Securities and Exchange Commission
Litigation Release No. 17990 / February 20, 2003
SEC v. La Mesa Geoscience, Inc., La Mesa Partners, L.C., La Mesa Group, L.P. and Kenneth Hooper , (U.S.D.C., Northern District of Texas, Dallas Division, Civil Action No. 3:03-CV-0360-H)
On February 19, 2003, the Commission filed a civil action against La Mesa Geoscience, Inc., La Mesa Partners, LC and La Mesa Group, LP (collectively "La Mesa") and the president of all three entities, Kenneth Hooper. In its complaint, the Commission alleged that Hooper and La Mesa engaged in fraud in connection with the unregistered offering of securities in the form of limited and general partnerships, undivided fractional interests in oil and gas leases, and debentures. The Commission's complaint also alleged that Hooper, a former registered representative, engaged in unregistered brokerage activities. Simultaneously with the filing of its action, the Commission announced that Hooper and La Mesa, without admitting or denying the Commission's charges, consented to the entry of a permanent injunction enjoining them from further violating the securities laws and that Hooper agreed to pay a $40,000 civil penalty.
According to the Commission's Complaint, La Mesa and Hooper committed fraud by failing to disclose material risks associated with the La Mesa securities; by making false claims to investors that La Mesa had enjoyed great success with its previous oil and gas ventures; and by falsely representing to investors that La Mesa had secured access to a $15 billion pension fund with a standing $300 million line of credit to pursue oil and gas prospects.
The Commission's Complaint alleges that the defendants violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10b of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Compliant also alleges that Hooper violated Section 15(a) of the Exchange Act through his unregistered brokerage activities.
Hooper has simultaneously submitted an offer of settlement in which he consents to the entry of an administrative order by the Commission, barring him from association with any broker or dealer with the right to reapply for association in two years. Jason LeDay, a vice-president at La Mesa, has consented to the Commission's entry of an order that he cease and desist from violating the securities registration and broker dealer registration provisions of the federal securities laws, suspending him from association with any broker or dealer for a period of 12 months, and requiring him to pay a $10,000 civil penalty.