Fracking Expert/Breitling sued by SEC for spending investor money on strippers
Bloomberg) - Calling himself the “frack master,” Texas businessman Chris Faulkner charmed hundreds of investors and major media companies into believing he had extensive experience in energy markets.
It turns out he had none and that at least $30 million he raised was spent on strippers, escorts, lavish vacations and other personal expenses, according to Wall Street’s top cop.
Faulkner’s alleged transgressions include using money from his Brietling Energy Corp. to pay off an American Express card that he referred to as his “whore card,” the U.S. Securities and Exchange Commission said in a complaint filed Friday. Faulkner and seven others, including Breitling chief operating officer Jeremy Wagers, defrauded investors out of about $80 million over the course of the past five years, the SEC said.
Faulkner, Breitling’s founder and chief executive officer, and other executives told investors their money would be used to drill oil wells, but instead spent it on cars, jewelry and gentleman’s clubs, according to the SEC. The regulator suspended trading in Breitling’s shares.
Public Profile
Part of his shtick was a carefully managed profile in which he paid a public relations firm to promote him for television interviews. It worked, as he appeared on CNBC, CNN, Fox Business News and hosted a weekly radio show in Dallas, according to the SEC complaint. He has also been interviewed on Bloomberg Television.
“Chris Faulkner orchestrated a sophisticated and multilayered scheme using BECC and its affiliated entities as a conduit to access millions of investor dollars,” said Shamoil T. Shipchandler, head of SEC’s Fort Worth office. “The financing for Faulkner’s opulent lifestyle came directly at the expense of unwitting investors across the country.”
Breitling investors are happy and got the returns they expected, said Larry Friedman, an attorney who represents Faulkner and the company.
“These allegations are not true or accurate,” Friedman said. “The personal accusations about Faulkner are out of place and uncalled for. Entertaining is part of raising investor capital from high net worth individuals.”
To contact the reporters on this story: Matt Robinson in New York at mrobinson55@bloomberg.net ;Asjylyn Loder in New York at aloder@bloomberg.net To contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net Gregory Mott
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Replies to This Discussion
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Permalink Reply by Paul Butler on
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The U.S. Securities and Exchange Commission on Thursday charged Dallas-based Breitling Energy Corp. and its CEO, “Frack Master” Chris Faulkner, of fraudulently spending tens of millions of dollars of investors’ money on lavish meals, expensive cars, strippers and escorts.
The SEC alleged that Faulkner masterminded an elaborate $80 million oil and gas fraud that included Breitling, three other affiliated energy companies – Crude Energy, Patriot Energy and Breitling Oil and Gas – and eight corporate executives, including Breitling Energy General Counsel Jeremy Wagers, who previously practiced law at Houston-based Vinson & Elkins and Skadden, Arps, Slate, Meagher & Flom in Houston.
Faulkner, a frequent guest on CNBC, Fox Business News and CNN, , disseminated false and misleading offering materials, misappropriated tens of millions of dollars of investor funds and attempted to manipulate Breitling Energy’s stock, the SEC charged in a 63-page complaint filed Friday in federal court in Dallas. Faulkner was dubbed “frack master” by the media because of his advocacy of the industry, according to Breitling Energy’s web site.
“Since at least 2011, Chris Faulkner has orchestrated a massive, multi-pronged, and fraudulent scheme that has defrauded hundreds of investors across the country out of approximately $80 million invested in oil-and-gas investments sold by companies he owns and controls,” the SEC charged. “Faulkner has misappropriated at least $30 million in investor funds to maintain a lifestyle of decadence and debauchery.”
The SEC also charged Breitling Oil and Gas, and its co-owners Parker Hallam and Michael Miller, Breitling Energy General Counsel Jeremy Wagers and Breitling Energy chief financial officer Rick Hoover with assisting Faulkner in the alleged fraud. The federal agency suspended trading in Breitling Energy securities for 10 business days.
Larry Friedman, a Dallas lawyer representing Breitling and Faulkner, said his clients “denies emphatically” the charges brought by the SEC.
“This reads more like a Grisham novel and less like an SEC complaint,” Friedman said. “It reads like a vendetta. Lots of personal attacks that are uncalled for, especially against a company and an executive that has an otherwise clean record.”
The company has received no complaints from investors, he said, and that any other complaints are coming from competitors in the oil and gas sector who seek the same investment money that Breitling has. Friedman also said that the SEC is unfairly targeting Breitling General Counsel Jeremy Wagers, who he describes as “a good person and a good lawyer.”
Crude Energy and Hallam are being defended by Karen Cook. Richard Roper of Thompson & Knight is representing Michael Miller. They did not respond to requests for comment.
SEC Regional Director Shamoil Shipchandler alleged in a statement that Faulkner started the scheme five years ago when he developed offering materials for potential investors in Breitling Oil and Gas that contained false statements and omissions about Faulkner’s experience, false estimates for drilling costs and false statements about how investor funds would be used.
The offering materials included reports by licensed geologist Joseph Simo that included baseless production projections and failed to disclose his affiliation with BOG, according to the SEC complaint. Simo, who was also charged in the scheme, could not be reached for comment.
The SEC alleges that Faulkner established Crude and Patriot to deceive investors through offerings similar to those conducted by BOG. BOG, Crude and Patriot raised more than $80 million from investors as part of these deceptive offerings, the agency claimed.
“Chris Faulkner allegedly orchestrated a sophisticated and multi-layered scheme using BECC and its affiliated entities as a conduit to access millions of investor dollars,” Shipchandler said. “The financing for Faulkner’s opulent lifestyle came directly at the expense of unwitting investors across the country.”
The SEC also alleges that Faulkner, Wagers and Hoover misrepresented Breitling’s operations in public reports, including statements about the company’s financial performance and its relationship to Crude and Patriot. The agency also accuses Faulkner of engaging in a scheme to manipulate the price of BECC’s stock by placing trades at the end of the day to “mark the close” of the stock.
The SEC also acknowledged that three former officials with Breitling are cooperating with the investigation.
For a longer version of this article,please visit TexasLawbook.net.
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Permalink Reply by Paul Butler on
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This article on the Frackmaster is almost unbelievable---that such a person could exist:
https://www.texasobserver.org/the-lite-guv-and-the-frack-master/
How many other Frackmasters are out there?
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Permalink Reply by Paul Butler on
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Really?
Why is it being reported as news across the country?
Are you a Chris Faulkner type?
I get that vibe.
A little research shows Faulkner and his ilk are the kings of all Hillary and Obama haters--they are liars Faulkner welters to all who will lesson.Isn't that rich?A self righteous, know it all-- who really knows nothing, ripping off red neck republicans while posing as one of them!You got to love it!!
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Permalink Reply by Paul Butler on
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I'm pro industry.
I'm anti fraud, anti know it all dunces, pretending to be successful oil men, pretending to understand the oil and gas business, pretending to understand business period.
We didn't miss anything.
The records of the bankrupts are now in third party hands, i.e.. of people without larceny in their hearts. The scandal and fraud hasn't even begun to be exposed, but it will.
The securities fraud and shareholder derivative suits will arrive around the end of the year in an avalanche.
People like you Jay are about to get much more uncomfortable. You won't be able to hide or gag the discussion. What happened the last 10 years--it's all going to come out.
That's a promise.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Paul, your constant negativity is getting tiresome and your tendency toward personal insult conflicts with site rules. If you can't dial it back I will get Keith involved in monitoring your posts.
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Permalink Reply by Paul Butler on
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I won't post anymore.
I've said what I needed to say.
My final comment is-- Skip you're a mirror image of Chris Faulkner and one of the biggest frauds I've ever seen in the industry.
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