SEC Charges Former Energy Company President with Acting as Figurehead for $15 Million Fraud
The Securities and Exchange Commission has charged Robert William Dorrance, the former president of a Tennessee-based energy company, with concealing from investors that two convicted felons actually ran the company and led a $15 million oil investment scheme affecting more than 150 investors.
The Securities and Exchange Commission has charged Robert William Dorrance, the former president of Tennessee-based energy company Southern Energy Group, with concealing from investors that two convicted felons ran the company and led a $15 million oil investment scheme affecting more than 150 investors.
Dorrance is accused of aiding and abetting David Greenlee and David Stewart Jr., two convicted felons previously charged with orchestrating the scheme and fraudulently selling interests in various limited partnerships and joint ventures that were supposedly created to extract and sell oil from existing wells in Kansas, Oklahoma and Texas. Investors were promised returns ranging from 15 to 55 percent or more per year, “for decades.”
Instead of using investor funds as intended, they allegedly steered most of the money into advertising, sales commissions, or misappropriated the money for their personal use.
According to the complaint, Greenlee and Stewart operated their scheme through two Tennessee corporations, Southern Energy Group, which is now administratively dissolved, and Black Gold Resources, which later changed its name to Tennstar Energy. The pair allegedly installed figurehead executives who pretended to run the companies so that they could conceal their own involvement.
The SEC claims that Dorrance, the figurehead for Southern Energy Group who received significant compensation for his role, knew that he was falsely portrayed to investors as both running the company and having 40 years experience in the oil industry.
With no background in the oil industry, his main work experience was as a former stereo salesman, and he largely performed clerical and administrative work at the company. Dorrance is the uncle of Greenlee’s spouse and was willing to take the job, the complaint noted.
Dorrance is also accused of transferring investor funds at the direction of Greenlee and Stewart from company accounts to accounts that were under the pair’s control.
Dorrance agreed to be permanently prohibited from violating the antifraud provisions of certain sections of the Securities Act of 1933 and the Securities Exchange Act of 1934, and must pay $101,075 in disgorgement plus interest, and $42,500 in civil penalties, for a total of $143,575.
