Case 4:09-cv Document 1 Filed 09/15/2009 Page 1 of 8 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS COMPLAINT

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1 Case 4:09-cv Document 1 Filed 09/15/2009 Page 1 of 8 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS PLANO DIVISION DIVSION SECURITIES AND EXCHANGE AND EXCHAGE COMMISSION, w. VS. Plaintiff, TONY E. MORRSON Defendants. TEXAS SECURITIES PARTNERS, LLC and TONY E. MORRISON I>efendants. Civil Action No.: Plaintiff Securities Securties and Exchange Commssion Commission alleges: SUMMARY SUMMAY 1. Texas Texas SecuritiesParners, Partners, LLC ("TSP") andmorrson Morrison conducted an unegistered unregistered securties securities offering fraud. From January 2005 through June 2008, TSP, at Morrison's Morrson's direction, sold fractional interests in 4 oil and gas offerings. TSP raised $12.7 million millon from over 500 investors nationwide. In In selling the oil and gas offerings, TSP's salespersons made material misrepresentations and omitted material facts regarding past performance, expected returns, retus, and risk. For example, TSP representatives told investors that: (i) a previous TSP offering provided a $30 milion million return to investors; (ii) the investment would payout 80% to 120% cash-on-cash return in in the the first year; (iii) no TSP project had resulted in a dry hole since 2005; and (iv) the investment was a "sure thing." Contrary to these statements, none oftsp's offerings returned retued investor principal or profit, and most resulted in dry holes (including wells drilled after 2005). In addition, TSP's offerings were not registered with the Commission, and were not otherwise exempt from registration.

2 Case 4:09-cv Document 1 Filed 09/15/2009 Page 2 of 8 2. The The Commission, in the in the interest of ofprotecting the public from any further fuher violations ofthe federal securities securties laws, brings this action against Defendants seeking permanent injunctive relief. JURISDICTION 3. The The Commission brings brings this this action action under Section 20(b) of ofthe Securities Act [15 (15 U.S.C. D.S.C. 77t(b)] 77t(b)) and Section 21(d) ofthe Exchange Act [15 (15 U.S.C. D.S.C. 78u(d)] 78u(d)) to enjoin Defendants from future violations ofthe federal securities laws. 4. Ths This Cour Court has jursdiction has jurisdiction over over this this action action under under Section 22(a) ofthe Securities Act (15[15 D.S.C. U.S.c. 77v(a)), Section 77v(a)], 27 of Section 27 ofthe Exchange Act [15 (15 U.S.C. D.S.C. 78aa], 78aa), and Title 28 U.S.C. D.S.C Defendants, Defendants, directly and indirectly, directly made use and of indirectly, madeuseofth s mails and of and ofthemeans and instrumentalities instruentalities ofinterstate commerce in in connection with the acts, practices and courses of business described in this Complaint. 5. Venue lies Venue in this Cour lies under insection this 22(a) Court of under Section 22(a) ofthe Securities Act (15 [15 D.S.C. U.S.C. 77v(a)) 77v(a)] and Section and 27 Section ofthe Exchange 27 Act ofthe (15 D.S.C. Exchange 78aa) because Act certain [15 of U.S.C. 78aa] because certain ofthe acts and transactions at issue at took issue place in took the Eastern place District in the of Eastern District oftexas. DEFENDANTS 6. Texas Texas Securities Securities Parers, Partners, LLC LLC is a is a Delaware limited limited liability company with its principal place of place ofbusiness in Plano, Texas. It has neverregisteredregistered an offeringofsecurities securties under the Securities Act or a class ofsecurities under the Exchange Act. 7. Tony E. Morrson, Tonyage E. 38, Morrison, a resident of age 38, a resident ofmansfield, Texas, is the president oftsp. COMPLAI Page 2 Page 2

3 Case 4:09-cv Document 1 Filed 09/15/2009 Page 3 of 8 STATEMENT OF FACTS 8. From From Januar January through June 2008, TSP raised $12.7 million milion by selling fractional interests in 4 oil and gas offerings to over 500 investors nationwide. During this time, TSP earned $1.2 million milion in commissions from its sales. TSP did not have any other brokerage business. 9. The The oil oil and and gas gas projects offered by TSP were exploratory wells. After a TSPaffiliated issuer acquired drilling rights in an oil and gas field, TSP would solicit investors to fund the drillng drilling operations. TSP usedits its websiteto to lure prospective investors to the offerings. Through the website, prospective investors provided contact information. And TSP called these prospective investors, soliciting them to to invest in the offerings. TSP also engaged in a coldcalling campaign using leads it purchased from third-party third-pary vendors. 10. Durng During the the relevant relevant period, period, TSP TSP was was subject to to FINRA Rule 301O(b)(2), which required it to record its registered persons' phone conversations with existing or prospective customers. The staff reviewed over 1,600 of these calls. In In them, TSP representatives made material misrepresentations and omissions concerning, concernng, among other things, past performance, expected returns, and risk. For example, TSP representatives told investors that (i) a previous TSP offering resulted in a $30 million millon return to investors; (ii) the investment would payout: (A) 80% to 120% cash-on-cash return in in the the first year; (B) (B) 99 to to I 1 (900% return); retu); and (C) $5,800 per month per1 1% % ownership interest; (iii) no TSP project had resulted in a dry hole since 2005; and (iv) this investment is a "sure thing." 11. These representations were false. TSP's records do not support the 11. These representations were false. TSP's records do not support the representations concerning past performance or expected returns. In fact, none of TSP's representations concerning past performance or expected returns. In fact, none of TSP's Page Page 3

4 Case 4:09-cv Document 1 Filed 09/15/2009 Page 4 of 8 offerings returned investor principal or profit. And TSP projects had resulted in dry holes during durng this time. 12. Morrson Morrison directed TSP TSP registered representatives to misrepresent the the true tre nature natue of the oil and gas offerings to TSP's prospective investors. For example, Morrison Morrson provided the registered representatives with the information to use in sales calls, including the information regarding historical results, performance, and and risk. risk. Morrson Morrison also monitored sales calls. Afterwards, Morrison Morrson would critique the sales forces' performances. As a result, all of the registered representatives made similar misrepresentations in sales calls to TSP investors. 13. Imediately Immediately after after contacting the the investors by by phone, TSP sent offering materials to them by express mail. mail. The offering materials consisted of, among other things, thgs, a Private Placement Memorandum ("PPM"), a geological summary, summar, and a subscription agreement. For each offering, offerg, investors paid their fundsto to the issuers. Accordingto the offeringmaterials, the issuer would use the funds to underwrite the offering's costs, which included drilling and testing fees, geological testing fees, management fees, marketing fees, due diligence dilgence fees, and commissions. Ifwarranted, waranted, investors also would be required to pay "completion costs," which are additional funds the issuer used to complete, equip, and operate the wells. The issuers used the money to drill wells as represented in the PPM. None ofthe TSP placed wells generated a profit for investors. COMPLAI SEC vs. Texas Securities Partners, LLC and Tony E. Morrison Page 4

5 Case 4:09-cv Document 1 Filed 09/15/2009 Page 5 of 8 CLAIMS First Claim Violations of ofsection LO(b) lo(b) of ofthe Exchange Act and Exchange Act Rule lob Plaintiff Plaintiffrepeats and incorporates and incorporates paragraphs 1 through paragraphs 13 of 1 through 13 ofthis Compiaint by reference as ifset forth verbatim. 15. Defendants, directly or or indirectly, singlyor or in in concert with others, in connection with the purchase or sale ofsecurities, securties, by use ofthe means and instrumentalities instrentalities of ofinterstate commerce and by and byuse of ofthe mails: (a) have employed devices, schemes and artifices arifices to defraud; (b) have made untrue untre statements ofmaterial materal facts and have omitted to state material materal facts necessary in order to make the statements made, in light ofthe circumstances circumstaces under which they were made, not misleading; and (c) and have engaged (c) have in acts, engaged practices and incourses acts, of practices and courses ofbusiness which operate as a fraud and deceit upon purchasers, prospective purchasers, and other persons. 16. Defendants made made these these misrepresentations and and omissions knowingly or with severe recklessness. 17. By By reason reason ofthe ofthe foregoing, Defendants have have violated and, unless uness enjoined, will continue to violate, to violate, Section 10(b) Section of 10(b) ofthe Exchange Act (15 [15 D.S.C. U.S.C. 78j(b)] 78j(b)) and Exchange Act Rule 10b-5 (17 [17 C.F.R. 240.lOb-5). 240.lOb-5]. Second Claim Violations ofsection 17(a) ofthe Securities Act 18. Plaintiffrepeats and incorporates paragraphs 1 through 13 ofthis Complaint by reference as ifset forth verbatim. COMPLAIT SEC vs. Texas texas Securities Partners, LLC and Tony E. Morrison Page 5

6 Case 4:09-cv Document 1 Filed 09/15/2009 Page 6 of Defendants, directly or or indirectly, singlyor orin in concert with others, in connection with the offer or or sale ofsecurities, securties, by by use use ofthe the means and and instrumentalities instrentalities ofinterstate intertate commerce and by use ofthe mails: (a) have employed devices, schemes and artifices arfices to defraud; (b) have made untrue untre statementsof ofmaterial materal facts and have omitted to state material materal facts necessary in order to make the statements made, in light ofthe circumstances under which they were made, not misleading; and (c) and have engaged (c) have in acts, engaged practices and incourses acts, of practices and courses ofbusiness which operate as a fraud and deceit upon purchasers, prospective purchasers, and other persons. 20. As a part ofand in furtherance oftheir scheme to defraud, Defendants, directly and 20. As a par of and in fuerance of their scheme to defraud, Defendants, directly and indirectly, prepared, filed, fied, executed, signed, disseminated, used and issued public statements which contained untrue untre statements ofmaterial materal facts and misrepresentations ofmaterial facts and which omitted to state material facts necessary in order to make the statements made, in light ofthe circumstances under which they were made, not misleading, including, but not limited limted to, those set forth above. 21. Defendants made made these these misrepresentations and and omissions knowingly, with severe recklessness, or negligently. 22. By reason By reason of ofthe foregoing, Defendants have violated and, unless enjoined, will continue to violate, Section 17(a) l7(a) ofthe Securities Act (15 [15 U.S.C. D.S.C. 77q(a)). 77q(a)]. Third Claim Violations of ofsections Sea) 5(a) and S(c) 5(c) ofthe Securities Act 23. Plaintiffrepeats and and incorporates paragraphs 1 through 13 ofthis Complaint by reference as ifset forth verbatim. COMPLAIT Page 6 Page 6

7 Case 4:09-cv Document 1 Filed 09/15/2009 Page 7 of Defendants, directly or or indirectly, singly singly and and in in concert with others, have been offering to sell, selling, sellng, and delivering after sale certain securities, and have been, directly and indirectly: (a) making (a) use making of use ofthe means and instrments and instruments of oftransportation and communication in interstate commerce commerce and of and ofthe mails to sell tosecurities, sell securities, through the use through of the use ofwritten wrtten contracts, offering documents and otherwise; (b) (b) carrying carng and causing to becarred'through carried'through the mails and in interstate commerce by the means and instruments instrments oftransportation, such securities for the purpose ofsale and for delivery after sale; and (c) ( c) making use use ofthe the means means or instruments or instrents of transportation and communication communcation in interstate commerce and ofthe mails to offer to sell such securities. securties. 25. No No registration statements were were ever ever filed with the Commission by the Defendants, and the offerings were not otherwise exempt from registration. 26. By By reason reason of ofthe foregoing, Defendants violated and, unless uness enjoined, will continue to violate Sections 5(a) and 5(c) ofthe Securities Act (15 [15 V.S.C. U.S.C. 77e(a) and 77e(c)]. 77e(c)). REQUEST FOR RELIEF The Commission requests that this ths Court enter a judgment permanently enjoining TSP andmorrson Morrison from violating, from directly violating, or indirectly, directly Section 10(b) orof indirectly, Section 10(b) ofthe Exchange Act and Exchange Act Rule Act lob-5, Rule and Sections IOb-5, 5(a), 5(c), and and Sections 17(a) of 5(a), 5(c), and 17(a) ofthe Securities Act; requiring TSP and Morrson Morrisonto to pay, jointly and severally, disgorgement of$1,200,000 and prejudgment interest of$52,802.44; and granting such other reliefas this Court may deem just or appropriate. COMPLAIT Page 7

8 Case 4:09-cv Document 1 Filed 09/15/2009 Page 8 of 8 DATED: ~ l~ 2009 DATED:~ ls: 2009 Respectfully submitted, MICHAEL D. D. KING KIG Texas Bar No. 24 ~ U.S. SECURITIES SECURIES & EXCHANGE COMMISSION 801 Cherry St., 19th Floor Fort Worth, Wort, Texas Office: Offce: (817) Fax: (817) (fax) ATTORNEY FOR PLAINTIFF Steve Graham Texas Bar No U.S. SECURITIES SECURTIES & EXCHANGE COMMISSION 801 Cherry St., 19th Floor Fort Worth, Wort, Texas Offce: Office: (817) Fax: (817) (fax) OF COUNSEL FOR PLAINTIFF COMPLAIT Page 8 Page 8