Litigation Release No. 24542 / July 19, 2019
Securities and Exchange Commission v. Carol J. Wayland, et al., No. 8:17-cv-01156-AG (DFMx) (C.D. Cal. filed July 6, 2017)
On April 18, 2019, a federal district court entered final judgments against a purported oil well company, its founder, and three promoters who were charged with selling unregistered securities to investors in an oil and well offering fraud scheme.
The SEC’s complaint, filed in the U.S. District Court for the Central District of California, alleges that from at least May 2014 until March 2016, defendant Kentucky-Tennessee 50 Wells/400 BBLPD Block, Limited Partnership (KT 50) fraudulently offered and sold unregistered securities to investors using a boiler room operation, raising approximately $2.4 million from 41 investors nationwide. The complaint also alleges that Carol J. Wayland of Newport Beach, California founded and operated KT 50 and conducted the offering through HP Operations, LLC (HP) and C.A.R. Leasing, LLC (C.A.R.). To solicit investors, Wayland set up a boiler room and employed Mitchell B. Dow, Barry Liss, and Steve G. Blasko as promoters. According to the complaint, defendants acted as unregistered brokers and sold securities to the public in unregistered transactions. The complaint also alleges that Wayland, KT 50, HP, and C.A.R misappropriated investor money and made false promises to investors of high returns and concerning Wayland’s purported extensive oil and gas investment management experience.
The U.S. Attorney’s Office for the Central District of California brought criminal charges against Dow and Wayland for related misconduct. On May 6, 2019, Dow pleaded guilty to one count of wire fraud, and on June 25, 2019, Wayland pleaded guilty to one count of conspiracy.
The final judgments entered against Wayland, KT 50, HP, and C.A.R. in the SEC’s case permanently enjoin them from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, and from violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act. The final judgment entered against Wayland also permanently enjoins her from violating the broker-dealer registration provisions of Section 15(a) of the Exchange Act, and orders her to pay disgorgement and prejudgment interest of $528,722 and a civil penalty of $464,665. The final judgments entered against Dow, Liss, and Blasko permanently enjoin them from violating Sections 5(a) and 5(c) of the Securities Act and Section 15(a) of the Exchange Act, and order them to pay disgorgement and prejudgment interest of $225,839, $182,911, and $67,658, respectively, and a civil penalty of $160,000 each. The final judgments resolve the SEC’s action against the defendants.
The Division of Enforcement’s litigation was conducted by Lynn M. Dean and supervised by Amy J. Longo.
The original Litigation Release can be found here.