FOR IMMEDIATE RELEASE
Washington, D.C., Oct. 3, 2012 — The Securities and Exchange Commission today announced that it has obtained an emergency court order to freeze the assets of a South Florida man who has been charged with fraudulently offering investments in oil drilling projects.
The SEC’s complaint unsealed today in federal court in West Palm Beach, Fla., alleges that Joseph Hilton made numerous misrepresentations to investors while selling limited partnership units in two oil drilling projects earlier this year through his firm Pacific Northwestern Energy LLC. Hilton falsely told potential investors that Pacific acquired its wells from Exxon Mobil Corp., and he overstated Pacific’s experience in the oil and gas industry and the historical accomplishments of its drillers. Hilton raised approximately $789,000 from investors. The SEC’s action froze the assets of Hilton, Pacific, and the two limited partnerships — Rock Castle Drilling Fund LP and Rock Castle Drilling Fund II LP. Hilton’s securities offerings were not registered with the SEC as required under the federal securities laws.
The SEC’s complaint also includes allegations against Hilton, Pacific, and another company controlled by Hilton called New Horizon Publishing Inc. Through Pacific and New Horizon, Hilton additionally sold $2.5 million worth of investments in oil drilling projects sponsored by United States Energy Corp. while deceiving investors about his identity, the anticipated returns on the investments, the amount of oil being produced by U.S. Energy’s wells, and the existence of natural gas wells. Hilton also operated a boiler room of sales representatives paid on a commission basis.
According to the SEC’s complaint, Hilton changed his name from Joseph Yurkin late last year following a final judgment for fraud in a previous SEC enforcement action against him for securities offerings he made through another company he worked for — Homeland Communications Corp.
“By changing his name, Hilton thought he could evade further SEC scrutiny and keep the investing public from finding the truth in his background,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “The SEC is committed to pursuing repeat offenders and ensuring the open and transparent sale of securities to investors.”
The SEC’s complaint charges Hilton, Pacific, Rock Castle I and Rock Castle II with violations of Sections 5(a) and (c) and 17(a)(2) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b). The complaint also charges Hilton with violations of Securities Act Section 17(a)(1), (2), and (3) and Exchange Act Sections 15(a), 10(b) and Rule 10b-5(a), (b) and (c). Pacific and New Horizon are charged with Exchange Act Section 15(a) violations in connection with their historical U.S. Energy related conduct. The SEC is seeking disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, and permanent injunctions against Hilton and his entities.
The court has appointed David Mandel — an attorney with the law firm of Mandel & Mandel LLP in Miami — as a receiver over Pacific, Rock Castle I, and Rock Castle II. Among other things, the receiver is responsible for marshaling and safeguarding assets held by these entities.
The SEC’s investigation was conducted by Senior Counsel Susan Cooke Anderson and Staff Accountant Timothy J. Galdencio under the supervision of Assistant Regional Director Eric R. Busto in the Miami Regional Office. Amie Riggle Berlin will lead the SEC’s litigation efforts.
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