Washington, D.C.–(Newsfile Corp. – April 14, 2021) – The Securities and Exchange Commission today charged seven individuals, including criminal recidivist Richard Dale Sterritt, Jr., with defrauding investors through a multimillion dollar oil-and-gas offering fraud and related market manipulation scheme.
The SEC’s complaint alleges that, between March 2018 and at least November 2020, Sterritt – who used the pseudonym “Richard Richman” – Michael Greer, Deanna Looney, Robert Magness, Jr., Katie Mathews, James Christopher Pittman, and Mark Ross raised more than $16 million from more than 300 investors through an unregistered private placement of the common stock of Zona Energy Inc., a Dallas-based company that claimed to be focused on the oil and gas industry. According to the complaint, the defendants made various false and misleading statements verbally and in offering materials to solicit investors, including that their funds would be used to support Zona’s operations, namely to develop the mineral rights on a West Texas cattle ranch. The complaint further alleges that instead of using investors’ money to capitalize Zona, Sterritt and his co-defendants misappropriated millions of dollars raised in the offering, using the funds to pay for luxury goods, rental apartments, a car, and to make cash payments to friends, family members, and Sterritt’s girlfriends. Also, according to the complaint, the offering materials falsely claimed that Zona had no debt when the company actually owed millions of dollars in demand notes to various Sterritt-controlled companies.
The complaint alleges that Sterritt, Magness, and Ross also conducted a manipulative trading scheme in the securities of OrgHarvest Inc., a Sterritt-controlled public issuer, in an attempt to inflate the price of the stock so that they could sell their shares to unsuspecting investors for a profit.
“Investors should be wary of individuals using aggressive sales tactics to pitch unregistered offerings that promise high investment returns with little or no risk,” said Richard R. Best, Director of the SEC’s New York Regional Office. “As alleged, Sterritt and his accomplices defrauded and victimized investors by inducing them to invest using false statements and then misappropriating their funds.”
The SEC’s complaint, filed in U.S. District Court for the Eastern District of New York, charges the defendants with violations of the registration and antifraud provisions of the federal securities laws and related rules. The SEC seeks injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties.
In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Sterritt and four others.
The SEC’s Office of Investor Education and Advocacy cautions investors to check the background of anyone selling them an investment and to always independently research investment opportunities.
The SEC’s ongoing investigation is being conducted by Christine D. Ely, David H. Tutor, Christopher Ferrante, John O. Enright, and Sheldon L. Pollock of the SEC’s New York office, and the litigation is being led by Alexander M. Vasilescu, Ms. Ely, and Mr. Tutor. The case is being supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York and the Federal Bureau of Investigation.