U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23758 / February 24, 2017
Securities and Exchange Commission v. Harrison Schumacher, et al., No. 15-civ-6388 (C.D. Cal. filed Aug. 21, 2015)
SEC Obtains Final Judgment Against Operator of California-Based Oil and Gas Offering Fraud and Relief Defendants
On February 21, 2017, the Honorable Dean D. Pregerson of the U.S. District Court for the Central District of California entered a final judgment against Harrison Schumacher and his two companies, Quantum Energy LLC and Quaneco LLC, and other related companies who were charged as relief defendants.
The SEC charged Harrison Schumacher, Quantum and Quaneco with defrauding more than 300 investors nationwide in purported investments in oil and gas projects. Harrison Schumacher raised approximately $12.4 million in five offerings that were not registered with the SEC. (The SEC later amended its complaint to allege a sixth unregistered, fraudulent offering.) He used these funds to cover undisclosed corporate business overhead expenses, Schumacher's compensation, and for personal expenses, all of which were contrary to representations he and his companies made to investors.
As part of the settlement, Harrison Schumacher, Quantum, and Quaneco each admitted wrongdoing.
The final judgment imposes on Harrison Schumacher permanent injunctions against future violations of the antifraud provisions of the federal securities laws, a conduct-based injunction, an officer and director and penny stock bar, and orders him to pay approximately $554,000 in disgorgement, prejudgment interest, and a penalty. The final judgment also orders Quantum, Quaneco, and the relief defendant companies to pay approximately $12.9 million in disgorgement and prejudgment interest, which will be deemed satisfied by transfer of funds to a potential court-ordered distribution, and transfer of all other assets to Quaneco which, after Schumacher divests himself, will be solely owned by investors.
On September 23, 2016, the court entered a final judgment against relief defendant Tara Schumacher and ordered her to pay $252,454.86 in disgorgement and prejudgment interest, but deemed that amount satisfied by her transfer of certain assets to the SEC.
The SEC did not seek a penalty against Paul Mysyk in recognition of his extensive cooperation in the SEC's investigation and litigation against Harrison Schumacher and his companies. Mysyk previously settled the SEC's charges by agreeing to entry of permanent injunctions and a penny stock bar but deferring consideration of a penalty.
The SEC's investigation was conducted by Nicholas A. Brady and supervised by Anita B. Bandy. The SEC's litigation was conducted by Charles Stodghill and Matthew F. Scarlato with assistance from Nicholas A. Brady. The litigation was supervised by Bridget Fitzpatrick.