Taking frack

27 June 2016 By Kevin Allison

The U.S. SEC says Chris Faulkner inflated his shale-oil company’s prospects, then blew $80 mln of investors’ money on dodgy expenses. Hard times tend to reveal bad boom-era behavior. The oil patch’s lax governance makes it an obvious place for regulators to hunt for culprits.

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The U.S. Securities and Exchange Commission on June 24 accused oil-sector boss Chris Faulkner of misleading investors about his companies’ financial prospects, then spending shareholders’ money on lavish meals, chartered planes, jewelry, strip clubs and female escort services.

Faulkner, the chief executive of Breitling Energy, sold investments in more than 20 oil and gas properties in several states, according to the SEC. The lawsuit alleges that Faulkner, who also co-founded or controlled a handful of related firms, exaggerated the financial potential of his projects and booked fictional drilling costs. It said Faulkner used investors’ money to pay for millions of dollars of personal expenses.

After investors had plowed funds into various other companies Faulkner created, the proceeds were illegally shifted back through Breitling, the SEC said. Some went to a friend and to Faulkner’s ex-wife, the SEC said, while Faulkner also allegedly used funds to covertly trade in Breitling’s shares, creating the false appearance of heavy investor interest.

Larry Friedman, a lawyer for Breitling and Faulkner, said the SEC’s allegations were “inaccurate and untrue.”

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