LAWFUEL – The Law Newswire – Two Orange County residents accused of orchestrating a “pump-and-dump” scheme involving two thinly traded oil and gas companies have been indicted by a federal grand jury in a scheme that cost investors $6 million.
The indictment returned Wednesday by a federal grand jury in Santa Ana names Gregory Turville Harry, a 46-year-old resident of Dana Point, who allegedly masterminded the scheme, and James Daniel Sifford, a 68-year-old resident of Dana Point, who worked for Harry.
Sifford was arrested by federal authorities Thursday morning. During Sifford’s initial court appearance yesterday afternoon, a United States Magistrate Judge set bond at $200,000, and he was released. Both Sifford and Harry are scheduled to be arraigned on the indictment on Monday.
Harry operated Paladin Global Group, Ltd., which purported to provide business services to public companies, including Austin Chalk Oil and Gas, LLC and Am-Tex Oil & Gas, Inc. Sifford worked at Paladin.
The indictment alleges that beginning in the spring of 2004, Harry and Sifford gained a majority shareholder interest in Austin Chalk and Am-Tex by issuing millions of shares of stock to themselves and their nominees for services provided to Austin Chalk and Am-Tex, even though they did not provide any services to the companies. The defendants subsequently made false and misleading statements about Austin Chalk and Am-Tex on the companies’ websites and in financial newsletters they created and mailed to thousands of investors nationwide. The Am-Tex newsletter promised investors up to a 500 percent return on their investments, while the Austin Chalk newsletter claimed its oil wells were producing 350 barrels of oil a day. According to the indictment, the defendants knew that Austin Chalk and Am-Tex were little more than shell companies with few assets and almost no business operations. Investors purchased shares of Austin Chalk and Am-Tex based on the false representations. The defendants sold their shares of Austin Chalk and Am-Tex into an artificially high market and recognized over $6 million in trading profits.
The indictment charges Harry and Sifford with four counts of securities fraud and three counts of mail fraud. These charges carry a statutory maximum penalty of 200 years in prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
This case was investigated by the Federal Bureau of Investigation and the United States Postal Inspection Service. The Securities and Exchange Commission provided substantial assistance to this case. According to James T. Coffman, Assistant Director of the SEC’s Division of Enforcement: “The Securities and Exchange Commission assigns high priority to market manipulation cases such as this. Investors lose tremendous sums each year to these types of schemes. The Commission will continue to provide assistance to the criminal prosecution of these cases.”
CONTACT: Special Assistant United States Attorney Margaret Cain
Assistant United States Attorney Jennifer Waier
Release No. 07-056