The Securities and Exchange Commission today obtained permanent officer-and-director and penny stock bars against the founder of a company who perpetrated a fraudulent initial coin offering (ICO) to fund oil exploration and drilling in California.
The Securities and Exchange Commission permanently barred David T. Laurance, the founder of Tomahawk Exploration LLC, on Tuesday from ever being an officer or director of a public company and from participating in any offering of a penny stock or in promoting the purchase or sale of any penny stock. The SEC alleged Laurance attempted to raise money through the sale of fraudulent blockchain-based digital tokens called "Tomahawkcoins."
However, the SEC claims that the ICO provided false information in their promotional statements. They “used inflated projections of oil production” and claimed that Tomahawk had already obtained leases for drilling on the sites. The firm also tried to portray Laurance as a principled individual by claiming that he had a “flawless background”.
The ICO wasn’t successful in raising enough money; however, the company set up a bounty program to trade Tomahawkcoins with online promotional services.
The SEC’s Office of Investor Education and Advocacy (OIEA) today issued an Investor Alert to encourage investors to check the background of anyone selling or offering them an investment using the free and simple search tool on Investor.gov. OIEA’s Investor Bulletin about ICOs is another resource that describes potential warning signs of investment fraud including “guaranteed” high investment returns and unlicensed sellers.
The SEC also added that scammers often lure people into their projects by offering high returns on their investment. In order to combat this issue, the agency has created a search tool at Investor.gov which contains the details of various investment professionals. Another tool, SEC Action Lookup – Individuals (SALI), helps investors identify individuals who have been convicted by the SEC.