SEC Sues Oil and Gas Promoters, Issues Investor Alert

Commission Seeks Return of Ill-Gotten Gains and Appointment of Receiver

FOR IMMEDIATE RELEASE
2006-149

Washington, D.C., Sept. 5, 2006 - The Securities and Exchange Commission today filed fraud charges against two securities promoters who fraudulently raised $2.2 million through sales of oil and leases to at least 70 investors nationwide. In announcing the charges, the SEC also issued an investor alert available at http://www.sec.gov/investor/pubs/oilgasscams.htm warning investors to beware of solicitations that prey on fears of higher oil and gas prices.

The Commission alleges that between August 2002 and July 2005, Ivan Dearaujo, the principal of California-based PetroSite Assets, Inc., and the company's salesperson, Wesley A. Harbison, Jr., sold participation interests in the future production revenue of oil and gas wells. Dearaujo and Harbison misrepresented PetroSite's ownership of wells and overstated the anticipated well production, according to the Commissions complaint, and kept a yet-undetermined amount of the money for themselves.

"Rising fuel prices make investors across the nation particularly susceptible to oil and gas scams," said Katherine Addleman, Associate District Administrator for Enforcement in the Commission's Fort Worth Office. "Investors are led to believe that it will be easy to profit from an oil and gas venture. However, oil and gas investments are highly speculative and complex and many unscrupulous individuals use that complexity to enrich themselves with the investors' funds."

Rose Romero, District Administrator of the Fort Worth Office, said, "The actions taken today by the Commission, including seeking a receiver to assume control of the companies and the oil and gas interests, not only call for sanctions against those who victimized investors but also will help to redress the harm to these investors. In addition, our actions should serve as a warning to investors of the existence of this threat in connection with oil and gas offerings."

The Commission alleges that Dearaujo defrauded the PetroSite investors at the time of the initial investment by misappropriating a substantial portion of their funds, instead of investing the money in the wells. The Commission further alleges that Dearaujo defrauded the PetroSite investors as the business progressed by diverting for his own benefit much of the revenue generated by the wells. Harbison, according to the complaint, was paid a commission on his sales of the PetroSite participation interests, and participated knowingly in Dearaujo's misrepresentation of those interests.

The Commission also filed fraud charges Dearaujo and Harbison for fraudulently raising $250,000 between June and December, 2005, through sales of stock in an inactive jewelry business, Masset, Inc., another California-based issuer. The Commission alleges that Dearaujo and Harbison defrauded the Masset investors by misrepresenting Masset's business prospects and financial stability and by exaggerating, without basis, the likely future value of Masset stock.

In its complaint, the Commission charges PetroSite, Masset, Dearujo and Harbison with violations of the antifraud provisions of the securities laws. The Commission is also charging Harbison with acting as a securities broker without having been registered with the Commission. The Commission is seeking against each of the defendants a permanent injunction, disgorgement plus prejudgment interest and a civil money penalty, and penny stock bars against Dearaujo and Harbison. The Commission is also seeking against each of the defendants orders requiring an accounting and prohibiting the destruction of records, and, with respect to PetroSite and Masset, the appointment of a receiver to marshal and conserve PetroSite's and Masset's assets for the benefit of the investors.

Deauaju is currently incarcerated in California on unrelated charges. Harbison is a resident of Oregon.

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For further information, contact:

• Kit Addleman (817) 978-6425
• Rose Romero (817) 900-2623
• Jeff Cohen (817) 978-6480

SEC Fort Worth District Office

  Additional materials: Litigation Release 19820

http://www.sec.gov/news/press/2006/2006-149.htm