The Securities and Exchange Commission agreed to a settlement with Christopher Faulkner — the self-proclaimed “Frack Master” — in connection with his wide-ranging securities-fraud scheme that raised more than $80 million from hundreds of investors nationwide.
Faulkner simultaneously entered into a plea agreement relating to the same misconduct under which he will serve 12 years in federal prison for securities fraud, money laundering and tax evasion.
According to the SEC’s June 2016 complaint, Faulkner — who had been a recurring guest on CNBC, CNN International, Fox Business News and the BBC to discuss oil-and-gas topics — systemically deceived investors across the country by disseminating false and misleading offering materials, misappropriating millions of dollars of investor funds, and manipulating the stock of Breitling Energy Corp., (BECC), a publicly traded company Faulkner controlled.
Faulkner started the scheme in 2011 through privately held Breitling Oil and Gas Corp. (BOG), which offered and sold “turnkey” oil-and-gas working interests to investors using a team of commissioned cold-callers. As part of these offerings, Faulkner lied to investors about his experience, the drilling-cost estimates for the prospects, and the use of their invested funds.
Faulkner, with the assistance of others, used these entities to raise more than $80 million and then he misappropriated approximately $23.8 million to fund his lifestyle. According to this complaint, the SEC reported that Faulkner “brazenly misappropriated” investors’ funds for personal expenses including lavish meals and entertainment, international travel, cars, jewelry, gentlemen’s clubs and personal escorts.
The SEC also charged 11 other individuals and entities for their roles in the misconduct, reaching settlements with a majority of them.