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U.S. Securities and Exchange Commission

United States Securities and Exchange Commission

LITIGATION RELEASE NO. 18032 / March 12, 2003

UNITED STATES v. ROBERT W. SCHLOTTERBECK, Criminal Action No. 3:03CR00001 (N.D. Tex., Dallas Division)

In January 2003, a federal grand jury in the U.S. District Court for the Northern District of Texas (Dallas Division) returned an indictment against Robert W. Schlotterbeck of Comanche, Texas, charging Schlotterbeck with two counts of securities fraud. The indictment was unsealed on March 7, 2003 and, simultaneously, Schlotterbeck was taken into custody.

The indictment charges that Schlotterbeck, the managing partner of C-Tech, LLP, committed fraud in connection with the offer and sale of securities in two oil and gas drilling projects in Beeville, TX: the Schlotterbeck-Adams # 1 (the Theil-Wilcox Development Prospect) and the Pouliot Heirs No. 2 (the Highland Development Project). The indictment is based on the same conduct alleged in a civil action brought against C-Tech and Schlotterbeck by the Commission's Fort Worth Office in December 2001. [SEC v. C-Tech, L.L.P., et al., USDC/ND/TX (Dallas Division), Civil Action No. 3-01CV2542-P] (Lit. Rel. 17251/ December 3, 2001).

The indictment states that Schlotterbeck hired a sales force to solicit investment in the oil and gas projects offered by C-Tech. The indictment further alleges that Schlotterbeck obtained investor funds through misrepresentations and omissions concerning, among other things, the risks involved in the oil and gas investments and the use of C-Tech investor funds. Schlotterbeck represented that investor funds would be used to drill and develop the C-Tech-sponsored wells. In fact, a significant portion of investor funds were misappropriated and diverted to Schlotterbeck's personal use. In addition, funds invested in the Pouliot Heirs No. 2 project were diverted to the Schlotterbeck-Adams No. 1 project to make up for the short fall created by Schlotterbeck's misappropriation of funds.

If proven guilty of the charges brought in the indictment, Schlotterbeck faces a maximum statutory sentence of 10 years imprisonment, a $500,000 fine and mandatory restitution. In a press release announcing the indictment, United States Attorney Jane J. Boyle acknowledged the assistance provided by the United States Securities and Exchange Commission.



Modified: 03/13/2003