If you’ve been around North Dakota’s energy communities you’ve probably seen advertising, and even billboards, for Texas-based Breitling Energy and the “Frack Master,” also known as Chris Faulkner.
It seems Faulkner and Breitling have now run afoul of the SEC for allegedly scamming investors based on Faulkner’s phony expertise:
The SEC account starts in 2009 when Faulkner ran a website data hosting company. At that point, “he had never managed, run, operated, or even worked in an oil-and-gas business.”
He met Parker Hallam and Dustin Michael Miller Rodriguez, who had sold oil and gas investments. They decided to create a company; Breitling Oil and Gas was born. By 2011 Miller and Hallam were selling unregistered investments – working interests in oil and gas prospects in Texas, Oklahoma and North Dakota.
Investors paid their money and Breitling promised to use the cash to drill, test and complete the projects. In fact, the company promised to pay the difference if the cost of development was higher than the estimate sold to the investors.
From January 2011 through December 2013, Bretling sold $43 million in investments.
According to the report, Faulkner billed himself as an oil and gas industry expert – particularly in the area of hydraulic fracturing – and even claimed to have college degrees he hadn’t, according to the SEC, actually obtained.
Faulkner and Breitling allegedly made money by dramatically inflating the costs of developing oil and gas resources in the states they were operating in. “In one case, the land costs were $80,000 and Breitling puffed that up to $8.2 million,” the Dallas Morning News reports.
They might have gotten away with stuff like that had the wells they developed hit the production estimates they sold investors on. Only, they didn’t. They inflated those too, often arbitrarily. Faulkner “doubled some of the production estimates on his own,” DMN reports.
And then there was the “whore card.” From the SEC complaint, which you can read in full below:
Wow. Read the whole complaint below. It’s…interesting.
“Chris Faulkner orchestrated a sophisticated and multilayered scheme using BECC and its affiliated entities as a conduit to access millions of investor dollars,” Shamoil T. Shipchandler, head of SEC’s Fort Worth office, told Bloomberg. “The financing for Faulkner’s opulent lifestyle came directly at the expense of unwitting investors across the country.”
The history of economic booms – from gold rushes to oil plays – is replete with hucksters who follow the money. Faulkner, it seems, is a classic example.