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SEC Sues Fund Manager and Investment Adviser for $30 Million Mineral Rights Fraud

The Securities and Exchange Commission has charged Christopher Bentley and his company, Bellatorum Resources LLC, for engaging in alleged "fraudulent acts" that resulted in an almost complete loss of more than $30 million invested in three private placement funds.

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The Securities and Exchange Commission has charged Christopher Bentley and his company, Bellatorum Resources LLC, for engaging in alleged “fraudulent acts” that resulted in an almost complete loss of more than $30 million invested in three private placement funds: Bellatorum Land & Minerals LP; Bellatorum Phalanx Investments LP; and Sentinel Energy Investments LP.

According to the SEC, Bentley raised $31.5 million from investors to purchase and sell mineral rights through the funds, but he reportedly used his control over Bellatorum, the funds’ investment adviser, to secretly siphon money from the funds while concealing their poor results.

The complaint alleges that between approximately February 2019 and April 2021, Bentley perpetrated his scheme by repeatedly manipulating the funds’ transactions, including purchasing inflated mineral rights from an affiliated entity that he secretly controlled, and purchasing mineral rights from third parties at inflated prices and then misappropriating the extra proceeds for himself and Bellatorum.

He was also accused of manipulating sales transactions to generate fake profits and trigger distributions to Bellatorum and altering documents to deceive two of the funds’ auditors.

The SEC claims that Bentley kept his alleged scheme afloat by secretly pledging most of the funds’ mineral rights as collateral for an improper loan. When he allegedly failed to repay the loan, the lender took most of the funds’ investments, which triggered massive losses for the funds and their investors.

The SEC’s complaint, filed in U.S. District Court for the Southern District of Texas, charges Bentley and Bellatorum with violating the antifraud provisions of various federal securities laws.

To resolve the SEC’s charges, Bentley and Bellatorum agreed to the entry of a judgment that permanently enjoins them from future violations of these provisions of the federal securities laws, bars Bentley from serving as an officer or director of a public company, and orders them to pay disgorgement, prejudgment interest, and civil penalties in amounts that will be determined by the court. The partial settlements are subject to court approval.

In a parallel action, the U.S. Attorney’s Office for the Southern District of Texas filed related criminal charges against Bentley.

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