SEC v. Premco Western, Inc. and Rodney Scott Ratheal, Case No. 2:12-cv-01120-BSJ (D. Utah). On December 10, 2012, the SEC announced it filed a settled fraud action against Premco Western, Inc., an oil and gas company that drills on land leased by the Bureau of Land Management, and its principal Rodney Ratheal. The SEC alleges that Premco, through Ratheal, mislead investors by telling them that a company geologist and a geologist at the U.S. Geological Survey discovered a “super giant” oil and gas field under land Premco leased which would yield five to ten million barrels of oil. After drilling started, Ratheal told investors that the drilling was successful. In reality, however, the drilling had not produced any oil. The SEC also alleges that Ratheal misled investors by telling them that their profits would be used to drill and that only 10% of the profits would pay for his living expenses. However, Ratheal used almost $3 million or 70% of the proceeds for living expenses. Premco and Ratheal have settled by agreeing to the entry of a judgment enjoining them from future violations of Section 5(a), 5(c), and 17(a)(2) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder. The judgment will also order them (1) to disgorge $2,927,037.68 and (2) to pay prejudgment interest in the amount of $4,445,221.48 for a total amount of $7,372,259.16 and (3) to pay a civil penalty but not imposing the disgorgement, prejudgment interest, and civil penalty amounts based on their demonstrated inability to pay any money.
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