U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23888 /July 26, 2017
Securities and Exchange Commission v. Joey Stanton Dodson, No. 2:17-cv-05520 (C.D. Cal. filed July 26, 2017)
Founder of Oil-and-Gas Related Business Caught Misappropriating Investor Funds For Himself and Family Members
The Securities and Exchange Commission today announced fraud charges against the founder of a collection of businesses known as Citadel Energy, which provided fluid management solutions to the oil and gas industry in North Dakota.
According to the SEC's complaint, from approximately November 2012 through December 2014, Joey Stanton Dodson, of Porter Ranch, California, made numerous material misstatements and statements that were materially misleading as a result of omissions to investors. As described in the complaint, Dodson misled investors regarding, among other things, his compensation arrangements, the intended use of investor proceeds, the status of an important land lease agreement, the ownership of certain assets or income streams, and prior litigation against himself. The SEC alleges that, most significantly, Dodson commingled funds among three ventures funded by separate investor groups and then misappropriated at least $1.7 million from investors for his personal benefit, including for large cash payments to himself and his family members, Ponzi-like payments to prior investors in unrelated projects, casino vacations, lease payments for a BMW automobile, and psychic readings and spiritual products. As a result of Dodson's alleged misconduct, approximately 50 investors suffered substantial, and in some cases total, losses.
The SEC's complaint, filed in the U.S. District Court for the Central District of California, charges Dodson with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the allegations in the SEC's complaint, Dodson consented to entry of a final judgment enjoining him from violating the charged provisions of the federal securities laws and requiring him to pay disgorgement of $1,718,026, plus prejudgment interest of $189,389, and a civil penalty of $859,013. The settlement is subject to court approval.
This matter was investigated by Lee Robinson and Donna Walker and was supervised by Ian Karpel, all from the SEC's Denver Regional Office.