Thank you, Mitch for taking the time out of your busy schedule, could you tell our readers a little bit about your practice and experience?
I am an employee of the law firm Scheef & Stone, LLP in Dallas, Texas. I work in commercial vessels, and much of my practice is devoted to fraud with oil and gas and securities. I graduated from Harvard University with a bachelor’s degree in public administration and received a law degree from the University of Texas. I have experience working with the first chairman and a good track record in getting canceled for oil and gas investors.
2- I heard you played Defensive End on the Harvard football team, which is harder to fire a defender or fire an unscrupulous cameraman / promoter? Which one is more enjoyable?
It’s harder to fire a defender. Removing a promoter is more helpful. Quarterbacks get up. If I do my job right, sometimes the promoter doesn’t get up.
3- When it comes to oil and gas fraud, people don’t seem to realize that many promoters are misstructuring their deals. Please explain.
There is really no “right” or “wrong” way to structure a deal as a promoter. “Fair” or “unfair” is probably the best comparison. As an oil and gas investor, you should know that there is a giant risk of losing all your investments. Oil and gas are very risky and you don’t have to invest money you can’t afford to lose. Most investors want to fight the chance to make money; unfortunately, many promotional investments in oil and gas do not give the investor this chance to fight. If you understand the industry – and you can think like a crook – you can tell the difference.
4- What is a Reg D sentence?
This is a very big question to which I will try to make a small answer. “Reg D” refers to Regulation D of the Securities Act of 1933, an important piece of federal law. Regulation D applies to private proposals. When Google conducts an IPO, it is clearly a public offering that requires registration under the 33-year Act. Most oil and gas transactions are offered privately in accordance with the exemption from registration – Regulation D. The issuer of securities may not use a public application and must accept only accredited investors. There are many other limitations, but usually this is a Reg D offer.
5- What is cancellation and how does it work?
Good question. I will refer to the Texas Securities Act for your convenience. The interest in oil and gas leases (i.e. labor interest) is a security. As a result, the types of investments we are discussing fall under the Texas Securities Act and the Federal Securities Act.
Basically, a cancellation is a refund of your money with interest and attorney’s fees. Under Texas law, there are several things that cause repeal:
(1) Publicly offer unregistered security (cold calls, internet, etc.), and
Offering an unregistered security by distorting or omitting material facts.
Here’s the key message: there’s nothing wrong with selling unregistered securities as long as you have an exception. If you do something to break the exception, such as publicly offering it or a simple scam, investors will get their money back.
6- Are they hard to get?
It depends on the financial resources of the issuer of the security and, in my experience, on the depth of the fraud. I received replies for clients with letters of inquiry, and I had lawsuits about securities fraud that lasted two and three years. The answer to your question will probably be “Sometimes”.
7- What are the signs that the investor has been offended?
Some of the signs of oil and gas fraud include:
(1) Lack of communication with the investor;
(2) significant actions on the project without the consent or recognition of the investor;
(3) revenues that lag far behind forecast forecasts;
(4) Your interest has been “transferred” to another project;
Significant unexplained drilling delays; and
(6) Decreased labor interests of the investor.
8- What is a termination and waiver order?
A C&D is an order commonly issued by a government agency, such as the State Securities Council or the SEC, that orders an issuer to immediately “stop and refuse” to sell securities in a particular state or sell securities at all. paper. I would encourage any investor to do some research online to determine if there was a company trying to sell you, C&D’s and get a reasonable explanation from the company. You need to make sure you get the whole story before you invest.
9-Can you talk about the responsibilities associated with having a working interest in the field? Are there any asset protection strategies to use before buying, such as purchasing them in an LLC or other form?
The responsibility is almost limitless; you have to understand that it is an investment in which you can lose all your investments and then some. When you acquire labor interest, you need to understand that you are responsible for your proportionate share of the costs associated with drilling and completing an oil or gas well, which is not cheap these days.
The oil and gas promoter has many tools to hedge your bid, the most common of which is a turnkey offer. The promoter promises to make you a hole up to x feet for y dollars. If the hole is drilled for less than y dollars, it retains the difference. If it costs more, it eats up the difference.
The investor does not know that the well can be drilled in ½ years or even 1/10 year. This is the biggest scam now.
10- Have you seen a noticeable increase in investor fraud with the recent rise in oil?
Absolutely. This is revelry. Please be careful in Texas.
11- With any government or federal agencies can we contact for information about companies offering units?
Yes, absolutely. Before investing in an oil and gas offer under Rule 506 of Regulation D, make sure the issuer has submitted Form D to the Securities and Exchange Commission and to the Secretary of State or the Securities and Exchange Commission of the state in which you reside.
Issuers of private proposals must submit these documents when applying for exemption. If there is no Form D already in the file or in the file within 15 days after your investment has been made, this should be a serious signal.
12- Any independent forums or other resources that you would recommend to our readers.
If you’re curious about investing in oil and gas, you should check out the site run by Bernie Bicoy, called Venture Research Info and its bulletin board. You can find it at http://www.vcresearch.info.
13- How can we contact you and how do you work? Hourly rate or contingencies?
You can contact me by email at firstname.lastname@example.org or by phone in the Dallas area at 214.472.2140. I work both on an hourly rate and on a notional basis; I usually leave this on the investor account.