Spokane businessman accused of fraud related to oil drilling company
Spokane man allegedly lied about location of oil wells
Federal stock regulators accuse a South Hill businessman of defrauding investors with false and misleading claims about the prospects of his Texas-based oil drilling company.
The lawsuit, filed this month by the Securities and Exchange Commission against Glen Landry, claims that he used a series of newsletters to promote unrealistic projections for his company, Norstra Energy Inc., shortly after he became its president and chief executive officer in March 2013.
The SEC alleges Landry and Eric Dany, a paid promoter based in Illinois, told potential investors there was a 99 percent chance Norstra would profit from drilling wells in the Bakken shale formation in northern Montana.
“Landry and Norstra Energy misled investors about the location of the company’s property in order to make the wells appear more promising and twice disclosed an inaccurate date to begin drilling operations to make the potential for oil riches appear imminent,” the SEC said in a statement.
Landry also is accused of inflating numbers in his quarterly reports to the SEC, including the amount of oil that Norstra expected to extract. A promotional claim that appeared in Dany’s stock-picking newsletter as well as the company’s website stated, “Norstra Energy could be sitting on top of as much as 8.5 billion barrels of oil!”
The SEC said claims like that are the reason Norstra’s stock prices shot up nearly 600 percent in the three months after the company went public with Landry at the helm. But Landry said those claims had nothing to do with the company’s apparent success.
“We did not know or have anything to do with the promotion of or raising of the stock,” he said in a phone interview. “That has nothing to do with me or with Norstra.”
Landry said he suspects some investors engineered a “pump-and-dump” – a fraudulent scheme of inflating stock prices in order to sell shares for more money. When the SEC suspended trading of Norstra’s stocks in June 2013, shares of common stock had soared from 35 cents to $2.06.
According to the lawsuit, Landry owned 1 million shares of preferred stock, which he could have converted to 10 million shares of common stock. A longtime geologist, Landry also received $5,000 a month in consulting fees.