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Monday, September 01, 2014 4:57:37 PM
NOLA.com News May 29th 2014 Former Metairie futures fund manager accused of fraud in energy investments
former Metairie investment fund manager who was suspended from futures trading this year amid allegations of misspending investors' money has now been accused of fraudulently enticing an investor in a New Orleans drilling company and an oil well, according to a lawsuit filed this week.
Bruce A. Gwyn agreed to a seven-year withdrawal from doing business on U.S. futures exchanges in February, while his two financial firms, Level III Trading and Level III Management, were permanently banned. The regulatory National Futures Association said Gwyn misled investors by exaggerating his fund's value by the millions of dollars and using fund money for personal expenses.
In a lawsuit filed Wednesday (May 28) in Orleans Parish Civil District Court, Gwyn is accused of fraud in connection with two other companies: Treaty Energy Corp., which is publicly traded on over-the-counter markets, and an affiliated company, Rampant Leon Financial Corp.
The lawsuit also names Andrew Reid, the CEO of both companies, as a defendant.
Gwyn was once chief operating officer and director at Treaty Energy, but he resigned from the company in March, according to the company's website. Treaty Energy is a New Orleans-based oil and gas exploration company with operations in Texas and Belize.
A lawyer for Treaty Energy on Thursday said the company couldn't immediately respond.
In the lawsuit, New Orleans resident George Demmas claims that Gwyn -- a childhood friend -- convinced him in May 2012 to invest $65,000 in a "fictional undivided interest in an oil well" on promises that he would earn $700,000 over 10 years in return.
That sale agreement was made through Rampant Leon Financial Corp. and signed by Reid, according to the lawsuit.
At Gwyn's urging, Demmas also decided to buy more than 810,000 shares in Treaty Energy for a total of $15,000 with an agreement that Demmas had to hold onto the shares for one year before selling them on the market, according to the lawsuit.
The lawsuit claims Gwyn "knowingly misrepresented material facts to and omitted material facts from" Demmas in both investments.
"In addition, Gwyn made continuing misrepresentations about the investments to induce plaintiff to hold the investments for a longer period of time than he otherwise would have and to delay plaintiff's actions in recovering or mitigating his losses," the lawsuit says.
Rather than the promised $3,000 or $4,000 per month, the lawsuit says, Demmas has received only a total of $700 on the oil well investment.
At one point, when Demmas complained about a lack of payments, Gwyn told him "that a supposed unnamed Russian investor had invested about $20 million in the investment and that Rampant needed to pay him back first before any of the other investors," the lawsuit says.
Meanwhile, Demmas' shares in Treaty Energy did not increase as Gwyn had promised, the lawsuit says, and Demmas couldn't find a brokerage firm willing to sell the shares after the one-year holding period.
Treaty Energy was trading Thursday at .0036 cents per share with a 52-week high of 4 cents per share.
Jason Burge, a lawyer representing Demmas, said when disciplinary action against Gwyn in the futures market was made public in February, Demmas began to realize "maybe it was not just an investment going wrong, maybe it was a deeper problem with Mr. Gwyn."
Burge said Reid is named in the lawsuit as being responsible for Gwyn's actions in the companies.
In a quarterly filing in January, Treaty Energy reported $1.24 million in total assets and $6.97 million in total liabilities, leaving a total shareholders' deficit of $5.73 million as of Sept 30, 2013. In the report, the company said there was "substantial doubt" about the company's ability to continue as a "going concern" because of negative cash flows in operations.
The company reported to the Securities and Exchange Commission in April that it would not be filing its annual report on time this year.
Reid previously helped lead an effort to redevelop the historic Orpheum Theater in downtown New Orleans through the company Orpheum Properties Inc. Disgruntled investors in that venture wrested control of the property in court last year and put it up for sale.
http://www.nola.com/business/index.ssf/2014/05/former_metairie_futures_fund_m.html
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former Metairie investment fund manager who was suspended from futures trading this year amid allegations of misspending investors' money has now been accused of fraudulently enticing an investor in a New Orleans drilling company and an oil well, according to a lawsuit filed this week.
Bruce A. Gwyn agreed to a seven-year withdrawal from doing business on U.S. futures exchanges in February, while his two financial firms, Level III Trading and Level III Management, were permanently banned. The regulatory National Futures Association said Gwyn misled investors by exaggerating his fund's value by the millions of dollars and using fund money for personal expenses.
In a lawsuit filed Wednesday (May 28) in Orleans Parish Civil District Court, Gwyn is accused of fraud in connection with two other companies: Treaty Energy Corp., which is publicly traded on over-the-counter markets, and an affiliated company, Rampant Leon Financial Corp.
The lawsuit also names Andrew Reid, the CEO of both companies, as a defendant.
Gwyn was once chief operating officer and director at Treaty Energy, but he resigned from the company in March, according to the company's website. Treaty Energy is a New Orleans-based oil and gas exploration company with operations in Texas and Belize.
A lawyer for Treaty Energy on Thursday said the company couldn't immediately respond.
In the lawsuit, New Orleans resident George Demmas claims that Gwyn -- a childhood friend -- convinced him in May 2012 to invest $65,000 in a "fictional undivided interest in an oil well" on promises that he would earn $700,000 over 10 years in return.
That sale agreement was made through Rampant Leon Financial Corp. and signed by Reid, according to the lawsuit.
At Gwyn's urging, Demmas also decided to buy more than 810,000 shares in Treaty Energy for a total of $15,000 with an agreement that Demmas had to hold onto the shares for one year before selling them on the market, according to the lawsuit.
The lawsuit claims Gwyn "knowingly misrepresented material facts to and omitted material facts from" Demmas in both investments.
"In addition, Gwyn made continuing misrepresentations about the investments to induce plaintiff to hold the investments for a longer period of time than he otherwise would have and to delay plaintiff's actions in recovering or mitigating his losses," the lawsuit says.
Rather than the promised $3,000 or $4,000 per month, the lawsuit says, Demmas has received only a total of $700 on the oil well investment.
At one point, when Demmas complained about a lack of payments, Gwyn told him "that a supposed unnamed Russian investor had invested about $20 million in the investment and that Rampant needed to pay him back first before any of the other investors," the lawsuit says.
Meanwhile, Demmas' shares in Treaty Energy did not increase as Gwyn had promised, the lawsuit says, and Demmas couldn't find a brokerage firm willing to sell the shares after the one-year holding period.
Treaty Energy was trading Thursday at .0036 cents per share with a 52-week high of 4 cents per share.
Jason Burge, a lawyer representing Demmas, said when disciplinary action against Gwyn in the futures market was made public in February, Demmas began to realize "maybe it was not just an investment going wrong, maybe it was a deeper problem with Mr. Gwyn."
Burge said Reid is named in the lawsuit as being responsible for Gwyn's actions in the companies.
In a quarterly filing in January, Treaty Energy reported $1.24 million in total assets and $6.97 million in total liabilities, leaving a total shareholders' deficit of $5.73 million as of Sept 30, 2013. In the report, the company said there was "substantial doubt" about the company's ability to continue as a "going concern" because of negative cash flows in operations.
The company reported to the Securities and Exchange Commission in April that it would not be filing its annual report on time this year.
Reid previously helped lead an effort to redevelop the historic Orpheum Theater in downtown New Orleans through the company Orpheum Properties Inc. Disgruntled investors in that venture wrested control of the property in court last year and put it up for sale.
http://www.nola.com/business/index.ssf/2014/05/former_metairie_futures_fund_m.html
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