Matthew and William Griffin Charged with Fraud
On November 23, 2016, the Securities and Exchange Commission (“SEC”) filed a civil action charging brothers Matthew Griffin and William Griffin with fraudulently offering interests in two Texas partnerships.
The SEC alleges that, between November 2013 and July 2014, the Griffins, through their company, Payson Petroleum, Inc., conducted a fraudulent two-phase offering of interests in two Texas partnerships, raising $23 million from approximately 150 investors for the purpose of developing three oil and gas wells. The SEC further alleges that the Griffins misled investors about Payson’s promised participation in the program and about Payson’s compensation as the program’s sponsor and operator.
Specifically, the SEC alleges that the Griffins misrepresented to the investors: i) that Payson would contribute, up-front, 20% of the offering amount, or $5.4 million, and that this capital infusion would cover 20% of the cost of the wells; ii) that Payson’s consideration as program sponsor/operator/co-investor would be limited to 20% of any petroleum revenue generated by the wells; and iii) that Payson would cover any cost overages, beyond the estimated $24 million, in drilling and completing the wells. The SEC further alleges that these were misrepresentations because, in fact: i) Payson contributed no money to the offering and paid nothing toward the well costs; ii) Payson appropriated the entirety of the offering proceeds net of offering costs; and iii) Payson lacked the financial means to pay even the smallest cost overage.
In its complaint the SEC charges Matthew Carl Griffin and William Daniel Griffin with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations in the SEC’s complaint, Matthew Carl Griffin and William Daniel Griffin have each consented to a permanent obey-the-law injunction, disgorgement with prejudgment interest and a civil penalty in amounts to be determined by the Court upon motion by the SEC.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956 or by email at [email protected]. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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