Four Texas businessmen have been charged with operating a nearly $12 million fraud scheme that was supposed to fund oil and gas operations in Kentucky, but which the Securities and Exchange Commission said was actually used for private gain and recreation, including alcohol, drugs and strippers.
In a Feb. 28 filing, the SEC alleged that AmeraTex Energy Inc., Lewis Oil Corp. and Lewis Oil Co. — all led by CEO Thomas Lewis — perpetrated the fraud. The agency accused Lewis, former AmeraTex President William Fort, accountant Damon Fox and compliance coordinator Brian Bull of running the scheme. The SEC said the four made "numerous misleading statements to over 150 investors" about their plans for drilling for oil in Kentucky. The men raised $11.7 million through cold calls. The drilling operations never appeared.
"Defendants made material misrepresentations and omissions and engaged in a continuous scheme to misappropriate investor monies to enrich themselves and others, including Lewis, who personally received almost $2 million of investor funds," the SEC said.
The federal allegations included details on how the money was used.
"[I]n 2013, Lewis divorced from his wife, leading to an increased use of alcohol and drugs and lavish purchases, including frequent visits to strip clubs and similar services, all furnished by investor monies," the SEC said.
In the meantime, AmeraTex, under the oversight of the four alleged conspirators, made up materials saying that the areas where the companies would drill had been highly profitable in the past. Those statements, the SEC said, were shown to be false through an examination of public records.
"This map contained production data for wells that AmeraTex claimed were located near the prospect wells in Cumberland County, Kentucky. However, this information was false. The production data for four of the eleven comparison wells was either inflated or falsified to conceal dry or noneconomic wells," the agency said.
AmeraTex, Lewis Oil Corp., Lewis Oil Co., Lewis, Fort and Fox have been charged with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Bull has been charged with violations of the Securities Act and aiding and abetting the three companies in their violations.
