Summary Judgment Win on All Claims in Quest Energy Offering Fraud
Aug. 1, 2016
U.S. District Judge Sam R. Cummings granted summary judgment for the SEC on all claims against the father-and-son duo of Paul R. and Jeffry P. Downey, and John M. Leonard, all promoters of fraudulent oil-and-gas investments, finding them liable on all charges. The SEC’s action, filed in November 2014, alleges that the defendants raised nearly $5 million from 17 investors in a securities offering in the Permian Advanced Oil Recovery Investment Fund I, LP (PAOR), in which the Downeys' company, Quest Energy Management Group, Inc. served as PAOR's operating general partner.
According to the court's order, the Downeys committed fraud by misrepresenting and concealing material facts while offering and selling securities to raise money for their oil-and-gas investment program, and that Leonard violated the law by acting as a broker in these securities transactions even though he was not registered with the SEC. Among other findings, the court noted that the Downeys made “misrepresentations relating to the usage of funds raised from the investors.”
The SEC's investigation was conducted by Jeffrey Cohen and Carol Hahn of the Fort Worth Regional Office. B. David Fraser and Timothy McCole are leading the SEC's litigation under the supervision of David Reece and Jessica Magee. See here for more information.