Texas Oilman Defrauded Investors With Fake Reports, SEC Says

A Dallas, Texas, man and three companies he controlled allegedly defrauded investors of approximately $10 million by selling fraudulent oil-and-gas investments.

Matthew S. Hilliard, 46, and his companies offered and sold interests in six oil-and-gas joint-ventures to 117 investors nationwide in unregistered securities offerings, the Securities and Exchange Commission alleged in a complaint filed in Texas federal court. The offenses took place from July 2015 to June 2019, the complaint said.

The complaint alleges that Hilliard prepared and distributed documents to investors containing untrue and misleading statements about the Hilliard Companies' past performance, their revenue and production projections, and the use of offering proceeds.

Hilliard prepared a "confidential information memorandum" on each site for potential investors, the complaint said. Many of those CIMs included false or misleading information, the SEC said.

"Hilliard prepared and disseminated to investors a written executive summary containing untrue and misleading statements," the complaint said of a Kansas site report. "Hilliard overstated the revenue projections in the executive summary, far exceeding the projections he received from a third-party geologist who prepared a report on the ... well prospects. Hilliard’s projections were untrue because they had no reasonable basis."

SEC: Inflated Projections

Revenue projections were inflated by as little as 22% and as much as 489%, the complaint said.

Hilliard also allegedly oversaw efforts to cold-call prospective investors across the country, and provided the sales staff written information about the ventures for use in the calls.

According to the complaint, Hilliard improperly commingled investor funds in other accounts he controlled and used the money to pay unrelated expenses, including personal spending at restaurants, retail stores, gas stations, grocery stores, movie theaters, a liquor store, and cable-television and cell-phone providers.

Without admitting or denying the charges, the defendants agreed to be enjoined from violating the charged provisions, to disgorge ill-gotten gains totaling $4,806,203, plus prejudgment interest totaling $310,760, and each to pay a civil penalty of $189,427. The settlements are subject to court approval.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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