Court Rulings Favor HEI Resources in Colorado Securities Lawsuit

COLORADO SPRINGS, Colo., Jan. 10, 2011 /PRNewswire/ -- Springs-based HEI Resources Inc. and Charles Reed Cagle, founder of the oil and gas exploration company, are announcing several favorable rulings issued by a Colorado state district court as part of an ongoing lawsuit filed by Colorado Securities Commissioner Fred J. Joseph.

The rulings handed down by the 2nd Judicial District Court in Denver were entered on Jan. 6, 2011, in Fred J. Joseph v. HEI Resources, Inc., et al., No. 09CV7181.

HEI Resources, Mr. Cagle, Steve Ziemke, Nick Troyer and other companies and individuals were sued by Commissioner Joseph for alleged securities law violations in July 2009. The lawsuit includes claims that HEI Resources and others sold unregistered securities in oil and gas exploration partnerships in the form of joint venture interests.

HEI Resources and Mr. Cagle have long maintained that the contested joint venture interests are not securities. In 1999, in a case involving Mr. Cagle, a federal court in Dallas ruled that similar interests in oil and gas joint ventures were not securities. In a 2002 case involving both HEI Resources and Mr. Cagle, Commissioner Joseph was unable to convince a separate administrative panel that similar joint venture interests were securities.

In the recent 18-page order, the Court ruled in favor of HEI Resources and Mr. Cagle on motions for partial summary judgment and rulings of law, and denied Commissioner Joseph's motions for partial summary judgment. The Court's order found that the contested joint venture interests "are strongly presumed not to be securities . . ." and that Commissioner Joseph "is barred in this case from arguing that the joint venture agreements are, on their face, securities . . . "

The Court also ordered that the trial begin no later than December 2011 in order to ascertain whether Commissioner Joseph can overcome the strong presumption that the HEI Resources joint venture interests are not securities.

"We have maintained from day one that our joint venture interests are not securities," says Mr. Cagle, founder of HEI Resources. "We're looking forward to getting this matter resolved favorably once the Court reviews all of the facts."

HEI Resources was founded in 1997 for the acquisition, exploration and development of domestic oil and gas reserves. Operations span from the gas rich counties of South Texas to the Black Warrior Basin of Mississippi and Alabama. Having drilled more than 80 oil and gas wells through private Joint Venture funding, HEI Resources continues a tradition of excellence, placing priority on creating value for its partners.

For more information on the ruling, please contact HEI Resources' attorney Andrew Shoemaker from Shoemaker Ghiselli + Schwartz LLC at 303-530-3452.

SOURCE HEI Resources Inc.