SEC Sues Fund Manager and Investment Adviser for Multi-Million Dollar Fraud
Litigation Release No. 25472 / August 17, 2022
Securities and Exchange Commission v. Christopher R. Bentley and Bellatorum Resources, LLC, No. 4:22-cv-02772 (S.D. Tex. filed August 16, 2022)
The Securities and Exchange Commission charged Christopher R. Bentley of Tomball, Texas and his company, Bellatorum Resources, LLC ("Bellatorum"), for engaging in myriad fraudulent acts that resulted in an almost complete loss of over $30 million invested in three private funds: Bellatorum Land & Minerals, LP; Bellatorum Phalanx Investments, LP; and Sentinel Energy Investments, LP.
According to the SEC's complaint, Bentley raised $31.5 million from investors to purchase and sell mineral rights through the funds, but Bentley used his control over Bellatorum, the funds' investment adviser, to secretly siphon money from the funds while concealing their poor results. The complaint alleges that between approximately February 2019 and April 2021, Bentley perpetrated his scheme by repeatedly manipulating the funds' transactions, including: (1) purchasing inflated mineral rights from an affiliated entity that he secretly controlled; (2) purchasing mineral rights from third parties at inflated prices and then misappropriating the extra proceeds for himself and Bellatorum; (3) manipulating sales transactions to generate fake profits and trigger distributions to Bellatorum; and (4) altering documents to deceive two of the funds' auditors. Bentley allegedly kept his scheme afloat by secretly pledging most of the funds' mineral rights as collateral for an improper loan. When Bentley allegedly failed to repay the loan, the lender took most of the funds' investments, which triggered massive losses for the funds and their investors.
The SEC's complaint, filed in U.S. District Court for the Southern District of Texas, charges Bentley and Bellatorum with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
To resolve the SEC's charges, Bentley and Bellatorum agreed to the entry of a judgment that permanently enjoins them from future violations of these provisions of the federal securities laws, bars Bentley from serving as an officer or director of a public company, and orders them to pay disgorgement, prejudgment interest, and civil penalties in amounts that will be determined by the court upon future motion of the SEC. The partial settlements with Bentley and Bellatorum are subject to court approval.
In a parallel action, the U.S. Attorney's Office for the Southern District of Texas filed related criminal charges against Bentley.
The SEC's continuing investigation is being conducted by Christopher W. Ahart and Ayesha Ahmed, and supervised by Jim Etri and Eric Werner, of the SEC's Fort Worth Regional Office. The SEC's litigation will be led by Jennifer Reece and supervised by B. David Fraser. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of Texas and the Federal Bureau of Investigation.