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UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933

Release No. 10264 / December 8, 2016

SECURITIES EXCHANGE ACT OF 1934

Release No. 79507 / December 8, 2016

INVESTMENT COMPANY ACT OF 1940

Release No. 32383 / December 8, 2016

ADMINISTRATIVE PROCEEDING

File No. 3-17716

In the Matter of

 ROBERT L. BAKER,

 JACOB B. HERRERA,

 MICHAEL D. BOWEN and

 TERRENCE A. BALLARD,

 

Respondents.

ORDER INSTITUTING 

ADMINISTRATIVE AND CEASE-ANDDESIST PROCEEDINGS PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933, SECTIONS 15(b) AND 21C OF 

THE SECURITIES EXCHANGE ACT OF 

1934, AND SECTION 9(b) OF THE 

INVESTMENT COMPANY ACT OF 1940

AND NOTICE OF HEARING

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Sections 15(b) 

and 21C of the Securities Exchange Act of 1934 (“Exchange Act”), and Section 9(b) of the 

Investment Company Act of 1940 (“Investment Company Act”) against Robert L. Baker, Jacob B. 

Herrera, Michael D. Bowen and Terrence A. Ballard (collectively the “Respondents”).

II.

After an investigation, the Division of Enforcement alleges that:

SUMMARY

1. Between 2011 and 2016, the Respondents willfully violated Sections 5(a) and 5(c)

of the Securities Act and Section 15(a) of the Exchange Act by engaging in the unregistered offer 
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and sale of undivided oil and gas interests to hundreds of investors across the country as part of an

$80-million offering fraud orchestrated by Chris Faulkner (the “Faulkner Scheme”).

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2. The Respondents participated in the Faulkner Scheme by selling or participating 

in the sale of securities to hundreds of investors, including cold-calling thousands of investors 

across the country to solicit investments in dozens of unregistered oil and gas securities

offerings, and providing substantive details about the offerings to prospective investors. For 

their roles in the Faulkner Scheme, the Respondents collectively received nearly $9 million in 

undisclosed transaction-based compensation in the form of commissions. None of the 

Respondents was registered with the Commission as a broker or associated with a registered 

broker-dealer during this time.

RESPONDENTS

3. Baker, age 54, is a resident of Dallas, Texas. Baker worked as a salesperson for 

Breitling Oil and Gas Corporation (“BOG”), Breitling Royalties Corporation (“BRC”), Crude 

Energy, LLC (“Crude”), Crude Royalties (“CR”), Patriot Energy, Inc. (“Patriot”), and Patriot 

Royalties (“PR”), selling oil and gas interests as part of unregistered offerings. Baker is not 

registered with the Commission in any capacity and does not have any disciplinary history.

4. Herrera, age 26, also known as Brandon Jacobs, is a resident of Cedar Hill, Texas. 

Herrera worked as a salesperson for BOG, BRC, Crude, CR, Patriot, and PR selling oil and gas 

interests as part of unregistered offerings. Herrera is not registered with the Commission in any 

capacity and does not have any disciplinary history.

5. Bowen, age 34, is resident of Waxahachie, Texas. Bowen worked as a 

salesperson for BOG, BRC, Crude, CR, Patriot, and PR selling oil and gas interests as part of 

unregistered offerings. Bowen is not registered with the Commission in any capacity and does 

not have any disciplinary history.

6. Ballard, age 41, is a resident of Frisco, Texas. Ballard worked as a salesperson for

BOG, BRC, Crude, CR, Patriot, and PR selling oil and gas interests as part of unregistered 

offerings. Ballard (CRD #4226733) previously held a Series 7 license, and was affiliated with 

several registered broker-dealers between 2000 and 2009. Ballard’s license is currently expired, 

and he is not currently registered with the Commission in any capacity and does not have any 

disciplinary history. 

OTHER RELEVANT PERSON AND ENTITIES

7. Christopher A. Faulkner, age 39, is a resident of Dallas, Texas. Faulkner is the 

co-founder of BOG and BRC and served as President of those entities until December 2013. 

 

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The Commission recently filed an action in United States District Court for the Northern District of Texas against 

Faulkner, seven additional individuals and four entities for their roles in the Faulkner scheme alleging, among other 

things, violations of the antifraud provisions of the federal securities laws. (SEC v. Faulkner, et. al, Civil Action No. 

3:16-cv-01735-D)(N. D. Tex. June 24, 2016)). 
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Faulkner is currently the President, CEO, and Chairman of the Board of Breitling Energy 

Corporation. He also directed the operations of Crude, CR, Patriot and PR.

8. Breitling Oil and Gas Corporation (“BOG”) is a company that was originally 

organized in the state of Oklahoma in 2004 under the name Southwest Energy Exploration, LLC

(“Southwest Energy”). Faulkner controlled Southwest Energy and changed its name to BOG in 

July 2010 when he started the company with Parker Hallam (“Hallam”) and Dustin Michael 

Miller Rodriguez (“Miller”). BOG’s principal place of business was in Dallas, Texas until 

December 9, 2013 when it was part of the transaction that created Breitling Energy Corporation. 

BOG is not registered with the Commission in any capacity. 

9. Breitling Royalties Corporation (“BRC”) is a corporation organized in Texas. 

Faulkner started the company with Hallam and Miller in 2010, and controlled its operations 

thereafter. BRC’s principal place of business was in Dallas, Texas until December 9, 2013 when it 

was part of the transaction that created BECC. BRC is not registered with the Commission in any 

capacity. 

10. Breitling Energy Corporation (“BECC”) is a corporation organized in Nevada with 

its principal place of business in Dallas, Texas. BECC is the result of an asset-for-stock sale 

transaction between Bering Exploration (OTC: BERX), BOG and BRC. BECC is registered with 

the Commission under Section 12(g) of the Exchange Act, and BECC’s (ticker: BECC) stock has 

been quoted on OTC Link operated by OTC Markets Group, Inc. BECC is currently a respondent 

in an administrative proceeding brought by the Commission pursuant to Section 12(j) of the 

Exchange Act. In the Matter of Breitling Energy Corporation, Administrative Proceeding File No. 

3-17336 (July 11, 2016). On September 12, 2016, the Administrative Law Judge issued an Initial 

Decision of Default against BECC and ordered that the registration of the company’s securities be 

revoked.

11. Crude Energy, LLC (“Crude”) is a limited liability company currently organized 

in Nevada with its principal place of business in Dallas, Texas. Crude served as BECC’s 

working interest sales arm from late 2013 through April 2015. Crude has since ceased 

operations. Crude is not registered with the Commission in any capacity and does not have any 

disciplinary history.

12. Crude Royalties (“CR”) is a limited liability corporation organized in Texas with 

its principal place of business in Dallas, Texas. Crude serve as BECC’s royalty interest sales 

arm from late 2013 through April 2015. CR has since ceased operations. CR is not registered 

with the Commission in any capacity and does not have any disciplinary history.

13. Patriot Energy, Inc. (“Patriot”) is a corporation organized in North Dakota with its 

principal place of business in Dallas, Texas. Patriot served as BECC’s working interest sales 

arm until June 2016. Patriot also sold royalties under the name of Patriot Royalties, Inc. (“PR”). 

Patriot has since ceased operations. Patriot is not registered with the Commission in any 

capacity and does not have any disciplinary history. 
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THE FAULKNER SCHEME

14. Starting in or around 2011, Faulkner orchestrated a multi-pronged scheme that 

defrauded hundreds of investors across the country out of at least $80 million dollars in 

connection with the unregistered offer and sale of oil and gas interests. Faulkner relied upon the 

assistance of numerous individuals – including the Respondents – to carry out the Faulkner 

Scheme. 

15. Faulkner ran the first part of the Faulkner Scheme through privately-held BOG, a 

Dallas-based company that offered and sold working interests in numerous oil and gas prospects

in various states, including Texas, North Dakota and Oklahoma. Faulkner hired a team of 

salespeople – managed by two BOG officers – to offer and sell the BOG working interests to 

prospective investors based on offering materials replete with material misrepresentations and 

omissions. Those misrepresentations lured hundreds of investors from across the county to 

invest millions of dollars with BOG. Once BOG received investor funds, Faulkner used a 

significant portion to fund his extremely lavish lifestyle. 

16. The Faulkner Scheme transitioned in December 2013 after BOG engaged in a 

transaction with a publicly-traded company to create BECC. BECC represented to investors 

that it was a legitimate exploration and production (E&P) oil and gas company with a business 

model that varied greatly from BOG. In reality, BECC’s business model was similar to BOG’s 

but with a different veneer. Faulkner set up two affiliated entities – Crude and later Patriot – to 

deceive investors with the same type of unregistered offerings that BOG promoted. The Crude and 

Patriot offering materials contained misrepresentations and omissions similar to those in the BOG 

offerings. After raising millions of dollars through Crude and Patriot, Faulkner again 

misappropriated several million for his personal use. 

RESPONDENTS’ UNREGISTERED OFFER AND SALE OF SECURITIES

17. Even though Faulkner conceived of and orchestrated the Faulkner Scheme, he 

delegated the offer and sale of the securities to others. Between 2011 and 2016, the Respondents 

sold working interests in oil and gas prospects for BOG, Crude, and Patriot (collectively the 

“Working Interest Entities”) and royalty interests in oil and gas prospects for BRC, CR, and PR 

(collectively the “Royalty Interest Entities”). The Respondents were regularly and intimately 

involved at key points in the chain of distribution for both the Working Interest Entities and 

Royalty Interest Entities. 

18. Although the relevant offering materials represented that officers of the various 

entities would be the only individuals to offer and sell the investments, the Respondents were, in 

fact, the primary salespeople. Although certain officers for the Working Interest Entities and 

Royalty Interest Entities did participate in the sales process - typically toward the end of the 

process after the Respondents had already offered the investment - the Respondents actively 

participated in the chain of distribution until the investment was complete. 
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19. The Respondents were the first line of the sales process, cold-calling thousands of 

prospective investors across the country using lead list information purchased from a third-party. 

After making contact, the Respondents continued the sales process by providing substantive details 

on the relevant offerings, including the size of the offering, the location of the proposed wells, and 

projected performance of the wells and the investment. The Respondents regularly answered 

questions about the offerings, either on the telephone or by email, and were instrumental in 

convincing prospective investors to invest in the offerings. 

20. In exchange for performing these sales-related duties, the Respondents received a 

fixed salary of $800 payable every two weeks, equivalent to $20,800 per year. Although the 

offering materials claimed that transaction-based compensation (i.e., commissions) would not be 

paid in connection with the securities, the Respondents’ primary source of income was from 

commissions that they received through a process designed to evade regulatory detection. This

payment of commissions was never disclosed to investors.

21. After selling a working interest or a royalty interest, the Respondents received a 

specific percentage of every dollar ultimately invested (typically 10%). However, instead of 

receiving these payments personally, the Respondents received their commission payments 

through companies they owned and controlled. As set forth in the chart below, each of the 

Respondents received over a million dollars in transaction-based compensation for their 

unregistered offer and sale of securities:

RESPONDENT YEARS TRANSACTION-BASED 

COMPENSATION

Bob Baker/TWB Associates, LLC 2011-2016 $2,912,514

Jacob Herrera/Boardwalk Consulting 

Group/JH Field Services

2010-2016 $2,421,035

Michael Bowen/Legacy Consulting, LLC 2010-2016 $2,016,490

Terry Ballard/Rothstein Ballard/Ballard 

Gold Group/Ballard Group

2010-2016 $1,239,284

22. None of the Respondents was registered with the Commission as a broker or 

associated with a registered broker-dealer during this time.

23. Moreover, for each of the working interests sold by the Respondents for the 

Working Interest Entities, no registration statement was in effect or filed with the Commission. 

VIOLATIONS

24. As a result of the conduct described above, the Respondents willfully violated 

Section 15(a) of the Exchange Act, which makes it unlawful for any broker or dealer to effect any 

transactions in, or to induce or attempt to induce the purchase or sale of, any security, unless such 

broker or dealer is registered or associated with a registered broker-dealer
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25. Respondents willfully violated Sections 5(a) and 5(c) of the Securities Act, which 

make it unlawful for any person, directly or indirectly, to sell or to offer to sell a security for which 

a registration statement is not filed or is not in effect, and for which there is not an applicable 

exemption from registration.

III.

In view of the allegations made by the Division of Enforcement, the Commission deems it 

necessary and appropriate in the public interest that public administrative and cease-and-desist 

proceedings be instituted to determine:

A. Whether the allegations set forth in Section II hereof are true and, in connection therewith, 

to afford Respondents an opportunity to establish any defenses to such allegations; 

B. What, if any, remedial action is appropriate in the public interest against Respondent 

pursuant to Section 8A of the Securities Act including, but not limited to, disgorgement and 

civil penalties; 

C. What, if any, remedial action is appropriate in the public interest against Respondent 

pursuant to Section 15(b)(6) of the Exchange Act including, but not limited to, disgorgement 

and civil penalties pursuant to Section 21B of the Exchange Act; 

D. What, if any, remedial action is appropriate in the public interest against Respondent 

pursuant to Section 9(b) of the Investment Company Act including, but not limited to, 

disgorgement and civil penalties pursuant to Section 9 of the Investment Company Act; and

E. Whether, pursuant to Section 8A of the Securities Act, Section 21C of the Exchange Act, 

each Respondent should be: (1) ordered to cease and desist from committing or causing 

violations of and any future violations of Section 15(a) of the Exchange Act and Sections 

5(a) and 5(c) of the Securities Act; (2) ordered to pay a civil penalty pursuant to Section 

8A(g) of the Securities Act and Section 21B(a) of the Exchange Act; and (3) ordered to pay 

disgorgement, with prejudgment interest, pursuant to Section 8A(e) of the Securities Act

and Sections 21B(e) and 21C(e) of the Exchange Act.

IV.

IT IS ORDERED that a public hearing for purposes of taking evidence on the questions set 

forth in Section III hereof shall be convened not earlier than 30 days and not later than 60 days from 

service of this Order at a time and place to be fixed and before an Administrative Law Judge to be 

designated by further order as provided by Rule 110 of the Commission’s Rules of Practice, 17 

C.F.R. § 201.110. 

IT IS FURTHER ORDERED that each Respondent shall file an Answer to the allegations 

contained in this Order within twenty (20) days after service of this Order, as provided by Rule 220 

of the Commission's Rules of Practice, 17 C.F.R. § 201.220.
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If a Respondent fails to file the directed answer, or fails to appear at a hearing after being 

duly notified, the Respondent may be deemed in default and the proceedings may be determined 

against him upon consideration of this Order, the allegations of which may be deemed to be true as 

provided by Rules 155(a), 220(f), 221(f) and 310 of the Commission’s Rules of Practice, 17 C.F.R. 

§§ 201.155(a), 201.220(f), 201.221(f) and 201.310.

This Order shall be served forthwith upon Respondents as provided for in the 

Commission’s Rules of Practice. 

IT IS FURTHER ORDERED that, pursuant to Rule 360(a)(2) of the Commission’s Rules 

of Practice, 17 C.F.R. § 201.360(a)(2), the Administrative Law Judge shall issue an initial decision 

no later than 120 days from the occurrence of one of the following events: (A) The completion of 

post-hearing briefing in a proceeding where the hearing has been completed; (B) Where the 

hearing officer has determined that no hearing is necessary, upon completion of briefing on a 

motion pursuant to Rule 250 of the Commission’s Rules of Practice, 17 C.F.R. § 201.250; or (C) 

The determination by the hearing officer that a party is deemed to be in default under Rule 155 of 

the Commission’s Rules of Practice, 17 C.F.R. § 201.155 and no hearing is necessary. 

In the absence of an appropriate waiver, no officer or employee of the Commission engaged 

in the performance of investigative or prosecuting functions in this or any factually related 

proceeding will be permitted to participate or advise in the decision of this matter, except as witness 

or counsel in proceedings held pursuant to notice. Since this proceeding is not “rule making” within 

the meaning of Section 551 of the Administrative Procedure Act, it is not deemed subject to the 

provisions of Section 553 delaying the effective date of any final Commission action.

By the Commission.

Brent J. Fields

Secretary