Securities and Exchange Commission v. Premco Western, Inc., et al., Civil Action No. 2:12-cv-01120-BSJ (USDC Utah, Filed December 10, 2012)


Recently, the Securities and Exchange Commission filed a settled civil injunctive action against Premco Western, Inc. (Premco), and its principal, Rodney Ratheal (Ratheal). Premco is an oil and gas company incorporated in Texas that operates by drilling land leased from the Bureau of Land Management (BLM). Premco has been solely owned and operated by Ratheal since he acquired it in June 2001.

In its Complaint, filed in the U.S. District Court for the District of Utah, the Commission alleges that, from June 2001 through April 2012, Ratheal raised over $4 million from approximately 100 investors through the fraudulent and unregistered sale of undivided fractional working interests in two oil and gas wells located along the Utah/Arizona border. Ratheal actively promoted and solicited investors by conducting marketing seminars in investors’ homes, cold-calling, and by posting Premco’s private placement memo (PPM) on the company’s Internet website.

The Commission alleges that Premco – through Ratheal – made various false and misleading statements to investors orally and in the company’s private PPM, regarding, among other things, that the company’s purported “in house” geologist and a geologist working for the U.S. Geological Survey (USGS), had discovered a “Super Giant” oil and gas field under Premco’s 1,000 acres of federal mineral leases, with recoverable oil reserves of 5 to 10 billion barrels.

The Commission further alleges that once drilling commenced on each drill site, Ratheal misrepresented to investors that drilling was successful. In reality, neither of the two wells drilled with investor funds produced any oil. In fact, the BLM terminated the drilling permits for lack of actual drilling. Additionally, Ratheal misrepresented to investors that their investment proceeds would be used to drill the two wells and that only 10% of the investment proceeds would be to cover his living expenses. In reality, approximately nearly $3 million (or 70%) of investor funds were used to support Ratheal’s lavish lifestyle.

Premco and Ratheal have consented to the entry of a permanent injunction enjoining them from future violations of Section 5(a), 5(c), and 17(a)(2) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5(b) under the Securities Exchange Act of 1934. Further, they consented to be held jointly and severally liable and consented to an entry of final judgment ordering them (1) to disgorge $2,927,037.68 and (2) to pay prejudgment interest in the amount of $4,445,221.48 for a total amount of $7,372,259.16 and (3) to pay a civil penalty but not imposing the disgorgement, prejudgment interest, and civil penalty amounts based on Ratheal’s and Premco’s demonstrated inability to pay any money.

Contact Us:

With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.