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OFFICE OF SECURITIES
121 STATE HOUSE STATION
AUGUSTA, ME 04333
ORDER TO CEASE AND DESIST
AND IMPOSING A CIVIL PENALTY
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Matrix Petroleum, Inc. (“Matrix”) was incorporated in
Thomas R. Watkins is an individual who has been at all
relevant times the president of Matrix and whose last known business address is
Brock Watkins is an individual who has acted at all
relevant times as a sales representative of Matrix and whose last known
business address is
In late 2004 and early 2005, a resident of
5. In discussing these investments with the Maine resident, Brock Watkins touted the company’s past successes, claimed that Matrix was the top producer of oil in Tennessee, suggested that the new projects would be successful, and, with respect to at least one project, claimed that he needed to know immediately whether the Maine resident would invest because Matrix was about to start drilling. These representations were false.
On at least one occasion, during the period of these
Between January and May 2005, and as a result of these
telephone solicitations, the
8. Each investment was memorialized by a Joint Venture Subscription Agreement signed by Thomas Watkins. Although Matrix Petroleum, Inc., is listed in these agreements as the offeror of the investments, each agreement has the words “Matrix/Basin Petroleum Incorporated” at the top of the first page.
These investments were not registered as securities in
Brock Watkins called the
Thomas Watkins is also the president of Basin Oil &
Gas Corporation (“Basin”), which was incorporated in
14. Between 2001 and 2005, securities regulators in at least seven other states issued administrative orders against Basin and Thomas Watkins for violations of state securities laws, including sales of unregistered securities, unlicensed conduct, and fraud in connection with the offer and sale of securities. The securities involved in these cases were investments in oil and gas projects.
The respondents did not disclose to the
On or about February 17, 2006, the Office of Securities
(“the Office”) sent certified letters to Matrix and Thomas Watkins, including
one sent to their
The investments that Matrix offered and sold to the
With respect to the securities offered and sold to the
19. With respect to the offers and sales of securities to the Maine resident, Thomas Watkins and Brock Watkins acted as “sales representatives” in Maine under section 10501(16) of the Act.
Pursuant to section 10401 of the Act, a person may not
offer and sell any security in
Respondents violated section 10401 of the Act because the
securities that they offered and sold to the
Pursuant to section 10301(1) of the Act, a person may not
transact business in
Thomas Watkins and Brock Watkins violated section 10301(1)
of the Act because they were not licensed as sales representative in
Pursuant to section 10301(2) of the Act, it is unlawful
for any issuer to employ or contract with a person as a sales representative in
Matrix violated section 10301(2) of the Act by
employing or contracting with Thomas Watkins and Brock Watkins as unlicensed sales
26. Pursuant to section 10201 of the Act, in connection with the offer or sale of any security, a person shall not, directly or indirectly: (a) employ any device, scheme or artifice to defraud; (b) make any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or (c) engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person.
Respondents violated section 10201 of the Act by making
false representations to the
Respondents also violated section 10201 of the Act by
failing to disclose, among other things, that Thomas and Brock Watkins were not
licensed to offer and sell securities in
29. Pursuant to section 10601(3) of the Act, “[i]t is unlawful to fail to provide promptly any written statement if requested” by the administrator.
30. By failing to provide the written statement requested by the administrator, Matrix and Thomas Watkins violated section 10601(3) of the Act.
31. As an officer of Matrix, Thomas Watkins is a “control person” of Matrix pursuant to 32 M.R.S.A. § 10602(3). He is thus liable for the securities law violations of Matrix.
32. Pursuant to section 10602(1) of the Act, the administrator may issue a cease and desist order if he reasonably believes that any person has engaged, is engaging or is about to engage in any act or practice constituting a violation of any provision of the Act.
33. Pursuant to section 10602(1) of the Act, the administrator may issue an order imposing a civil penalty that may not exceed $1,500 for a single violation if he reasonably believes that any person has engaged, is engaging or is about to engage in any act or practice constituting a violation of any provision of the Act.
34. In this matter, each respondent is liable for at least five violations of section 10401 of the Act, five violations of section 10301 of the Act, and five violations of section 10201 of the Act. In addition, Matrix and Thomas Watkins are each liable for one violation of section 10601(3) of the Act.
35. Effective December 31, 2005, the Maine Uniform Securities Act, Title 32, Chapter 135, superseded the Act and governs conduct occurring after December 31, 2005.
36. On March 16, 2006, the Securities Administrator issued a Notice of Intent to Issue a Cease and Desist Order and Impose a Civil Penalty on Matrix, Thomas R. Watkins, and Brock Watkins (“Notice”), giving them thirty (30) days to request a hearing on the matter. No respondent has requested a hearing or otherwise responded to the Notice.
37. In accordance with 5 M.R.S.A. § 9053(3), and Section 19(1) of Office of Securities Rule Chapter 540, the Securities Administrator may dispose of this proceeding by default.
NOW, THEREFORE, it is ORDERED that Respondents Matrix, Thomas R. Watkins, and Brock Watkins CEASE AND DESIST from violating the Maine Uniform Securities Act, including the prohibitions against securities fraud, offering and selling unregistered securities, transacting business as an unlicensed agent in Maine, and employing or contracting with an unlicensed agent in Maine.
further ORDERED that Respondents Matrix and Thomas R. Watkins shall each pay a
civil penalty of $24,000, and that Respondent Brock Watkins shall pay a civil
penalty of $22,500. All payments should
be made payable to Treasurer, State of
Pursuant to 32 M.R.S.A. § 10708, this is a final order, entered after notice and opportunity for hearing. Pursuant to 32 M.R.S.A. § 10709, a party may obtain judicial review of the order in Kennebec County Superior Court by filing a petition within thirty (30) calendar days after receipt of the order, in accordance with 5 M.R.S.A. § 11001 et seq. and Rule 80C of the Maine Rules of Civil Procedure.
Date: April 20, 2006 s/Michael J. Colleran
Michael J. Colleran
Date: April 20, 2006 s/Bonnie E. Russell
Bonnie E. Russell
Assistant Securities Administrator
Date: April 20, 2006 s/Michael W. Atleson
Michael W. Atleson