The US Securities and Exchange Commission said on Dec. 22 that it sued Star Exploration Inc. of Dallas and its principal, James T. Gurgainers, with conducting fraudulent oil and gas stock offerings.
The civil action in federal court alleges that Gurgainers raised more than $12 million from more than 160 investors nationwide from December 2005 to May 2008, the SEC said.
It said that the lawsuit specifically cited Gurgainers for seeking completion funds from investors for dry holes, failing to use investor funds as offering materials represented, and commingling investor funds from different ventures contrary to offering materials. It also alleged that Gurgainers used offering funds from one entity to pay other entities' expenses and diverted at least $700,000 for his personal use.
The court approved the SEC's request to appoint a receiver over the assets acquired with investors' funds, the federal securities regulator said. It said that it seeks a permanent injunction, disgorgement of ill-gotten gains (plus prejudgment interest) and a civil penalty from each defendant.
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