In August of 2016, a federal court in Texas entered contempt orders against three individuals, John Weber, Parveen Sethi, and Sameer Sethi. The trio was accused of violating the court’s preliminary injunction prohibiting Sameer Sethi and Sethi Petroleum from engaging in oil and gas securities offerings.
Honorable Amos L. Mazzant entered the order after concluding that the defendants had created a separate company, Cambrian Resources LLC, in an attempt to evade the Court’s injunction and in an attempt to continue raising funds from investors. In May of 2015, the SEC filed a complaint against Sameer Sethi and his company alleging that they had raised roughly $4 million through the fraudulent offering and selling of securities in the Sethi-North Dakota Drilling Fund-LVIII Joint Venture.
It is believed that the fraudulent activities were initiated in January of 2014. The complaint concluded that the offering materials claimed that 70 percent of the funds would be utilized to acquire working interest in, to drill and to complete 20 oil and gas wells in the Bakken Shale formation in the state of North Dakota.
The SEC alleges that less than 25 percent of the money was used for those purposes. Instead, the SEC concluded that nearly 75 percent of investor funds were spent on unapproved and undisclosed expenditures, such as giving $1.6 million to Sameer Sethi, his family and Sethi Petroleum’s parent company. On June the 22th of 2016, the SEC filed an emergency motion after discovering that Sameer had continued to raise investor funds through his father Praveen Sethi and his attorney John Weber under a new business entity, Cambrian Resources.
The Sethis and Weber rectified the problem by ceasing operations at Cambrian and returning the money that had been raised. On August the 7th of 2017, Honorable Amos L. Mazzant ordered Sethi to pay more than $4 million is disgorgement and prejudgment interest, as well as a civil penalty of $160,000. The judgment also prohibits Sethi from purchasing or selling securities.