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The U.S. Security and Exchange Commission (SEC) filed charges earlier this month against a Las Vegas-based company and its CEO for allegedly running a “deceptive” crowdfunding scheme to solicit investments for overriding royalty interests in undeveloped oil and gas wells.

The SEC filed charges against Las Vegas-based Ascenergy LLC and its CEO, Joseph “Joey” Gabaldon of Southern California, on October 13 for running a “deceptive scheme” on crowdfunding websites since at least 2014 that earned the company $5 million from about 90 investors.

Ascenergy has already spent at least $1.2 million of the proceeds, but only a few thousand dollars appear to have been used for oil and gas-related expenses, the SEC claims.

The commission alleges that a “significant part” of the $1.2 million was spent on payments to Gabaldon, companies he controls, or for expenses unrelated to the oil and gas business.

The SEC also claims that immediately after it subpoenaed Gabaldon, Ascenergy transferred $3.8 million, or virtually all of the remaining offering proceeds, to Pyckl LLC, a San Jose, California company that has “no apparent connection to the oil and gas business.”

The SEC contends that Ascenergy also made “multiple, material misrepresentations” about the company and the nature of the offering.

“Ascenergy allegedly falsely holds itself out as a credible energy company, and it presents the investment as a novel and extremely low-risk opportunity that will essentially guarantee investors out-sized returns,” the SEC said.

The commission’s complaint also claims that Ascenergy was “at best” offering a high-risk investment in undeveloped and unproven conventional oil and gas wells.

At the commission’s request, the U.S. District Court for the District of Nevada has entered a temporary restraining order halting the offering, as well as an order freezing the defendants’ assets and the assets of relief defendants Alanah Energy and Pyckl LLC.

The SEC is seeking preliminary and permanent injunctions, disgorgement of ill-gotten gains, prejudgment interest, civil penalties, and other ancillary relief against both defendants.

The commission is also seeking the return of investor funds from the relief defendants.

A trial date has not been set yet.

The case is Securities and Exchange Commission v. Ascenergy LLC et al., Civil Action No. 2:15-cv-01974-GMN-PAL (D. Nev., October 13, 2015).