U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17248 / November 27, 2001
SECURITIES AND EXCHANGE COMMISSION v. TEXON ENERGY CORPORATION,
LONESTAR PETROLEUM CORPORATION, JAMES E. HAMMONDS aka JAKE HAMMONDS
aka JAKE DAVIS, and BARRY V. REED (Case No. CV-01-09706-LGB(MANx)
(C.D.Cal.)
The United States Securities and Exchange Commission ("Commission")
announced that on November 21, 2001, the Honorable Lourdes G. Baird,
United States District Judge for the Central District of California,
issued an order of preliminary injunction halting a $1 million
securities fraud by Texon Energy Corporation ("Texon"); Lonestar
Petroleum Corporation ("Lonestar"); and James E. Hammonds
("Hammonds"), age 60 of Inglewood, California and a recidivist
securities violator. The Court (1) granted the Commission's
application for a preliminary injunction and appointment of a
receiver; (2) froze the assets of the defendants; (3) prohibited the
destruction of documents by the defendants; and (4) ordered
accountings from the defendants.
Judge Baird also extended a temporary restraining order against the
president of Texon, Barry V. Reed ("Reed"), age 56, of Las Vegas,
Nevada. A hearing on whether a preliminary injunction should be issued
against Reed is scheduled for November 30, 2001.
The Commission's complaint, filed November 13, 2001, alleges that
since 1998, the defendants have raised over $1 million from investors,
purportedly for investments in oil and gas wells, and promising
investors a monthly dividend equal to 12% per year. In fact, the
defendants are operating a Ponzi-like scheme in which they are making
payments to existing investors with the money that they raise from new
investors. As part of the defendants' sales pitch in September and
October 2001, the defendants have tried to capitalize on the September
11^th tragedy by telling elderly investors that because of "the War,"
the demand for and price of oil would increase and Texon is in a "good
position" to benefit from all of this because it purchases domestic
oil and gas wells. Hammonds is the vice president of Lonestar and in
some documents is identified as the vice president of Texon. In 1994,
Hammond was enjoined for his part in a similar oil and gas fraud in
which investors were also falsely promised a 12% return. SEC v.
Southern California Securities, Inc., et al., (CV-94-6156-HLH) (C.D.
Cal. November 17, 1994) (LR14794). In 1996, he was barred from the
securities industry. In the Matter of Raymond Charles Gross and James
Eugene Hammonds, Exchange Act Release No. 36802.
The Commission obtained an order preliminarily restraining Texon,
SNIPPETS:
U.S. SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION v. TEXON ENERGY CORPORATION, LONESTAR PETROLEUM
The United States Securities and Exchange Commission announced that on November 21, 2001, the
The Court granted the Commission's application for a preliminary injunction and appointment
Judge Baird also extended a temporary restraining order against the president of Texon, Barry
The Commission's complaint, filed November 13, 2001, alleges that since 1998, the defendants
As part of the defendants' sales pitch in September and October 2001, the defendants have
Hammonds is the vice president of Lonestar and in some documents is identified as the vice
In the Matter of Raymond Charles Gross and James Eugene Hammonds, Exchange Act Release No.
The Commission obtained an order preliminarily restraining Texon, Lonestar, and Hammonds from
The Court's order also preliminarily restrains the defendants from committing violations of
In addition to the interim relief granted on November 21, 2001, the Commission seeks a final
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