Claims for damages in excess of $1 million are made in a recent lawsuit filed on behalf of an Osage County oil field services firm involved in business deals brokered by Larry Dearman as an investment consultant with Focus Group Advisors.
The latest court action to be taken in the area case contends that Howell’s Well Service Inc., sustained over $700,000 in actual monetary losses as a result of defaults on loans arranged by Dearman, between 2007 and 2011, when he was a Focus Group senior advisor.
In the past six months, more than a dozen civil lawsuits have emerged in the financial scandal. At least 35 individual and corporate investors — nearly all from Washington and Osage counties — are now involved.
The first Focus/Dearman lawsuit was filed last November, approximately three months after Dearman had been dismissed from the Bartlesville-based investment firm.
At that time, officials with the investment company sent a letter to clients acknowledging that one of its local agents had conducted unauthorized business activities "involving inappropriate private financial transactions (i.e., loans and stock purchases) directly between the financial advisor and certain clients."
Last month in Bartlesville, 12 of the Focus Group cases that had been filed in Washington County were consolidated in an effort to expedite an eventual settlement.
The Howell’s Well Service suit is the second to be filed in Osage County District Court. It was initiated earlier this month by the Brad Hilton Law Office of Skiatook, representing the longtime oil field services and supply company which is headquartered in Wynona.
According to the lawsuit petition, four different loans were transacted between Dearman and the well service company over a 50-month period between August 2007 and November 2011. The last loan — for $75,000 —was made directly to Dearman and called for interest to be paid at 10 percent per year.
The first two Howell’s loans were for $100,000 each and the third, made in January 2009, was for $200,000.
Both of the early loans were made to Bartnet Wireless, an internet services provider. At the time, Bartnet was controlled by Bartlesville businesswoman Marya Gray, a longtime associate of Dearman.
Less than three months after the second Bartnet loan was made in February 2008, it was consolidated with the initial 2007 loan to make a principal sum of $225,000 with annual interest to be paid at 12 percent. The third loan to Bartnet called for a nine percent interest rate, court documents show.
The lawsuit claims that, in addition to defaulting on the aforementioned loan agreements, defendants Dearman, Gray, Bartnet and another Gray-owned company, The Property Shoppe, withdrew more than $244,000 from the plaintiff’s Fidelity Investments Account.
It went on to state that defendants Dearman and Gray "did advise plaintiff that these sums were withdrawn for various investment/loans … and that all sums would be repaid with interest."
"Some amounts withdrawn were done so without the knowledge or consent of the plaintiff," the petition continued, referring to those as "fraudulent transfers."
Named as defendants, along with The Focus Group, Dearman and Gray, are Bartnet LLC (as well as Bartnet Wireless Internet Inc.), The Property Shoppe and Focus Group officials Jon Nettles and Daniel Vice. Also listed is Dearman’s wife, Teresa Kay Dearman.
It is claimed in the petition that Teresa Dearman "received the ill-gotten gains and proceeds from the above stated causes of action from her spouse." Dearman filed for divorce from her husband in September 2012. A final decree is still pending due to the other civil actions.
The latest Osage County suit alleges breach of contract, fraud, misrepresentation, deceit, breach of fiduciary duties and negligence/malpractice. In addition to claims for damages on actual monetary losses, the lawsuit seeks punitive damages of more than $500,000.
In April, the judge overseeing the 12-case consolidation in Washington County District Court amended a temporary restraining order on Gray to permit her to complete sale of two of her business interests — Bartnet and Quench Buds, a drive-through food-and-drink dispensary.
Associate District Judge Russell Vaclaw ruled that the sale transaction, which had been in negotiations since prior to filing of the consolidated actions, be allowed to be completed. He ordered that a net payment of approximately $549,000 resulting from the sale (as modified from an estimated total combined sale amount of around $1.050,000) by paid to the court clerk.
Vaclaw called for the temporary restraining order to otherwise remain in effect.