U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23643 / September 12, 2016
Securities and Exchange Commission v. Tycoon Energy, Inc., et al., No. 4:16-cv-00693 (E.D. Tex. filed September 9, 2016)
The SEC's complaint, filed on September 9, 2016, in the U.S. District Court for the Eastern District of Texas, alleges that, from 2010 through 2013, Tycoon, a Texas oil and gas company, raised more than $5.6 million from approximately 232 investors nationwide in four unregistered offerings of joint-venture securities in oil and gas projects. Nerbonne drafted and disseminated materially false and misleading offering documents and investment brochures containing baseless projections that four oil-well prospects would produce up to 400 barrels of oil per day. And they allegedly grossly overstated the test results and success of Tycoon's earlier wells. Nerbonne allegedly induced investors to pay hundreds of thousands of dollars for well-completion costs before Tycoon conducted required testing to determine the wells' commercial viability. According to the complaint, none of the wells became commercially viable, and in one case, Tycoon never even drilled the well. The SEC alleges that Nerbonne misappropriated approximately $1.5 million of the investment proceeds, which he used to pay for his personal expenses.
The SEC's complaint charges Tycoon and Nerbonne with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations of the complaint, Tycoon and Nerbonne have consented to the entry of permanent injunctions with any disgorgement and civil penalties to be determined by the court upon the SEC's motion. The settlement is subject to court approval.
The SEC's investigation was conducted by Richard Zadina and supervised by Eric Werner and David Peavler of the Fort Worth Regional Office. The litigation will be led by Timothy McCole.