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GC Dropped Nearly $40K of Company Funds at Gentlemen’s Club, SEC Says

June 27, 2016, 10:55 PM

Wall Street’s top cop has charged the general counsel of a Texas-oil and gas company with violating a bevy of securities laws, including dropping almost $40,000 of company funds in a four-day period in 2014 at a Dallas gentlemen’s club.

Jeremy Wagers, general counsel chief operating officer of Breitling Energy Corp, faces charges that he violated anti-fraud and reporting provisions of the Exchange Act, including that he signed public filings “replete” with misrepresentations and omissions on material financial issues.

Wagers attorney Larry Friedman, of Friedman & Feiger in Dallas, said his client categorically denies the allegations.

“Wagers did what good lawyers do,” said Friedman. “They document deals. They give advice. They ensure compliance. But lawyers, particularly GCs do not get involved in the finances of a business.”

Filed in federal court in Dallas last week, the SEC complaint accuses Wagers and eleven other defendants of a scheme to defraud investors out of $80 million during the last five years that involved selling investments in oil and gas prospects, where the production had been “grossly” overestimated, among other misrepresentations.

Breitling Energy Corp. is an oil and gas exploration and development company whose CEO Christopher Faulkner, the lead defendant in the case, dubbed himself the “frack master” and frequently appeared in the media.

Friedman, who is representing Faulkner and other defendants and whose firm has represented Breitling in the past, accused the SEC of littering the complaint with details of Wagers and other defendants’ expenses at a gentlemen’s club in order to embarrass them. In reality, Friedman said they needed to wine and dine prospective investors.

“This isn’t about humiliation — they only have a claim if there’s a violation of the securities act and buying an expensive dinner isn’t,” he added.

David Fraser, the SEC attorney who signed the complaint, was not available for comment.

According to the complaint, Faulkner and Wagers purposely obtained Amex cards in their names, but which showed up to the account of Gilbert Steedley, Breitling’s vice president of capital markets and also a defendant.

“Faulkner used this card — which he referred to as his ‘whore card’ — to charge more than $1 million for personal travel, expenses for various personal escorts, gentlemen’s clubs, nightclubs, and associated expenditures,” the complaint states. “Wagers used his card predominantly for gentlemen’s club expenses.”

Wagers joined Breitling in 2012 as GC and chief compliance officer and the following year, his title changed to GC and chief operating officer. Before joining Breitling, he practiced law as a corporate finance attorney in Houston with Vinson & Elkins and Skadden Arps Slate Meagher & Flom.

Wagers remains with Breitling as GC and chief operating officer, according to the company’s website.