US Securities and Exchange Commission accuses DC investment company of fraud, same company Osage are also suing for fraud
SEC lawsuit alleges that the investment company, NewMarket, “looted” the fund in which the Osage, LLC invested
RE: Update from the Office of the Osage Nation Attorney General
A-Ka-Zhi Tsi, Osage Nation Law Building, in Pawhuska, Okla., on the Osage Nation Reservation.
Pawhuska, Okla., (Monday, January 30, 2017)— The Osage Nation has learned that the United States Securities and Exchange Commission (SEC) has accused a Washington, D.C. investment company and its owners of securities fraud in a lawsuit filed in federal court in Philadelphia, Pennsylvania on November 7, 2016. The SEC allegations closely track many of the Nation’s claims leveled against the same Washington, D.C defendants in a lawsuit that the Nation filed in Osage County District Court in May, 2015, following an extensive investigation conducted by the Nation. The Nation, at that time, made its filing and supporting evidence available to the SEC. The Nation also has sued its former chief executive, Carol Leese, and other defendants, in the Osage County lawsuit, alleging that Leese and the others improperly persuaded Osage, LLC to invest in the NewMarket fund.
“It is not an every-day occurrence that a federal agency investigates and prosecutes complex securities fraud reported by a Native American Tribe, or that the Tribe itself would identify and prosecute the wrongdoers in the first instance,” said Amanda Proctor, independent legal counsel for the Nation. Proctor is contracted by Osage Nation Attorney General Holli Wells on behalf of the Nation’s investigation.
The defendants that are common to the Nation’s lawsuit and the SEC’s recently filed civil action are NewMarket Technology Fund I and its two principals, Howard Hill and Christopher Schrichte. In addition, the SEC alleges that an unnamed “software company” was the vehicle through which Hill and Schrichte defrauded some $21 million-worth of investors, one of which was the Nation’s venture capital subsidiary, Osage, LLC. Osage, LLC invested $1 million in NewMarket during the summer of 2010. Investigation by Attorney General Holli Wells and the Nation’s outside counsel has convinced the Nation that the unnamed “software company” in the SEC lawsuit is in fact TeraDact Solutions, Inc., a company that also is named as a defendant in the Osage County lawsuit.
Prior to July 20, 2016, the Washington D.C. companies and their principals, Hill and Schrichte, were represented by attorney Wilson Pipestem of Tulsa. The Pipestem Law Firm withdrew from the representation at that time, citing nonpayment by the Washington, D.C. group. Pipestem, however, continues to represent other named Defendants in the case, including the investment advisors who allegedly steered Osage, LLC to the investment with Hill and Schrichte. In a written submission to the Osage County District Court, Pipestem described the Nation’s allegations against his clients as “demonstrably false” and characterized the transaction with Hill and Schrichte as a “reasonable investment that could still return a profit.” Pipestem referred to Hill and Schrichte as “serious and credible executives.” But the SEC lawsuit alleges that NewMarket, Hill and Schrichte have “looted” the fund in which Osage, LLC invested and that the fund operators used investor funds to “line their own pockets.” The SEC lawsuit goes on to allege that the fund operators took unauthorized, interest-free loans from the fund, that they paid themselves exorbitant salaries, and that they used investor money to purchase “luxury goods” (including cars and jewelry) and to pay personal debt.
The Nation’s counsel, after analysis of the SEC’s filings in the federal court lawsuit, have opined to the Nation that the SEC claims for recovery of misappropriated investor funds include, specifically, Osage, LLC’s $1 million investment. The Nation and its subsidiary company, which is now under new management, also seek to recover those funds in the Osage County lawsuit.
The SEC’s lawsuit is a civil action to recover money for defrauded investors. The SEC seeks permanent injunctions, disgorgement plus prejudgment interest, and civil penalties. The SEC does not have criminal prosecution authority, which resides with the United States Department of Justice. The Nation’s first priority in this event is to get back its money. Under the direction of the Attorney General of the Nation, the Nation will pursue all avenues to bring this matter to a satisfactory end.
The Osage Nation’s investigation was conducted by the Office of the Osage Nation Attorney General, the Osage Nation Police Department and the Osage Nation Office of Fiscal and Performance Review, and supervised by the Osage Nation Attorney General. The litigation filed by the Osage Nation is led by J. David Jorgenson and Proctor and supervised by Attorney General Holli Wells.
Three of the attorneys serving the Osage Nation on these matters are members of the Osage Nation, including, Wells, First Assistant Attorney General Clinton Patterson and Proctor. This investigation, and the resulting litigation, underscores the Principal Chief’s firm commitment to protecting the assets of the Osage Nationand bringing justice to individuals who seek unjust enrichments at the expense of the Osage people.
Osage Nation Attorney General
Attorney General Holli Wells is the legal counsel for the Osage Nation and is charged by the Office of the Attorney General Act, 15 ONC § 3-101 et seq., to:
- Defend and enforce the laws and Constitution of the Osage Nation
- Prosecute violations of Osage Nation law
- Represent the legal interests of the Osage Nation
To fulfill these responsibilities, the Office of the Attorney General serves as legal counsel to all departments and offices of the Osage Nation government, issues legal opinions when requested by the Principal Chief or Speaker of the Congress, and defends challenges to Osage Nation laws and suits against the Nation. The Office is committed to upholding and protecting the sovereign immunity of the Nation.
The Opinions of the Attorney General are public information and are available on the Osage Nation website.
The Office of the Attorney General is committed to serving our Osage people. If you have any questions or concerns, please feel free to contact our office at:
Physical Address:
1071 Grandview Lane
Pawhuska, OK 74056
Telephone:
918-287-5514
Fax:
918-287-5468
Hours of Operation:
Monday – Friday, 8:00am to 4:30pm.
For Media Inquiries: Osage Nation Communications 918-287-5599