The Securities and Exchange Commission (SEC) on Tuesday charged two securities promoters with allegedly bilking 70 investors nationwide out of an estimated $2.2 million through the sales of oil and natural gas leases. Along with the charges, the SEC issued an investor alert available on its website at warning investors to beware of solicitations that prey on the fears of higher oil and gas prices.

In a lawsuit filed in U.S. District Court for the Northern District of Texas in Dallas, the Commission alleged that between August 2002 and July 2005 Ivan Dearaujo, the principal of California-based PetroSite Assets Inc., and the company’s salesperson, Wesley A. Harbison Jr., sold participation interests in the future production revenue of oil and gas wells. The two men misrepresented PetroSite’s ownership of wells and overstated the anticipated well production, the SEC complaint said, and they kept a still-undetermined amount of the money for themselves.

The SEC also filed charges against Dearaujo and Harbison for allegedly defrauding investors out of $250,000 between June and December 2005 through sales of stock in an inactive jewelry business, Masset Inc.

Dearaujo currently is jailed in California on unrelated charges, the SEC said. Harbison is a resident of Oregon.

In its lawsuit, the Commission charged PetroSite, Masset, Dearaujo and Harbison with violating the antifraud provisions of the federal securities laws. The agency also has charged Harbison with acting as a securities broker without having been registered with the SEC. In addition, the Commission is seeking against each of the defendants a permanent injunction, as well as the disgorgement of profits plus prejudgment interest and a civil penalty.

The SEC has requested court orders that would require an accounting and prohibit the destruction of records, and, with respect to PetroSite and Masset, the appointment of a receiver to marshal and conserve PetroSite’s and Masset’s assets for the benefit of the investors.

“The actions taken [Tuesday] by the Commission, including seeking a receiver to assume control of the companies and the oil and gas interests, not only call for sanctions against those who victimized investors but also will help to redress the harm to those investors,” said Rose Romero, district administrator of the SEC’s office in Forth Worth, TX.

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