SEC Fines Unregistered Rep for Role in $122 Million Oil & Gas Scheme

The U.S. Securities and Exchange Commission announced sanctions against David C. Underwood for his role in a $122 million oil and gas offering fraud.

According to the SEC, between at least October 2018 and October 2021, Heartland Group Ventures LLC, Heartland Production and Recovery LLC, and their principals fraudulently raised approximately $122 million from more than 700 investors across the country, purportedly for working on existing wells or drilling new wells in Texas through various unregistered offerings.

The SEC continued that, between February 2020 and December 2021, Underwood acted as an unregistered broker-dealer on behalf of Heartland and Heartland-affiliated entities in connection with two of its unregistered offerings. Underwood raised approximately $4.3 million for the offerings through the offer and sale of unregistered securities to 20 individual investors, both directly and indirectly through a feeder fund that he owned and controlled. Underwood provided advice to investors, assisted them in completing investment documents, and facilitated the transfer of their funds to Heartland. In return, Underwood received transaction-based compensation from Heartland, ranging between 5% and 8% of the investors’ investments.

As a result of his conduct, the SEC has barred Underwood from association with any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or nationally recognized statistical rating organization. Additionally, Underwood is barred from participating in any offering of a penny stock. After five years, Underwood will be allowed to apply for reentry.

Furthermore, Underwood has been ordered to pay disgorgement of $145,972, prejudgment interest of $25,716, and civil penalties of $50,000.

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