U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17698 / August 23, 2002
SECURITIES AND EXCHANGE COMMISSION v. FIDELITY PETROLEUM CORP. AND ROBERT R. McCLANAHAN, Civil Action No. 3-02 cv-1796L (N.D. Tex.)
SEC CHARGES TEXAS COMPANY AND CEO WITH FRAUD IN $4 MILLION OIL AND GAS WELL TELEMARKETING SCHEME
The Securities and Exchange Commission ("Commission") announced today the filing of charges against Fidelity Petroleum Corp. and Robert R. McClanahan for defrauding over 300 investors nationwide of more than $4 million.
In its complaint, the Commission accuses Fidelity and McClanahan, 65, a McKinney, Texas resident, of fraudulently selling interests in oil and gas wells through cold-call telemarketing. The Commission alleges that Fidelity's sales agents told investors that they would recoup their initial investment within the first five to fifteen months. Furthermore, agents, as directed by McClanahan, falsely represented that an investment in Fidelity wells would yield a yearly return of between 65% and 113% of the original investment, when they had no reasonable basis for making such projections. Contrary to the defendants' representations, the yield from an investment in Fidelity's commercially productive wells never exceeded 20% and was, on some wells, below six percent.
In its lawsuit, filed in United States District Court for the Northern District of Texas, the Commission alleges that Fidelity and McClanahan violated the registration and antifraud provisions of the federal securities laws, specifically Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5, and Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, 15 U.S.C. §§ 77e(a), 77e(c), 77q(a). The Commission seeks an injunction against Fidelity and McClanahan, forbidding them from committing future violations of the registration and antifraud provisions. The Commission also asked the Court to require Fidelity to return the funds it wrongfully received, plus interest, and to require McClanahan to pay a civil penalty.