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Judge rules oil and gas venture are NOT Securities

The oil and gas joint-ventures marketed by a Colorado Springs company — in which investors lost million of dollars — were legal investments, according to a  2013 Denver District Court ruling.


The Colorado Securities Commission sued HEI Resources Inc. and Heartland Energy Development, contending their investments were improperly marketed to hundreds of investors using pressure tactics.

Six investors testifying for the state said they collectively lost $4 million in the oil and gas drilling ventures, according to the court ruling.

But in the Oct. 17 ruling, Judge Michael Martinez rejected the state’s arguments.

“It is a vindication of our agreements,” said Donnie Wisenbaker, HEI Resources’ general counsel. “It is a vindication of our business.”

The key ruling was in the nature of the investment.

The state maintained that they were securities. HEI said they were joint-ventures not regulated by state securities law.

Martinez — noting that investors directly participated in conference calls on the oil and gas properties — ruled they were joint-ventures.

The state also argued that the ventures were marketed to the elderly and unsophisticated investors,

Martinez rejected the claim, saying there was “persuasive and credible evidence” that investors “were capable of intelligently exercising the partnership powers granted to them in the joint venture.”

Brandon Davis, an attorney for Heartland, said in a statement that the ruling “confirms businesses can raise capital through joint ventures without being subject to burdensome securities regulations.

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