The U.S. Securities and Exchange Commission (SEC) recently announced that it has agreed to a settlement with Christopher A. Faulkner, the self-proclaimed “Frack Master,” in connection with his wide-ranging securities-fraud scheme that raised over $80 million from hundreds of investors nationwide.
At the same time, Faulkner has entered into a plea agreement relating to the same misconduct under which he will serve 12 years in federal prison for securities fraud, money laundering and tax evasion.
According to the SEC’s complaint, Faulkner systemically deceived investors across the country by disseminating false and misleading offering materials, misappropriating millions of dollars of investor funds, and manipulating the stock of Breitling Energy, a publicly traded company Faulkner controlled.
Faulkner started the scheme in 2011 through privately held Breitling Oil and Gas, which offered and sold “turnkey” oil-and-gas working interests to investors using a team of commissioned cold-callers.
Faulkner raised more than $80 million and then he misappropriated roughly $23.8 million to fund his lavish personal lifestyle. The SEC also charged 11 other individuals and entities for their roles in the misconduct, reaching settlements with a majority of them.
Under the agreed final judgment, which is subject to court approval, Faulkner would be ordered to disgorge $23.8 million; permanently enjoined from violating various provisions of the federal securities laws and from participating in any unregistered securities transactions; and barred from serving as an officer or director of any SEC-reporting company and from participating in any offering of a penny stock.
Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office, commented:
Faulkner first proclaimed himself the ‘Frack Master’ in order to deceive investors about his expertise and steal millions of dollars to fund his lifestyle, and the SEC put an early end to his second effort to defraud investors in a real estate scheme. Today’s serious civil and criminal sanctions serve as a warning to anyone who intends to target retail investors.