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Two Springs oil companies file countersuit in securities fraud case
WAYNE HEILMAN
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(August 28, 2008 - Thursday) - Gulf Coast Western LLC and HEI Resources Inc., which Gulf Coast Western acquired in late 2007, argue in a countersuit filed Monday against Joseph in Denver District Court that both state and federal regulators have already failed in previous attempts to show the companies violated state and federal securities laws. Both companies, based in Colorado Springs, sell partnerships in oil and natural gas wells in Texas to investors nationwide.
Joseph sued both companies along with Charles Reed Cagle, Dale Phillips and Nicholas Troyer, all of Colorado Springs; Joseph Kinlaw of Woodland Park and Steve Ziemke of Monument, among others, alleging they operated a fraudulent scheme to sell partnerships in oil and gas wells to more than 200 investors nationwide using “boiler room” sales operations in the Springs and Denver.
The counterclaim alleges, among other things, that a federal judge in 1999 dismissed a lawsuit by the Securities and Exchange Commission against Kinlaw Securities Corp. making similar allegations about similar partnership interests after ruling that the partnership interests weren’t securities.
Joseph said Wednesday he “stands by the original (lawsuit) and allegations that the defendants are fraudulently selling unregistered securities.”
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