The U.S. Securities and Exchange Commission has charged Texas-based Mieka Energy Corporation and its president Daro Ray Blankenship with fraudulently selling stakes in gas drilling joint ventures.
The SEC said Friday that between September 2010 and October 2011 Blankenship and Mieka raised $4.4 million from 60 investors by selling interests in joint ventures established to drill and complete two gas wells.
Prosecutors claim Blankenship immediately spent all of the investment proceeds on unrelated expenses and projects, leaving now money to drill one of the promised wells or complete another well.
Mieka’s publicly traded parent company, Vadda Energy Corporation, has also been charged with fraud and reporting violations for “deceptively touting the success of Mieka’s investments,” the SEC said.
The SEC added that Blankenship also published “deceptive” investor update newsletters and “misleading” public findings from Vadda that he signed and certified.
Two Mieka salesmen, Robert William Myers, Jr. and Stephen Romo, have been charged with acting as unregistered brokers.
Romo and Myers allegedly aided in the scheme by marketing and selling joint venture interests in the gas well projects.
The two men received $190,000 in commissions from the sales without being registered as broker-dealers, the SEC said.
The SEC is seeking permanent injunctions against all defendants, as well as civil penalties, disgorgement of ill-gotten gains with prejudgment interest and a bar against Blankenship ever serving as an officer and director of a public company.