Securities Commissioner John Morgan entered an Emergency Cease and Desist Order June 22 against Petro-San Resources LLC and Sean Patrick Riley of San Antonio.
The order alleges that Petro-San and Riley are offering to sell unregistered oil and gas investments in a Caldwell County drilling program, failing to disclose material facts about Riley's background, and making misleading statements likely to deceive the public.
The Texas State Securities Board order is Riley's third sanction, following a 2012 cease and desist order by the Pennsylvania Securities Commission and a 2013 order by the Georgia Securities Commissioner, both for selling unregistered oil and gas interests to unqualified investors.
According to the order, Riley, the president and sole managing member of Petro-San, is offering for sale unregistered working units in a one-well project in the county. Riley is claiming that the investment will produce gusher-like returns: $30,000 will entitle investors to a working interest in the project with an "asset value" of $60,000, and in addition could generate $2,112 in monthly revenue.
The offer to investors is deceiving the public by making misleading statements that characterize Petro-San's professional team as having "three generations of integrity and expertise, and a strong work ethic. . ." Riley is also said to be part of a third generation to find success in the oil and gas industry and has five years of experience in developing and reworking oil and gas projects.
In the past 10 years, though, Riley has accumulated other types of experience. In 2005, he pleaded guilty in Harris County State District Court to a state jail felony for promotion of a pyramid scheme.
In 2014, Riley was charged with two crimes. One, a charge of misdemeanor driving while intoxicated, with an extreme intoxication enhancement, is pending in Bexar County Court at Law.
Riley was also charged with misdemeanor assault to a spouse or cohabitating member. That case is pending in Bexar County Court at Law.