Home News SEC Charges Two Oil and Gas Execs with Defrauding Retail Investors

SEC Charges Two Oil and Gas Execs with Defrauding Retail Investors

The Securities and Exchange Commission has charged Pennsylvania resident William Milles and Canadian resident Donald Lutzko with running an oil and gas offering fraud and related Ponzi scheme targeting retail investors.

The Securities and Exchange Commission has charged Pennsylvania resident William Milles and Canadian resident Donald Lutzko with running an oil and gas offering fraud and related Ponzi scheme targeting retail investors.

According to the SEC’s complaint, from July 2014 to July 2016, Milles and Lutzko raised at least $3.9 million from approximately 70 investors by offering and selling interests in five oil and gas projects managed by Capital Energy Group LLC, a company they founded and controlled.

The complaint alleges that Milles and Lutzko guaranteed investors returns of 227 percent to 363 percent and grossly overstated each project’s past and current oil and gas production. In reality, most of the wells failed to produce any oil or gas and none ever produced any revenue, the SEC claims.

Milles and Lutzko allegedly used investor funds to make Ponzi-style payments to investors, pay personal credit card bills and rent, and transfer funds to family members and related companies.

According to the complaint, of the at least $3.9 million received from investors, the pair allegedly spent $817,000 to make Ponzi payments; roughly $1.2 million to pay undisclosed commissions to contract salesmen; and $1 million for personal expenses, personal cash withdrawals, related-party payments, and to fund their own salaries.

The SEC’s complaint, filed in the United States District Court for the Western District of Texas, Austin Division, charges Milles and Lutzko with violating the antifraud provisions of federal securities laws. The complaint seeks permanent injunctions, disgorgement plus prejudgment interest, and civil penalties.

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