In the Matter of Houston American Energy Corp., et al.
Admin. Proc. File No. 3-16000

On April 23, 2015, the Commission issued two separate orders (collectively, the “Orders”) that settled cease-and-desist proceedings that were instituted on August 4, 2014, against Houston American Energy Corp. (“Houston American”), John F. Terwilliger (“Terwilliger”), Undiscovered Equities, Inc. (“Undiscovered Equities”), and Kevin T. McKnight (“McKnight”) (collectively, the “Respondents”). In the Orders, the Commission found that, between November 2009 and April 2010, Houston American, Terwilliger and their agents, promoted Houston American’s interest in a Columbian oil and gas production area known as “CPO-4 block.” Houston American and Terwilliger made a series of fraudulent statements and omissions that materially exaggerated CPO-4 block’s value to Houston American and downplayed any associated risks. In doing so, Houston American entered into an agreement with Undiscovered Equities, a marketing firm owned and operated by McKnight that specialized in small-cap stock promotion, to post on its website and distribute to its subscribers a series of promotion articles about Houston American and its investment in CPO-4 block. Undiscovered Equities disclosed that it was compensated by Houston American, but did not disclose the amount of compensation it received. The Commission ordered the Respondents to pay a total of $572,500.00 in civil money penalties. See the Commission’s orders: Release Nos. 33-9756 and 33-9757.

The Respondents have paid a total of $572,500.00.

On July 16, 2018, the Commission issued an order establishing a fair fund (the “Fair Fund”), pursuant to Section 308(a) of the Sarbanes-Oxley Act, as amended, so the penalties, along with the disgorgement and prejudgment interest, can be distributed to harmed investors. See the Commission’s Order: Release No. 83636.

On February 25, 2019, the Commission issued an order appointing Miller Kaplan Arase LLP as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-85185.

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