SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16111 \ April 14, 1999
SECURITIES AND EXCHANGE COMMISSION v. WHITWORTH ENERGY RESOURCES,
LTD., ET AL., Civil Action No. 97-6980 CAS (SHx) (C.D. Cal.)
The Securities and Exchange Commission ("Commission")
announced that, following a bench trial, on April 2, 1999, the
Honorable Christina A. Snyder, United States District Judge for
the Central District of California, entered a Final Judgment Of
Permanent Injunction And Other Relief Against Defendants Peter
Sacker, Jerry W. Anderson and Robert M. Kerns. The Court
enjoined the Defendants from further violations of the antifraud
provisions of the Securities Act of 1933 and the Securities
Exchange Act of 1934 and granted other relief. Previously, on
May 18, 1998, the Court had entered an Order Granting Partial
Summary Judgment, in which it found that the Defendants had
defrauded over 500 investors, many of whom are elderly, of
between $16 million and $19 million in at least 18 offerings of
interests in oil and gas leases and wells made between 1992 and
1997.
Among other things, the Defendants (1) engaged in a Ponzi-
like scheme where they told investors they were receiving
distributions from revenue generated by the sale of oil and gas
when in fact most of the monies were from other investors; (2)
failed to disclose that the operator of most of the wells claimed
a substantial debt was owed to it and was withholding most of the
revenues from the wells (over $1 million); (3) falsely
represented that certain wells owned by the Hunt brothers in
Texas had been purchased when they had not; (4) "assigned" the
same wells to at least three joint ventures; and (5) grossly
overstated, by a factor of 20, the interest owned by Defendant
Whitworth Energy Resources, Ltd. in 400 wells owned by a joint
venture to which it belonged.
The defendants were permanently enjoined from further
violations of Section 17(a) of the Securities Act, Section 10(b)
of the Exchange Act and Rule 10b-5 thereunder. In addition, the
Defendants have further each been ordered to disgorge their ill-
gotten gains of $643,113 (Sacker), $981,625 (Anderson) and
$204,580 (Kerns), together with prejudgment interest thereon.
Additionally, each Defendant has been ordered to pay a maximum
third tier civil penalty equalling his gross pecuniary gains in
the five years prior to the action being brought of $551,845
(Sacker), $822,781 (Anderson) and $167,150 (Kerns).
Previously, on October 16, 1997, and September 22, 1997,
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION v. WHITWORTH ENERGY RESOURCES, LTD., ET AL., Civil Action
The Securities and Exchange Commission announced that, following a bench trial, on April 2,
Sacker, Jerry W. Anderson and Robert M. Kerns.
The Court enjoined the Defendants from further violations of the antifraud provisions of the
Previously, on May 18, 1998, the Court had entered an Order Granting Partial Summary
Among other things, the Defendants engaged in a Ponzilike scheme where they told investors
y had not; "assigned" the same wells to at least three joint ventures; and grossly overstated, by a
Additionally, each Defendant has been ordered to pay a maximum third tier civil penalty
Previously, on October 16, 1997, and September 22, 1997, respectively, the Commission had
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