UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING 

File No. 3-20089

In the Matter of

Scott Eugene Bachman

Respondent.

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PROPOSED PLAN OF 

DISTRIBUTION

I. OVERVIEW

1. The Division of Enforcement submits this Proposed Plan of Distribution (the 

“Plan”) to the United States Securities and Exchange Commission (the “Commission”) pursuant 

to Rule 1101 of the Commission’s Rules on Fair Fund and Disgorgement Plans (the 

“Commission’s Rules”), 17 C.F.R. § 201.1101. This Plan provides for the distribution of a Fair 

Fund (the “Fair Fund”), comprised of civil money penalties paid by Scott Eugene Bachman (the 

“Respondent”) in the above-captioned matter.1 

2. As described more specifically below, the Plan seeks to compensate investors 

who were harmed by the Respondent’s conduct described in the Order in connection with his 

violations of the broker-dealer and registration provisions of the securities laws between August 

2017 and December 2017. Based on information obtained by the Commission staff during its 

investigation and the review and analysis of applicable records, the Commission staff has 

reasonably concluded that it has all records necessary to calculate each investor’s harm. As a 

result, the Fair Fund is not being distributed according to a claims-made process, so procedures 

for making and approving claims in accordance with Rule 1101(b)(4) of the Commission’s 

Rules, 17 C.F.R. § 201.1101(b)(4), are not applicable.

3. As calculated using the methodology detailed in the Plan of Allocation (attached 

as Exhibit A), investors will be compensated for harm suffered in connection with the purchase 

of securities in the form of “membership units” of an LLC in connection with an oil and gas 

drilling project known as “Woodland-OP1 Oddfellows A-1” hereinafter, the “Oddfellows 

Project” (the “Securities”) between August 2017 through December 2017 (the “Relevant 

Period”). 

 

1

 See Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities 

Act of 1933 and Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing 

Remedial Sanctions and a Cease-and-Desist Order, Securities Act Rel. No. 10857 (Sept. 28, 2020) (the “Order”).
2

4. In the view of the Commission staff, this methodology constitutes a fair and 

reasonable allocation of the Fair Fund. 

5. The Commission has custody of the Fair Fund and shall retain control of the 

assets of the Fair Fund. The Plan is subject to approval by the Commission, and the Commission 

retains jurisdiction over its implementation.

II. BACKGROUND

6. On September 28, 2020, the Commission issued the Order instituting and 

simultaneously settling administrative and cease-and-desist proceedings against the Respondent. 

In the Order, the Commission found that, since July 17, 2017, Bachman had been a principal and 

served as the co-manager of Crudefunders, LLC, which previously operated an online equity 

crowdfunding portal. The Order further found that, during the Relevant Period, Bachman 

directed Crudefunders’ Director of Client Relations to distribute promotional materials to 

potential investors concerning the Oddfellows Project, and to offer and sell the Securities. The 

Order also found that Bachman directed the use of investor funds in connection with the 

Oddfellows Project, and, at Bachman’s direction, Crudefunders received transaction-based 

compensation for its sales of the Securities. However, Bachman was not registered with the 

Commission as a broker-dealer or associated with a registered broker-dealer. In addition, the 

Securities were not registered and did not qualify for any exemption from registration. 

7. As a result of the conduct described in the Order, the Commission found that the 

Respondent violated the broker-dealer and registration provisions of the securities laws. The 

Commission ordered the Respondent to pay a civil money penalty of $8,824.00. 

8. In the Order, the Commission also established a Fair Fund, pursuant to Section 

308(a) of the Sarbanes-Oxley Act of 2002, so the penalty paid can be distributed to harmed 

investors.

9. The Respondent has paid in full. The Fair Fund has been deposited at the United 

States Department of the Treasury’s Bureau of the Fiscal Service (“BFS”) for investment. 

III. DEFINITIONS

As used in this Plan, the following definitions will apply:

10. “Administrative Costs” means any administrative costs and expenses, including 

without limitation the fees and expenses of the Tax Administrator, tax obligations, and 

investment and banking costs.

11. “Distribution Payment” means a payment from the Fair Fund to a Payee in 

accordance with the terms of this Plan.
3

12. “Eligible Claimant” shall mean a Preliminary Claimant, who is determined to 

have suffered a Recognized Loss pursuant to the Plan of Allocation, and who is not an Excluded 

Party or an Unresponsive Preliminary Claimant.

13. “Excluded Party” shall mean: (a) Respondent, or Respondent’s employees, 

advisers, agents, nominees, assigns, creditors, heirs, distributees, spouses, parents, children, or 

controlled entities; and (b) any purchaser or assignee of another Person’s right to obtain a 

recovery from the Fair Fund for value; provided, however, that this provision shall not be 

construed to exclude those Persons who obtained such a right by gift, inheritance or devise.

14. “Fair Fund” means the fund created by the Commission pursuant to Section 

308(a) of the Sarbanes-Oxley Act of 2002, for the benefit of investors harmed by Respondent’s 

violations described in the Order. 

15. “Final Determination Notice” means the written notice sent by the Fund 

Administrator to any Preliminary Claimant who timely submitted a written dispute of their 

calculated Recognized Loss notifying the Preliminary Claimant of its resolution of the dispute. 

The Final Determination Notice will constitute the Fund Administrator’s final ruling regarding 

the status of the claim.

16. “Net Available Fair Fund” means the Fair Fund, plus any interest or earnings, 

less Administrative Costs. 

17. “Payee” means an Eligible Claimant who is determined to receive a Distribution 

Payment, as calculated in accordance with the Plan of Allocation

18. “Person” means natural individuals as well as legal entities such as corporations, 

partnerships, or limited liability companies.

19. “Plan Notice” means a written notice from the Fund Administrator to Preliminary 

Claimants regarding the Commission’s approval of the Plan, including, as appropriate: a 

statement characterizing the distribution, a link to the approved Plan posted on the Commission’s 

website and instructions for requesting a copy of the Plan, specification of any information 

needed from the Preliminary Claimant to prevent them from being deemed an Unresponsive 

Preliminary Claimant, their preliminary Recognized Loss, a description of the tax information 

reporting and other related tax matters, the procedure for the distribution as set forth in the Plan, 

and the name and contact information for the Fund Administrator in order to provide any 

requested information or to contact with questions regarding the distribution. 

20. “Plan of Allocation” means the methodology by which a Preliminary Claimant’s 

Recognized Loss is calculated. The Plan of Allocation is attached as Exhibit A.

21. “Preliminary Claimant” means those Persons, or their lawful successors, 

identified by the Fund Administrator based on its review and analysis of applicable records 

obtained by the Commission staff during its investigation who may have suffered a loss in 

connection with transactions in the Securities during the Relevant Period.
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22. “Recognized Loss” means the amount of loss calculated for a Preliminary 

Claimant in accordance with the Plan of Allocation.

23. “Unresponsive Preliminary Claimant” means a Preliminary Claimant whose 

address the Fund Administrator has not been able to verify and/or who does not timely respond 

to attempts to obtain information, including any information sought in the Plan Notice. 

Unresponsive Preliminary Claimants will not be eligible for a distribution under the Plan.

IV. TAX COMPLIANCE

24. On October 14, 2021, the Commission appointed Miller Kaplan Arase LLP as the 

tax administrator (the “Tax Administrator”) for the Fair Fund to handle the tax obligations of the 

Fair Fund.

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 The Tax Administrator will be compensated for reasonable fees and expenses from 

the Fair Fund in accordance with its 2019-2021 Engagement Letter Agreement with the 

Commission.3

25. The Fair Fund constitutes a Qualified Settlement Fund (“QSF”) under Section 

468B(g) of the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 468B(g), and related 

regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the 

administrator of such QSF, for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and shall satisfy the 

tax-related administrative requirements imposed by Treas. Reg. § 1.468B-2, including, but not 

limited to:

(a) Obtaining a taxpayer identification number; 

(b) Requesting funds necessary for the timely payment of all applicable taxes, 

the payment of taxes for which the Tax Administrator has received funds, 

and the filing of applicable returns; and 

(c) Fulfilling any information reporting or withholding requirements imposed 

on distributions from the Fair Fund.

26. All tax obligations will be paid from the Fair Fund, subject to the review and 

approval of Commission staff.

V. FUND ADMINISTRATOR

27. David H. London is proposed to be the fund administrator for the Fair Fund 

(“Fund Administrator”). As a Commission employee, the Fund Administrator shall receive no 

compensation, other than his regular salary as a Commission employee, for his services in 

 

2

 See Order Appointing Tax Administrator, Exchange Rel. No. 93315 (Oct. 14, 2021).

3

 See Omnibus Order Directing the Appointment of Tax Administrator in Administrative Proceedings that Establish 

Distribution Funds, Exchange Act Rel. No. 85174 (Feb. 22, 2019).
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administering the Fair Fund. In accordance with Rule 1105(c) of the Commission’s Rules,4no 

bond is required since the Fund Administrator is a Commission employee. 

28. The Fund Administrator will be responsible for administering the Fair Fund in 

accordance with the Plan. This will include, among other things, taking reasonable steps to 

obtain accurate mailing information for Preliminary Claimants; preparing accountings; 

cooperating with the Tax Administrator appointed by the Commission to satisfy any tax 

liabilities and to ensure compliance with income tax reporting requirements, including but not 

limited to Foreign Account Tax Compliance Act (FATCA); disbursing the Fair Fund in 

accordance with this Plan, as ordered by the Commission; and researching and reconciling errors 

and reissuing payments, when possible. 

29. To carry out the purposes of this Plan, the Fund Administrator is authorized to 

make and implement immaterial changes to the Plan. If a change is deemed to be material, 

Commission approval is required prior to implementation by amending the Plan.

30. The Fund Administrator may extend any procedural deadline contained in the 

Plan for good cause shown.

VI. PLAN PROCEDURES

Specification of Preliminary Claimants

31. Using information obtained during its investigation, the Commission has 

identified the Preliminary Claimants who may be eligible to receive a payment pursuant to this 

Plan. 

Procedures for Locating and Notifying Preliminary Claimants

32. Within thirty (30) days of Commission approval of the Plan, the Fund 

Administrator will send the Plan Notice to each Preliminary Claimant’s last known email address 

(if known) and/or mailing address.

Undeliverable Mail

33. The Fund Administrator will attempt to locate any Preliminary Claimant whose 

mailing is returned as undeliverable by the U.S. Postal Service or otherwise. If another address 

is obtained, the Fund Administrator will then resend the Plan Notice to the Preliminary 

Claimant’s new address within a reasonable number of days following receipt of the returned 

mail. If the mailing is returned again, and the Fund Administrator, despite best practicable 

efforts, is unable to find a Preliminary Claimant’s correct address, the Fund Administrator, in its 

discretion, may deem such Preliminary Claimant an Unresponsive Preliminary Claimant.

 

4

 17 C.F.R. § 201.1105(c).
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34. Any Preliminary Claimant who relocates or otherwise changes contact 

information after receipt of the Plan Notice must promptly communicate any change in address 

or contact information to the Fund Administrator.

Procedures to Request Plan Notice

35. Any Person who does not receive a Plan Notice, as described in paragraph 33 but 

who is aware of this Plan (e.g., through other Preliminary Claimants or on www.sec.gov) and 

believes he/she/it should be included as an Preliminary Claimant should contact the Fund 

Administrator within thirty (30) days of approval of the Plan to request to be considered a 

Preliminary Claimant. The Fund Administrator will send the Person a Plan Notice within 

fourteen (14) days of receiving the Person’s request, if the Fund Administrator determines that 

the Person should have received a Plan Notice.

Failure to Respond to Plan Notice

36. If a Preliminary Claimant fails to respond within thirty (30) days from the mailing 

of the Plan Notice, the Fund Administrator will make no fewer than two (2) attempts to contact 

the Preliminary Claimants by telephone or email. The second attempt will in no event take place 

more than forty-five (45) days from the initial mailing of the Plan Notice. If a Preliminary

Claimant fails to respond to the Fund Administrator’s contact attempts as described in this 

paragraph, the Fund Administrator, in its discretion, may deem such Preliminary Claimant an 

Unresponsive Preliminary Claimant.

Dispute Process

37. Disputes will be limited to calculations of Recognized Loss. Within thirty (30) 

days of receipt of the Plan Notice, the Fund Administrator must receive a written communication 

detailing the dispute along with any supporting documentation. The Fund Administrator will 

investigate the dispute, and such investigation will include a review of the written dispute as well 

as any supporting documentation. 

Final Determination Notices

38. Within sixty (60) days of the initial mailing of the Plan Notices, the Fund 

Administrator will send a Final Determination Notice to any Preliminary Claimant who timely 

submitted a written dispute as described in paragraph 37 above, notifying the Preliminary 

Claimant of its resolution of the dispute.

Distribution Methodology

39. The Fund Administrator will calculate each Preliminary Claimant’s Recognized 

Loss in accordance with the Plan of Allocation. All Preliminary Claimants who are determined 

to have a Recognized Loss, and who are not deemed an Excluded Party or an Unresponsive 

Preliminary Claimant, will be deemed an Eligible Claimant. All Eligible Claimants who are 

determined to receive a Distribution Payment will be deemed a Payee.
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Establishment of a Reserve

40. Before determining the amount of funds available for distribution and calculating 

each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax 

Administrator, will establish a reserve to pay future Administrative Costs and to accommodate 

any unexpected expenditures (the “Reserve”).

41. After all Distribution Payments are made and Administrative Costs are paid, any 

remaining amounts in the Reserve will become part of the Residual described in paragraph 50 

below.

Preparation of the Payment File

42. Within one hundred eighty (180) days of Commission approval of the Plan, after 

withholding the Reserve, the Fund Administrator will compile the Payee information, including 

the name, address, and the amount of the Distribution Payment for all Payees (the “Payee List”).

Distribution of the Fair Fund

43. Pursuant to Rule 1101(b)(6) of the Commission’s Rules, 17 C.F.R. § 

201.1101(b)(6), the Fund Administrator will obtain an order from the Commission to disburse 

the Net Available Fair Fund to Payees in accordance with the Plan. The BFS will mail checks or 

electronically transfer funds to each Payee as instructed by the Fund Administrator in accordance 

with the Payee List. 

44. All Distribution Payments will be preceded or accompanied by a communication 

that includes, as appropriate: (a) a statement characterizing the distribution; (b) a statement that 

the tax treatment of the distribution is the responsibility of each Payee and that the Payee should 

consult his, her, or its tax advisor for advice regarding the tax treatment of the distribution; (c) a 

statement that checks will be void and cannot be reissued after one (1) year from the date the 

original check was issued; and (d) contact information for the Fund Administrator for questions 

regarding the Distribution Payment. The letter or other mailings to Payees characterizing a 

Distribution Payment will be submitted to the Tax Administrator for review and approval.

45. The Distribution Payments, on their face, or the accompanying mailing shall 

clearly indicate that the money is being distributed from a Fair Fund established to compensate 

investors for harm suffered as a result of securities law violations described in the Order. 

Post Distribution; Handling of Returned or Uncashed Checks; and Reissues

46. The Fund Administrator will work with BFS to obtain information about 

uncashed checks, any returned items due to non-delivery, insufficient addresses, and/or other 

deficiencies. The Fund Administrator is responsible for researching and reconciling errors and 

reissuing payments, when possible. The Fund Administrator is also responsible for accounting 

for all payments. Checks issued by BFS will state on their face that they are valid for one (1) 
8

year of the date the original check was issued (the “stale date”). If any checks issued are not 

cashed before the stale date, the Fund Administrator will work with BFS to identify all uncashed 

checks. In the event that there are uncashed checks, the Fund Administrator will determine the 

extent to which, under the circumstances in this distribution, it would be appropriate and feasible 

to make additional efforts to contact the Payee(s). If the Fund Administrator is unable to locate a 

Payee, the Fund Administrator, in its discretion, may remove such Payee from the distribution 

and the allocated Distribution Payment will remain in the Fair Fund for distribution, if feasible, 

to the remaining Payees.

47. The Fund Administrator will direct BFS to reissue checks to Payees upon the 

receipt of a valid written request from the Payee received prior to the stale date. In cases where a 

Payee is unable to endorse a Distribution Payment check as written (e.g., name changes, IRA 

custodian changes, or recipient is deceased) and the Payee or a lawful representative of the Payee 

requests the reissuance of a Distribution Payment check in a different name, the requesting 

Person must provide documentation to support the requested change to the Fund Administrator. 

The Fund Administrator will review the documentation to determine the propriety of the request 

and the authenticity of the supporting documentation. If the Fund Administrator determines, in 

its discretion, that the request for a change is appropriate and supported by the documentation 

provided, the Fund Administrator will direct that a Distribution Payment check be issued to the 

requesting Person. Reissued checks will be void ninety (90) days from the date of reissuance.

Receipt of Additional Funds

48. Should any additional funds be received pursuant to a Commission or Court 

order, agreement, or otherwise, prior to the Commission’s termination of the Fair Fund, such 

funds will be added to the Fair Fund and distributed, if feasible, in accordance with the Plan, 

pursuant to the Commission’s Rules.

Disposition of Undistributed Funds

49. If funds remain following the initial distribution and payment of all 

Administrative Costs, the Fund Administrator may seek subsequent distribution(s) of any 

available remaining funds, if feasible, pursuant to the Commission’s Rules. All subsequent 

distributions shall be made in a manner that is consistent with this Plan. 

50. A residual within the Fair Fund will be established for any amounts remaining 

after the final disbursement to Payees from the Fair Fund and the payment of all Administrative 

Costs (the “Residual”). The Residual may include funds from, among other things, amounts 

remaining in the Reserve, distribution checks that have not been cashed, checks or electronic 

payments that were not delivered or returned to the Commission, and tax refunds for 

overpayment or for waiver of IRS penalties.

51. After the final accounting is approved by the Commission (see paragraph 54), all 

funds remaining in the Residual that are infeasible to distribute to investors will be transferred to 

the general fund of the U.S. Treasury, subject to Section 21F(g)(3) of the Securities Exchange 

Act of 1934 (the “Exchange Act”). 
9

Administrative Costs

52. All Administrative Costs will be paid from the Fair Fund, in accordance with the 

Commission’s Rules. 

Accountings

53. When all funds have been disbursed, except for the Residual described in 

paragraph 50 of the Plan, the Fund Administrator will submit a final accounting pursuant to Rule 

1105(f) of the Commission’s Rules, 17 C.F.R. § 201.1105(f), for the Commission’s approval 

prior to termination of the Fair Fund and discharge of the Fund Administrator. Since the funds 

are being held in a Commission-designated account at the U.S. Treasury and the Fund 

Administrator is a Commission employee, no interim accountings will be made.

Termination of the Fair Fund

54. The Fair Fund will be eligible for termination and the Fund Administrator will be 

eligible for discharge after all of the following have occurred (a) a final accounting, in a standard 

accounting format provided by the Commission staff, has been submitted by the Fund 

Administrator and approved by the Commission; and (b) all Administrative Costs have been 

paid. Once the Commission has approved the final accounting, the Commission staff will seek 

an order from the Commission authorizing: (a) the transfer of any Residual remaining in the Fair 

Fund that is infeasible to return to investors, and any amounts returned to it in the future that are 

infeasible to return to investors, to the general fund of the U.S. Treasury, subject to Section 

21F(g)(3) of the Exchange Act; (b) discharge of the Fund Administrator; and (c) termination of 

the Fair Fund.

VII. NOTICE OF PROPOSED PLAN AND OPPORTUNITY FOR COMMENT 

55. The Notice of the Proposed Plan of Distribution and Opportunity for Comment 

(the “Notice”) shall be published on the Commission’s website 

http://www.sec.gov/litigation/fairfundlist.htm. Any Person wishing to comment on the Plan 

must do so in writing by submitting their comments within thirty (30) days of the date of 

publication of the Notice (a) to the Office of the Secretary, United States Securities and 

Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549-1090; (b) by using the 

Commission’s Internet comment form (www.sec.gov/litigation/admin.shtml); or (c) by sending 

an e-mail to rule-comments@sec.gov. Comments submitted by e-mail or via the Commission’s 

website should include “Administrative Proceeding File No. 3-20089 in the subject line. 

Comments received will be publicly available. Persons should only submit comments that they 

wish to make publicly available.
Exhibit A

Plan of Allocation

This Plan of Allocation is designed to compensate investors for losses incurred from the 

purchase of securities in the form of “membership units” of an LLC in connection with an oil 

and gas drilling project known as “Woodland-OP1 Oddfellows A-1” (the “Securities”) between 

August 2017 and December 2017 (the “Relevant Period”). Investors who did not purchase 

Securities during the Relevant Period did not suffer a loss and are ineligible to recover under this 

Plan. Based on the records obtained by the Commission during its investigation, the Fund 

Administrator has identified those investors, or their lawful successors, who may have suffered a 

loss from purchasing Securities during the Relevant Period (the “Preliminary Claimants”).

The Fund Administrator will calculate each Preliminary Claimant’s loss (“Recognized 

Loss”) as the amount of actual monies invested in Securities during the Relevant Period less any 

monies distributed by Crudefunders on or about March 16, 2018.

If the Recognized Loss calculates to a gain, then the Recognized Loss will be $0.00.

To avoid payment of a windfall, the Recognized Loss will be reduced by the amount of 

any compensation for the loss that resulted from the conduct described in the Order that was 

received from another source (e.g., class action settlement), to the extent known by the Fund 

Administrator.

Any Preliminary Claimant who suffered a Recognized Loss pursuant to this Plan of 

Allocation, and who is not an Excluded Party or an Unresponsive Preliminary Claimant, as 

defined in the Plan, will be deemed an Eligible Claimant.

Additional Provisions

Allocation of Funds: The Net Available Fair Fund is less than the sum of the Recognized 

Losses of all Eligible Claimants. Therefore, each Eligible Claimant’s distribution amount will 

equal his, her or its “Pro Rata Share” of the Net Available Fair Fund, and will be subject to the 

“Minimum Distribution Amount.”

Pro Rata Share: A Pro Rata Share computation is intended to measure Eligible Claimants’ 

Recognized Losses against one another. The Fund Administrator shall determine each Eligible 

Claimant’s Pro Rata Share as the ratio of his, her, or its Recognized Loss to the sum of Recognized 

Losses of all Eligible Claimants.

Minimum Distribution Amount: The Minimum Distribution Amount will be $10.00. If 

an Eligible Claimant’s distribution amount is less than the Minimum Distribution Amount, that 

Eligible Claimant will be deemed ineligible to receive a Distribution Payment and his, her, or its 

distribution amount will be reallocated on a pro-rata basis to Eligible Claimants whose 

distribution amounts are greater than or equal to the Minimum Distribution Amount. 
2

Payee: An Eligible Claimant whose distribution amount equals or exceeds the Minimum 

Distribution Amount will be deemed a Payee and receive a Distribution Payment equal to his, her, or its 

distribution amount. In no event will a Payee receive from the Fair Fund more than his, her, or its 

Recognized Loss.