Court agrees to regulators’ freeze demand in fraud case

An Oklahoma County judge has frozen the assets of two men state securities regulators accuse of defrauding investors.

Oklahoma’s Department of Securities brought a suit against Jerrold Wayne Myers and Gary Douglas Warlick, and seeks orders requiring the men to repay their investors and barring both men from selling securities to investors in Oklahoma in the future.

Business violations

Myers and Warlick both are accused of violating the Oklahoma Business Opportunity Sales Act through business arrangements they made with investors involving fish and quail breeding programs.

Those investment opportunities were offered through a company Myers and Warlick named Manna Source Sustainable, which operates in Bartlesville.

The Oklahoman contacted Manna Source Sustainable on Friday, but Myers and Warlick were not available, an unidentified man who answered the phone said.

They also are accused of violating the Oklahoma Uniform Securities Act by selling a penny stock issued by another company they own, Harris Exploration Inc., to buyers.

The Securities Department accuses the men of misleading customers about Harris Exploration’s scope of business and their expectations for the stock’s future value.

They also, the suit asserts, offered Harris stock to unhappy investors in their fish breeding program as a way to try to buy them off.

The suit claims Manna’s investor deals on its fish and quail breeding programs violated the business opportunity act in various ways.

Details of the case

In a breeders/growers program for tilapia Manna offered, potential investors from Oklahoma, Kansas, Arkansas and Missouri were solicited to pay amounts ranging from $10,000 to $100,000 to enter the business, records show. Depending on how much an investor paid, the company projected he or she could expect to see an annual return income of between $62,000 and $548,000, according to court records.

Their offer stated Manna had the knowledge to make the business a success and that Manna would supply breeder/growers with all the equipment they needed, including tanks, filtration systems and plumbing, records show.

Manna also promised investors the company would provide them with tilapia stock (the investment size dictated how many fish they would get), organic feed and other training and technical support for their operations, court records state.

Under the agreements, investors were expected to provide buildings for the tank farms, to provide needed utilities and water for the operations and to feed and care for the fish.

Manna, meanwhile, said it would buy tilapia offspring, picking them up at regular intervals so they could be taken to other farms to complete their growth process before being sold to food stores such as Whole Foods, Kroger and Costco, or the countries of Dubai and Kuwait, records show.

The suit accuses the men of failing to provide

disclosure documents to their investors, of failing to deliver functional equipment, training and technical support, of failing to provide adequate food, of failing to deliver breeder/feeder stock to some investors and, of failing to buy the resulting offspring.

The suit also accuses the men of lying to investors about the existence of downstream contracts with the grocery stores and countries.

It goes on to say that neither the defendants or their companies were licensed with the Oklahoma Department of Agriculture, Food and Forestry or the Oklahoma State Department of Health to operate aquaculture or food manufacturing operations.

It accuses the men of offering a similar fraudulent deal to investors in the quail breeding/growing program. The suit claims the men offered investment opportunities to investors for it that ranged from $1,500 to $50,000, with projected annual incomes ranging from $23,040 to $115,200.

The suit asserts the men lied to investors when they told them they had agreements with cruise ships to buy the resulting eggs daily.

Initial steps

Oklahoma County District Court Judge Bryan C. Dixon issued an order Wednesday that froze the assets of Myers and Warlick. The order also temporarily barred them from conducting business in the state, barred them from destroying any of their business-related records and required them to give Oklahoma securities regulators access to those records.

Jim Reese, secretary of Oklahoma’s Department of Agriculture, Food and Forestry, said Friday his agency received numerous complaints from Manna’s investors.

“Some lost significant amounts of money, and we spent some effort trying to alleviate their losses,” Reese said.

Dixon has scheduled another hearing on the case on Feb. 17.