SEC Cases: Oil and Gas Company is Charged With Accounting Fraud, Utah-Based Broker-Dealer is Accused of Not Complying With Anti-Money Laundering Laws, and Hemp Oil Company Allegedly Inflated Assets

Penn West Petroleum is Accused of Accounting Fraud
The US Securities and Exchange Commission has charged Penn West Petroleum Ltd., now called Obsidian Energy Ltd., and three of its ex-finance executives with involvement in an alleged accounting fraud. According to the regulator, the Canadian-based oil and gas company fraudulently transferred hundreds of millions of dollars in expenses to capital expenditure accounts from its operating expense accounts. As a result, Penn West was able to artificially lower operating expenses by up to 20% during some periods, as well as falsely enhance the metrics having to do with profitability and oil extraction efficiency. These metrics are important for selling barrels of oil.

The SEC is accusing ex-Penn West CFO Todd Takeyasu, ex-VP of Accounting and Reporting Jeffery Curan, and ex-Operations Controller Waldermar Grab of running the accounting fraud. The regulator claims that the three men violated federal securities laws related to antifraud, books and records, reporting, and internal controls provisions.

Grab has already agreed to settle with the SEC but without denying or admitting to the allegations. The regulator’s cases against Curran and Takeyasu have yet to be resolved. The SEC wants monetary relief and permanent injunctions.

Alpine Securities Corporation Faces Anti-Money Laundering Compliance-Related Violations
Alpine Securities Corp, a brokerage firm based in Salt Lake City, Utah, is accused of violating securities laws as they relate to the alleged clearing of microcap stock transactions that may have been involved in scams to harm investors. By law, broker-dealers must submit SARs (Suspicious Activity Reports) detailing suspect transactions that occur at their firms. The Commission contends that the Salt Lake City broker-dealer systematically did not submit such reports for transactions that it considered potentially problematic. When Alpine Securities would submit SARs reports, it purportedly often left out the information that was key to why Alpine knew, suspected, or had grounds for thinking that a transaction might be suspicious.

Las Vegas-Based Hemp Oil Company Faces SEC Fraud Charges
In federal court in Nevada, the SEC filed securities fraud charges against CannaVEST Corp. The regulator is accusing the hemp oil company and CEO Michael Mona Jr. of inflating CannaVEST’s assets.

The SEC contends that the company reported buying PhytoSphere Systems LLC, as well as its rights under contracts with processing and production facilities, for $35M while knowing that the purchase price was inflated. The Commission believes that CannaVEST agreed to the price because it was able to mainly use its own shares to pay for the acquisition.

The SEC claims that during 2013’s third quarter, CannaVest got a third-party valuation of PhytoSphere for $8M as of the date of the acquisition aNd wrote down the acquisition’ value at $8M in its Form 10-Q. However, it purportedly did not reveal that the acquisition’s original value was inflated.

If you are an investor who has lost money because of what you suspect may be investment fraud, contact The SSEK Partners Group today.

The SEC Complaint in the Penn West Petroleum Case (PDF)

The SEC Complaint in the Alpine Securities Case (PDF)

The SEC Complaint in the CannaVEST Case (PDF)