2012 BCSECCOM 342

Background
1. Armadillo is a Nevada corporation that claims to be a privately owned energy corporation that owns an oil lease in Oklahoma. Armadillo has never filed a prospectus, offering memorandum or exempt distribution report under the Act.

2. The Company is a British Columbia Corporation, incorporated on November 3, 2010, and Okano is the sole director. It is not registered under the Act.

3. Okano, Soolaman and Gozdek are all residents of British Columbia. Okano and Gozdek have never been registered under the Act. Soolaman was registered under the Act as a Dealing Representative from May 9, 2011 to January 20, 2012.

Illegal Trading and Distribution of Securities
4. The Respondents promoted and sold Armadillo Partnership Agreements (Partnership Agreement) to investors. Under a Partnership Agreement, an investor received title to a defined amount of crude oil from Armadillo’s lease in Oklahoma. The quantity of oil would depend on the amount of money invested. Armadillo guaranteed the partner that equal amounts of the oil purchased would be extracted each month and sold to a refinery on the partner’s behalf. The net proceeds would then, at the partner’s election, be used to acquire title to an additional quantity of oil or were to be forwarded to the partner in the form of a production payment.

5. Armadillo distributed its securities in Canada through the Company, which received a 19% commission on the sale of each Partnership Agreement.

6. Between December 13, 2010 and April 12, 2011, the Company sold Partnership Agreements to at least 64 investors in Canada for a total of $2,379,229.27. Twenty-six of the investors were residents of British Columbia, who invested a total of $781,502.66.

7. Okano, Gozdek and Soolaman each directly solicited persons to invest in the Partnership Agreements, executed them on behalf of Armadillo as a “Sales Associate”, and received a Commission from the Company for each investment sold. In respect of the Partnership Agreements sold in British Columbia:

(a) Godzek raised $500,778.74;

(b) Okano raised $221,374.79; and

(c) Soolaman raised $59,349.13.

8. On July 29, 2011, the Ontario Securities Commission issued a Notice of Hearing and Temporary Cease Trade Order against Armadillo and others for alleged unregistered activity in Ontario.

9. By trading and distributing securities without being registered and without having filed a prospectus, the Respondents contravened sections 34 and 61 of the Act.

Public Interest

Hearing Process