Guardian Oil and Natural Gas, Inc., Guardian Oil and Gas, Inc., and Rick Mullins


June 4, 2014

Type of alert:


Guardian Oil and Natural Gas, Inc. (“GONG”), and Guardian Oil and Gas, Inc. (“Guardian”), are under investigation for its’ alleged selling of fraudulent oil and gas securities. Principal, Rick D. Mullins, was charged with numerous counts of fraud stemming from the company’s oil and gas public offerings.   Mullins, Guardian, and GONG, raised approximately $6.5 million through the alleged scheme. The funds were supposed to be used for specific operating and investment activities but Mullins and Guardian allegedly used the funds to pay for other, non-related debts.

According to the Complaint, Mullins and Guardian failed to disclose to investors of Guardian its deteriorating financial condition, including significant amounts owed on pre-existing bank loans. Investors had no idea the loans even existed and were utterly disappointed to learn that Guardian’s balance sheet was fabricated. To make matters worse, it was alleged that Mullins and Guardian falsely represented to investors that their contributions would be used solely for the specific drilling project in which they had invested but instead, under Mullins’s direction, Guardian and GONG redirected investor funds for other unrelated purposes.

The SEC’s Complaint also alleges that Mullins falsely represented to investors that he would directly receive revenue from the sale of any oil and gas production when, in truth, operators were deducting from production revenue expenses due on other unrelated projects. Mullins also allegedly lied and misrepresented to investors that the gas well was unproductive and that the companies had been approached by a possible purchaser. In fact, the phantom purchaser was a total lie, the SEC alleges. Mullins, Guardian, and GONG now face charges for violating several sections of the Securities Act of 1933 and the Securities and Exchange Act of 1934. The Complaint seeks permanent injunctions and disgorgement of undeserved gains plus prejudgment interest against all Mullins, Guardian, and GONG.

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