SEC complaint alleges fraud by Wellco Energy, employees

May 20, 2009
A Colorado Springs, Colo., company and its employees fraudulently misrepresented their oil and gas activities to potential investors, the US Securities and Exchange Commission charged in a civil complaint.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, May 20 -- A Colorado Springs, Colo., company and its employees fraudulently misrepresented their oil and gas activities to potential investors, the US Securities and Exchange Commission charged in a civil complaint.

The federal securities regulator named Wellco Energy LLC; its principal, Justin William Rifkin; and salesmen Patrick Looper, Richard Pacheco, and Justin White in a complaint filed May 14 in federal district court for the District of Colorado.

It said the defendants defrauded investors by misrepresenting the company's role as operator in oil and gas projects, Rifkin's production experience, and Wellco's intended use of investors' funds. Among other things, it said Wellco's offering materials misrepresented that offering proceeds would be used to fund drilling and completions, when in fact less than half of investors' funds went to that purpose.

Rifkin, Looper, Pacheco, and White allegedly solicited sales of these interests by cold-calling prospective investors nationwide, according to the SEC. Its complaint further alleged that Wellco's offerings were not registered with the commission, nor were Rifkin, Looper, Pacheco, and White associated with a registered broker-dealer.

The commission said the court issued a temporary restraining order, order of reference to a magistrate judge, and order setting hearing upon receiving the SEC's application. It said that among other things, the court's order froze Wellco and Rifkin's assets traceable to the alleged violations pending determination of the commission's motion for a preliminary injunction.

Contact Nick Snow at [email protected].