Risk & Compliance

‘Frack Master’ Accused of $80M Investment Scam

Texas oilman Chris Faulkner allegedly spent at least $30 million in investor funds on a “lifestyle of decadence and debauchery.”
Matthew HellerJune 27, 2016

Texas oilman and TV pundit Chris Faulkner has been charged with orchestrating a “massive” scheme to defraud investors in more than 20 oil and gas prospects and using at least $30 million of the proceeds to finance a “lifestyle of decadence and debauchery.”

The U.S. Securities and Exchange Commission said the $80 million fraud involved investments offered through Breitling Oil and Gas Corp. and other entities controlled by Faulkner and that he spent investor funds on lavish meals and entertainment, international travel, cars, jewelry, gentlemen’s clubs, and personal escorts. Faulkner is CEO of publicly-traded Breitling Energy Corp. (BECC).

The heart of the scheme “involved knowingly lying to investors about how much it would likely cost to drill and complete [oil] wells and how much the investments would likely earn,” the SEC said in a civil complaint.

Faulkner, 30, has branded himself the “Frack Master” for his purported expertise in hydraulic fracturing, but the SEC said in a civil complaint that he misrepresented he had extensive and diverse experience “in all aspects of oil and gas operations.”

“In fact, his only exposure to the oil-and-gas industry was through website data hosting work he and his prior company, C I Host, performed for oil and gas companies,” the SEC said.

The complaint also named eight other individuals, including former Breitling Energy CFO Judson Hoover, as defendants.

“Chris Faulkner allegedly orchestrated a sophisticated and multilayered scheme using BECC and its affiliated entities as a conduit to access millions of investor dollars,” Shamoil T. Shipchandler, director of the SEC’s Fort Worth regional office, said in a news release. “The financing for Faulkner’s opulent lifestyle came directly at the expense of unwitting investors across the country.”

According to the SEC, the Faulkner-controlled entities kept the difference between the total amount of money they raised from investors on each offering and the actual costs of drilling and completing oil wells, ensuring that Faulkner “would pocket millions of dollars in illicit profits from unwitting investors.”

The oilman allegedly used a company credit card — which he referred to as his “whore card” – to charge more than $1 million for escorts and other personal expenses.