SEC Charges Recidivist and Four Others in Oil-And-Gas Offering Frauds


Litigation Release No. 25433/ July 1, 2022


Securities and Exchange Commission v. William Glen Baker, Michael Bowen, Cannon Operating Company LLC, North Texas Minerals LLC, and Chol Kim (a/k/a Brandon Kim), No. 3:22-cv-01415-S N.D. Tex. filed June 30, 2022)


The Securities and Exchange Commission charged William Glen Baker, recidivist Michael Bowen, Cannon Operating Company LLC, and Chol Kim for their roles in raising approximately $2.2 million from more than 140 investors through the fraudulent and unregistered sale of working interests in four Oklahoma wells.

According to the SEC's complaint, from January 2018 to September 2020, Baker and Bowen made numerous material misstatements and omissions while raising approximately $2.2 million for Cannon. Specifically, the complaint alleges that they misrepresented the performance of Cannon's earlier wells, failed to disclose prior criminal and regulatory actions, misled investors about the prospects for well production, and failed to disclose the use of investor funds to pay sales commissions. The complaint also alleges that instead of drilling and operating the wells, Baker and Bowen misused investor funds, and that Baker spent investor funds on shopping sprees, entertainment, and personal travel. The complaint further alleges that Baker, Bowen, and Kim acted as unregistered brokers when selling the working interests.

The SEC also charged Baker and his company North Texas Minerals LLC (NTX) with additional fraudulent conduct that occurred in June 2019, when Baker and NTX convinced one investor to open a self-directed IRA to buy a mineral interest owned by NTX. However, the complaint alleges NTX never owned the mineral interest, and that Baker misappropriated the investor's entire $126,000 investment for personal use.

The complaint, filed in federal district court in Dallas, charges Baker, Bowen, Cannon, and NTX with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further charges Baker, Bowen, and Kim with violating the broker registration provisions of Section 15(a) of the Exchange Act. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against all defendants; conduct-based injunctions against Baker, Bowen, and Kim; and officer-and-director bars against Baker and Bowen.

The SEC's investigation was conducted by Jeaneen Kappell and Ayesha Ahmed, and supervised by Jim Etri and Eric Werner. The SEC's litigation will be led by Janie Frank and supervised by B. David Fraser. The SEC appreciates the assistance of the Texas State Securities Board.


(END) Dow Jones Newswires

July 01, 2022 09:02 ET (13:02 GMT)

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