PA Securities Commission Halts Unregistered Activity by McKelvey Gas Co.
HARRISBURG, Pa., Sept. 23 /PRNewswire/ -- In its first enforcement action marking its increased scrutiny of investment activities involving natural gas drilling in the Marcellus Shale formation, the Pennsylvania Securities Commission (PSC) today announced it has ordered a halt to the offer and sale of unregistered securities in Pennsylvania by a Gibsonia (Allegheny County) firm.
The Commission issued a Summary Order to Cease and Desist against McKelvey Gas Co. (MGC) as a company and Albert T. McKelvey as an individual, both with an address in Gibsonia. MGC was offering for sale investments in a Marcellus Shale gas well drilling project. McKelvey was listed as the owner of MGC. The offer and assertions made to prospects by McKelvey represent violations of Pennsylvania securities law.
The Commission found that earlier this month, McKelvey placed an advertisement entitled "Investment Opportunity" in a Pittsburgh-area newspaper. The ad stated "Here is an opportunity to earn money from the Marcellus shale gas well drilling." The ad specified a minimum investment is $5,000; that "all investment notes are locked in for thirty-six months" and investors will earn 6 percent interest the first year, 6.5 percent interest the second year and 7 percent interest the third year. The ad further stated that interest was to be paid at the end of each twelve month period; and that "wells produce for 20 to 30 years."
A staff investigation revealed that at least one Pennsylvania resident observed the ad and telephoned McKelvey. McKelvey, according to Commission documents, told the resident that as an investor he would receive an "interest certificate" with a corporate seal; that the certificate would be an "official state document" and would be "just like having a U.S. Savings Bond paying interest"; and that as long as investors kept their money with MGC, they would receive a one-half percent increase in interest annually, without limitation.
McKelvey further stated, according to the PSC, that he is "bonded to do 500" wells and only needed eight to be able to repay investors; and that the prospect did not need to know anything about oil and gas as MGC would do everything.
MGC failed to make material information available to the prospective investor which also represents violations of Pennsylvania law including disclosure of (1) the financial condition of MGC; (2) the financial risks of the program; (3) the identity and relevant background of the corporate officers of MGC; (4) MGC's operating history; (5) that the program is not registered in Pennsylvania; and (6) that in or about April 2006, McKelvey was convicted in the United States District Court for the Western District of Pennsylvania of impersonating a Marine Corps officer.
The Commission ordered McKelvey Gas Co. and Albert T. McKelvey to stop offering and selling the program in the Commonwealth of Pennsylvania, in violation of the 1972 Act.
According to the Commission, any further solicitations or sales made by MGC, McKelvey or their affiliates in Pennsylvania will constitute further violations of the 1972 Act.
The Commission issued a request for any person who is or was solicited by or has information about MGC or McKelvey to immediately notify the Pennsylvania Securities Commission by calling the toll-free line 800-600-0007 (PA only); in Harrisburg: (717) 787-8061; in Pittsburgh: (412) 565-5083; or, in Philadelphia: (215) 560-2088.
SOURCE Pennsylvania Securities Commission
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