No. 10-10989against ACS for the full $240,000. ACS has appealed. We REVERSE. TheReceiver’s attempt to liken the scheme in question to a “Ponzi-like fraud,” andtherefore reduce her burden to proving “presumed intent to defraud,” fails forlack of evidence. Not all securities frauds are Ponzi schemes.
On September 28, 2009, the SEC commenced the underlying action foralleged violations of federal securities laws against Giant Operating, LLC, GeorgeWesley Harris (“Harris”), Stephen Christopher Plunkett (“Plunkett”), GiantPetroleum, Inc., and DSSC Operating, LLC. The corporate entities willsometimes be collectively referred to as “Giant.” In its complaint, the SECalleged that between December 2007 and September 2009, Giant Operating, byand through Harris, raised approximately $13.4 million from investors throughfive unregistered securities offerings. The offered securities were interests in oil-and-gas drilling programs, which promised considerable returns within twelvemonths. Investment brochures claimed that 80% of the offering proceedingswould be spent on operational costs—such as drilling, testing, andcompletion—while the remaining 20% would be spent on management costs. Inreality, according to the SEC, a considerable portion of investor funds wastransferred from Giant Operating to a DSSC account, which Harris devoted topersonal expenses unrelated to oil-and-gas programs. Harris also transferredmillions of dollars to defendants Plunkett and Giant Petroleum, another companyHarris owned and controlled. Based on these allegations, the SEC chargedmultiple violations of federal securities laws. After suit was filed, the district court appointed Cook as receiver over thedefendants’ assets (except those of Plunkett). The court authorized Cook to“immediately take and have complete and exclusive control, possession, andcustody of the Receivership Estate and to any assets traceable to assets ownedby the Receivership Estate.” Cook was also authorized to “[i]nstitute such actions2
Case: 10-10989 Document: 00511794306 Page: 2 Date Filed: 03/20/2012