On May 18, 2020, the Securities and Exchange Commission sued three Texas residents who used deceptive offering materials and promotional videos to sell $2.7 million in fraudulent oil & gas investments.

The SEC's complaint, filed in federal district court in San Antonio, Texas, alleges that defendants Paul Russell Montgomery, Jr., Michael David Fisher, and James Hurst Willingham, Jr. promised investors that they would drill and recomplete oil and gas wells in South Texas to generate returns of 32% or more. To bolster these promises, the defendants allegedly disseminated promotional videos that purported to show the wells defendants had drilled and included interviews with purported investors who were invested or interested in the projects. As alleged, the defendants also distributed written offering materials in which they promised to use investor funds only for specified purposes, with the vast majority going to actual drilling and recompletion activities. In addition, the defendants allegedly touted Montgomery's credentials and prior success as an oil and gas operator. According to the complaint, however, the defendants never drilled or recompleted any wells, and instead misappropriated investor funds, spending hundreds of thousands of dollars for a number of uses not permitted in the offering documents, such as undisclosed commissions, and payments to Montgomery and Willingham. The complaint further alleges that some of the purported "investors" identified in the defendants' promotional videos never invested, and that Montgomery's purported credentials and prior successes were fabrications.

The SEC's complaint charges Willingham, Montgomery, and Fisher with violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and charges Montgomery and Fisher with aiding and abetting Willingham's violations of the charged antifraud provisions. The SEC seeks disgorgement of ill-gotten gains plus interest, civil penalties, and injunctive relief. Willingham has agreed to be enjoined against future violations of the charged provisions, and to pay disgorgement, prejudgment interest, and a civil penalty, the amounts of which will be determined by the court upon a motion filed by the SEC.

The SEC's investigation was conducted by Catherine Floyd and Carol Stumbaugh and was supervised by Barbara Gunn and Eric Werner of the Fort Worth Regional Office. The litigation is being conducted by Jason Reinsch and supervised by B. David Fraser.