Court Enters Final Judgment Against COO in Cannon Operating Oil and Gas Fraud
The U.S. District Court for the Northern District of Texas this month entered a final consent judgment permanently barring Michael Bowen, the former chief operating officer and sales manager of Cannon Operating Company LLC, from the securities industry and ordering him to pay $304,827 to resolve U.S. Securities and Exchange Commission charges that he helped fraudulently sell unregistered oil and gas working interests to more than 140 investors.
Without admitting the allegations, Bowen consented to a permanent injunction barring him from future violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 and from participating in the offer or sale of any security other than listed securities purchased for his own personal accounts. The judgment orders Bowen to pay $106,000 in disgorgement, $48,827 in prejudgment interest, and a $150,000 civil penalty – for a combined total of $304,827.
According to the SEC’s complaint, between January 2018 and September 2020, Bowen and Cannon principal William Glen Baker fraudulently raised approximately $2.18 million from at least 140 investors through the unregistered offer and sale of working interests in four Oklahoma oil and gas wells. Bowen served as Cannon’s COO and sales manager from April 2016 through September 2018.
The SEC alleged that offering materials Bowen helped draft misrepresented the performance of Cannon’s prior wells in the same field, failed to disclose sales commissions paid to brokers, and otherwise misstated how investor funds would be used. The complaint further alleged that Bowen directed and concealed the payment of those undisclosed commissions and acted as an unregistered broker in connection with the sales.
The SEC’s original 2022 complaint charged Bowen alongside Baker, Cannon Operating, and Chol Kim, also known as Brandon Kim, who also allegedly acted as an unregistered broker. The complaint alleged that Baker, a recidivist with prior SEC disciplinary history, misused investor funds on personal expenses including shopping, entertainment, and travel rather than drilling and operating the wells. Baker was also charged separately with convincing one investor to open a self-directed IRA to purchase a mineral interest that his company North Texas Minerals LLC never actually owned, misappropriating the investor’s entire $126,000 investment.
The case illustrates recurring risk patterns in private oil and gas offerings marketed by unregistered brokers operating outside oversight from the Financial Industry Regulatory Authority, offering documents that misrepresent prior performance and undisclosed compensation arrangements. Working interest offerings in oil and gas programs are a long-standing segment of alternative investments distributed to retail investors as direct participation programs, and regulators have repeatedly warned of elevated fraud risk in the category.
The final judgment resolves the SEC’s claims against Bowen. The litigation against Baker, Cannon Operating, North Texas Minerals, and Kim remains pending, according to court records.
Visit the AltsWire directory page.
