U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20377 / November 30, 2007
Securities and Exchange Commission v. T-Bar Resources, LLC and Tommy Eugene Barber, Civil Action No. 3:07CV1994B, United States District Court; Northern District of Texas; Dallas Division
Court Grants Preliminary Relief Against Texas Oil and Gas Promoter, and Appoints a Receiver on Behalf of Investors
On November 30, 2007, the Securities and Exchange Commission ("Commission") filed a civil action in United States District Court in Dallas, Texas against Dallas-based T-Bar Resources, LLC ("T-Bar") and its principal, Tommy Eugene Barber. In its complaint, the Commission alleges that the defendants engaged in fraudulent conduct in connection with three oil and gas securities offerings - Arrowhead, Sierra and Sidnee. According to the complaint, between May 2006 and November 2007, Barber raised through the offerings almost $14 million from over 300 investors nationwide.
On the day the Commission filed its action, the District Court granted the Commission's request for preliminary relief. Specifically, the Court entered, as against each defendant and with each defendant's consent, a preliminary injunction, an asset freeze, an accounting, an order prohibiting the destruction of documents and expediting discovery, and an order appointing a receiver to marshal and conserve T-Bar and Barber's assets for the benefit of investors.
Included in the Commission's complaint are the following allegations: that, although T-Bar and Barber represented to investors that the funds raised in each offering would be held in escrow until 80 percent of the total offering amount was raised, T-Bar and Barber immediately diverted, and to a large extent misappropriated, the funds; that Barber and T-Bar told the Arrowhead investors that they were raising $4.125 million for the project, when, in fact, they raised nearly $9.2 million, significantly diluting the investors' interests; that, contrary to representations to investors that the Sierra and Sidnee projects had in place lease and drilling agreements pursuant to which drilling had already begun, in fact, no drilling had begun, there was no lease or drilling agreement in place, and the proceeds that should have been earmarked for the leases and drilling had been diverted by T-Bar and Barber; and that T-Bar and Barber enticed investors to invest in the Sierra and Sidnee projects by representing that the Arrowhead wells are producing, in the aggregate, over 450 barrels of oil per day, when, in reality, the wells are producing just 10 to 55 barrels per day.
In its complaint, the Commission alleges that each of the defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In its continuing action, The Commission is seeking against each of the defendants a permanent injunction, disgorgement plus prejudgment interest, and a civil money penalty.