The Securities and Exchange Commission has received a permanent ban on David T. Laurance and his Tomahawk Exploration LLC. Laurence attempted to raise money issuing a “Tomahawkcoin” (TOM) in an initial coin offering (ICO).
While the ICO was not successful it tripped the fraud triggers at the SEC enforcement division. Laurance is now permanently banned from acting as an officer or director of any issuer of a registered securities. He is also barred from offering any penny stock including acting as a finder and more.
According to the SEC, Tomahawk launched an ICO in 2017 seeking $5 million to ostensibly fund the cost of drilling oil wells in California. The ICO did the standard white paper release, and affiliated hyperbole, claiming the company was “capable of producing significant risk adjusted rates of return,” adding “LOW RISK, HIGH POTENTIAL RATES OF RETURN ARE ACHIEVABLE.” A huge red flag when it comes to issuing securities. The Tomahawkcoins were said to be linked to equity in the company.
Going from bad to worse, in July 2017 Laurance responded to the SEC’s DAO Report publishing an article online titled, “Tomahawkcoin ICO Adjusting to the SEC by Legally Avoiding Them.”
The article claimed that Tomahawk’s ICO would be exempt from securities regulation because the Company was abandoning its plan to be quoted on the OTC market.
Laurance ultimately failed to raise any money although the bounty program did see some Tomahawkcoins distributed which were deemed an offer of securities and thus prohibited without an appropriate exemption.
According to the SEC, in 1993 Laurance was convicted of mail fraud and providing false information to the SEC in connection with a scam to defraud investors in penny stock companies he promoted. Following his release from prison, Laurance jumped back into the oil and gas business which ultimately failed. The Tomahawkcoin promotional material described Laurance as having a “flawless background.”
Robert A. Cohen, Chief of the SEC’s Cyber Unit, commented on the enforcement action;
“Investors should be alert to the risk of old-school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs.”
Without admitting or denying the SEC’s findings, Tomahawk and Laurance consented to a cease and desist order and Laurance consented to an officer and director bar, penny stock bar, and a $30,000 penalty.
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