The U.S. Securities and Exchange Commission has obtained an emergency order freezing the assets of an alleged oil and gas fraud that has been soliciting investors in the United States and Canada.

The SEC said Friday that it has filed a complaint in the US District Court for the Central District of California against a California man, Thomas Labry, and his Costa Mesa, Ca.-based entity, Cherokee Gas Systems, Inc., for “perpetrating an ongoing oil and gas offering fraud that raised at least $1.4 million from investors throughout the United States and Canada.” The court entered an order halting the alleged fraud and freezing the assets of Labry and Cherokee, the SEC said. The allegations have not been proven.

The commission’s complaint alleges that since December 2008, the defendants have been engaged in a fraudulent scheme soliciting investors through cold-calling to invest in an unregistered oil and gas offering. According to the complaint, investor monies are not invested in oil and gas production and investors are not receiving returns. Instead, the SEC alleges that the funds have been misappropriated for personal use.

In its lawsuit, the SEC obtained an order: freezing the assets of Labry and Cherokee; appointing a temporary receiver over Cherokee; preventing the destruction of documents; granting expedited discovery; requiring accountings; and, temporarily enjoining them from future violations of securities laws. The SEC also seeks preliminary and permanent injunctions, disgorgement plus prejudgment interest, and civil penalties. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for January 19.

IE