U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19924 / November 22, 2006
SEC v. Mercer Capital, Inc, et al., Case No. 06-81080-Middlebrooks/Johnson (S.D. Fla., filed November 21, 2006)
SEC Brings Emergency Action to Halt an Ongoing Fraud Involving Oil and Gas Limited Partnerships and a Former Commodities Broker-Dealer Seeking Temporary Restraining Orders and Asset Freezes
The Securities and Exchange Commission ("SEC") announced today that on November 21, 2006, it filed an emergency civil action to halt an ongoing offering fraud involving the sale of oil and gas limited partnerships interests and investments in a private placement of a former commodities broker-dealer, Mercer Capital, Inc., by their principal Robert L. Flickinger II and sales agents he directed. The action was filed against Mercer Capital, its subsidiary Mercer Capital Management, Inc., two purported oil and gas companies Tri-State Energy Group I, Ltd., Tri-State Energy Group II, Ltd. (collectively "the Tri-State Companies"), their general partner, Tri-State Energy Group, LLC, and Flickinger.
Acting on the Commission's request for emergency relief, on November 21, 2006, Judge Donald M. Middlebrooks of the United States District Court for the Southern District of Florida, issued temporary restraining orders, asset freezes and other relief against the defendants. The Court also appointed Daniel S. Newman, Esq. as Receiver over all of the entities named in the Commission's Complaint.
The Commission's complaint alleges that from at least 2004 to the present, Flickinger and sales agents he directed have raised at least $2 million from investors through three securities offerings, two in the Tri-State Companies and another in Mercer Capital. According to the complaint, the Tri-State Companies, Mercer Capital Management, and Flickinger have falsely stated that the Tri-State Companies have business relationships and contracts with well-established oil and gas companies. These defendants have also falsely portrayed the prior investment performance and rates of return of those unrelated oil and gas companies as the Tri-State Companies' own.
In connection with the Mercer Capital offering, Mercer Capital and Flickinger have grossly overstated Mercer Capital's earnings and assets to potential investors, made baseless price projections for Mercer Capital's stock in a subsequent proposed resale of approximately one million of its shares, and have omitted disclosing they have an extensive disciplinary history with regulatory agencies. Finally, in attempting to trade Mercer Capital's stock publicly on the Over-the-Counter Bulletin Board, Flickinger and Mercer Capital have filed fraudulent registration and amended registration statements with the Commission that misrepresented and omitted material facts regarding Mercer Capital's regulatory history and registration status.
The Commission's complaint alleges that defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. In addition to the emergency relief obtained on November 21, 2006, the Commission's civil action is seeking, among other things, preliminary and permanent injunctions, an order that the defendants disgorge all ill-gotten gains, with pre-judgment interest, an order imposing civil money penalties, and an officer and director bar against Flickinger.
The Commission acknowledges the assistance in this case of the National Futures Association and the Pennsylvania Securities Commission.