Northamerican Energy (NNYR)

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SEC Takes Emergency Action to Shut Down Alleged Oil and Gas Fraud

On August 13, 2010, in Oil and Gas, SEC, Scams, Securities Industry (general), Texas, by IW Dog
http://investorswatchdog.com/blog/investorswatchblog/?p=2226

Oil and gas frauds will never fade. They’ve proven too good a vehicle for separating people from their life savings.

The U.S. Securities and Exchange Commission (“SEC’) has charged Houston resident Jon C. Ginder (“Ginder”) and two related companies, Northamerican Energy Group, Inc. (“NEG”) and Northamerican Energy Group Corp. (NEGC”), with securities fraud. Specifically, the SEC claims that the defendants fraudulently raised approximately $3.5 million from about 50 investors between February 2008 and May 2010, The SEC’s press release reads in part:

Investors were solicited through television advertisements touting annual returns as high as 40% from low risk producing wells. The estimated returns were purportedly based upon historical oil and gas data. In fact, the complaint alleges that historical oil and gas production from the leases in the first two partnership offerings was very poor, and many of the wells had no recent production history.

In connection with the first, and largest offering that raised in excess of $2.4 million, investors were told that funds would be used only for partnership purposes, specifically to purchase leases and renovate existing wells to “further enhance monthly production.” Contrary to these representations, the complaint alleges that $800,000 of investor funds were utilized to purchase leases from a private company Ginder controlled for an undisclosed profit of approximately $700,000 in cash plus an additional ten partnership units worth $60,000 per unit — in essence an undisclosed profit of $1.3 million. Further, without the partners’ approval, it is alleged that Ginder withdrew $300,000 from the partnership’s operating account to make an unsecured and non-interest bearing “loan” to a penny stock company operated by a personal friend and in which Ginder owned stock. The general partner has also borrowed over $478,000 from the partnership. None of these funds were repaid to the partnership. Ginder also paid at least $210,000 of investor funds for the television advertising campaign that generated investor leads.. None of the above expenditures, which total approximately 70% of the offering proceeds, were approved by investors.

Within the past two weeks, Investor’s Watchdog has conducted three Winnow® investigations for clients interested in three separate oil and gas ventures. In two of those investigations we found multiple red flags suggesting a strong likelihood of fraud.

Oil and gas frauds will never fade. They’ve proven too good a vehicle for separating people from their life savings. Before you invest in one, consider finding out what an SEC-trained investigator can learn for you.

http://investorswatchdog.com/blog/investorswatchblog/?p=2226