WASHINGTON, DC, Jan. 7 -- The proprietor of a Massachusetts company, which "sold" interests in oil and gas leases agreed to pay more than $3 million to settle fraud charges, the US Securities and Exchange Commission said on Jan. 5.
SEC said Howard Graham, principal of Braintree Energy Inc., which was based in Cheshire, Mass., agreed on Dec. 23 to repay almost $3 million of investors' funds, which he allegedly diverted to his personal use. Without admitting or denying the allegations, he consented to the entry of a final judgment in federal court in Massachusetts ordering him to pay nearly $3.3 million, including prejudgment interest and a $120,000 penalty, the SEC said.
Graham and Braintree offered and sold unregistered securities in the form of investment contracts or fractional interests in oil and gas leases, according to the civil complaint, which the SEC filed on Feb. 20, 2007.
It said the company, which is no longer in business, and its principal made numerous oral and written misrepresentations during 2000-06 to more than 200 US and non-US investors regarding the expected level of return, level of profits, and risks associated with the investments.
The SEC charged in its complaint that Graham and Braintree raised at least $9 million, and that the company and its employees led investors to believe that Braintree's offerings were not risky, that the company had never offered interests in oil and gas wells that did not produce, and that investors' money was safer there than in certificates of deposit.
In fact, most investors received no profits and most did not recover even their initial investments, the SEC said in its complaint.
It said that the court's final judgment also enjoins Graham from violating antifraud, securities registration, and broker-dealer registration provisions of federal securities laws. The SEC said that it also obtained a default judgment against Braintree Energy, permanently enjoining it from violating federal securities laws.
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