition, and other personal expenditures. “Sham ‘royalty payments’” were allegedly issued to some investors to make it appear as if they were getting a return on their investments.
Sewell and 7S are settling the SEC case without denying or admitting to the allegations. They are charged with violating multiple sections of the Securities Act of 1933 and portions of the Securities Exchange Act of 1934.
Now, 7S will pay over $492K of disgorgement and Sewell will pay almost $93,5000 of disgorgement and almost $4,400 of prejudgment interest plus a $160K civil penalty. A court must still approve the settlements.
Texas Securities Fraud
If you believe that your investment losses are due to oil and gas fraud, contact our Texas securities fraud law firm today. Shepherd Smith Edwards and Kantas, LTD LLP represents investors in the state and throughout the US.
Read the SEC Complaint (PDF)