Pastor sues State Rep. Byron Cook, alleging fraud

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HOUSTON – The executive pastor at one of the largest megachurches in the United States is accusing state Rep. Byron Cook of defrauding him on a half-million dollar investment.

Mike Buster of Prestonwood Baptist Church in Plano filed a lawsuit in Collin County Friday against a company called Unity Resources, LLC, against the faces of the company, Mark Mersman and Mark Solomon, Jr., and against the men he alleges were behind the operation, Cook and Joel Hochberg.

All of those defendants were sued last November by a friend of Attorney General Ken Paxton’s named Charles “Chip” Loper, III. The same law firm, Scheef and Stone, LLP, is representing the two plaintiffs; many of the paragraphs in Buster’s petition are copied verbatim from Loper’s.

The nature of the two lawsuits is similar: Unity Resources sold mineral interests by the acreage in Texas, Oklahoma, and Wyoming, and the plaintiffs bought in to deals that didn’t pay off.

Their complaints overlap on two matters and diverge on a third.

According to Buster, Unity and Cook sold properties back and forth between Unity and Cook-controlled entities to drive up their book value before dumping them on a sucker, Buster. According to Buster’s petition, the other partners in Unity also had no idea Cook was unloading his own undesirable properties on to Unity.

Buster also alleges that Unity made specific representations to him that the company would only profit on a commission.

“In these ‘principal’ transactions, Unity and Legacy (a related company) substantially marked up the costs of the mineral acreage before selling them to Buster and deriving a substantial profit. Unity and Legacy had told Buster that the only money it would make on its mineral transactions with Buster were in the form of a 5% finder’s fee. This was false. The profits Unity and Legacy received in the form of Buster’s investment proceeds were substantially more than 5% on ‘principal transactions.’”

This sort of secret profiting at Buster’s expense was material information that should have been disclosed to him, Buster alleges.

“Unity brokered a transaction between Buster and Trade Rare (a Cook and Hochberg company) in which Trade Rare’s interest was marked up 80% from its cost before being sold to an unwitting Buster,” the lawsuit states. “In these same transactions where Trade Rare profited directly, Unity paid itself a 5% ‘finder’s fee’ that was transaction-based and functioned directly as a commission on the sale of these securities. These commissions were illegal, as Unity has never been registered With FINRA or any state (including Texas) as a broker-dealer….

If Unity was paying commissions, this could be a problem, as state law does not allow unregistered employees “any compensation for offering for sale, selling, or otherwise aiding in the sale of securities.”

The plaintiff alleges “(t)hese mineral acres are ‘securities’ under Section 4 of the Texas Securities Act, as they represent an interest in or under an ‘oil, gas, or mining lease, fee, or title.’”

Buster invested some $532,038.90 with the group in 2014 and 2015, but says he has now lost “virtually his entire investment.” He has not returned a call seeking comment.

One big reason this lawsuit matters is that a criminal securities fraud case against Paxton comes down to the nature of an investment group centered around Cook. Was it an informal group with shifting members and allegiances? Or did it somehow become formal, with policies about how its members could make money?

After Loper sued Cook and Hochberg n November, alleging securities fraud over an oil rights deal that also involved Paxton, a Paxton attorney named Matthew Martens subpoenaed some of Cook’s financial records involving the investment group.

Terry Jacobson, the same Cook lawyer who first complained to the Texas Rangers and the Travis County District Attorney about Paxton, sent Martens an email Dec. 2 explaining that it would be hard to identify all of the group’s investments, as there “was no formal group that existed.”

“Instead, there was an ad hoc arrangement where, from time to time, good friends might invest in the same transaction—or were at least offered the opportunity to invest in the same transaction. The persons who invested differed from transaction to transaction, and the length of time they had invested all differed from person to person. Mr. Hochberg and Mr. Cook go back 25 or so years. Other people were involved at different times. General Paxton’s involvement was more recent. At various times, people who participated in a transaction or transactions might include Mr. Cook, Mr. Hochberg, Mr. Griggs, Mr. Sandford, General Paxton and perhaps a host of other people. It differed from transaction to transaction.”

Cook, after these lawsuits, is in a bind.

He is Paxton’s chief accuser, and the case against Paxton will come down to Cook’s assertions that the investment group had unwritten and unspoken policies about how one might profit.

Paxton’s camp asserts that this is a fiction, that there was no formal group, much less actual policies.

But if Cook sticks to that story, then he undermines his own defense in the two lawsuits against him. Indeed, if he so much as testifies against Paxton, he risks perjury charges and the loss of the lawsuits against him.

Cook has hired state Rep. Rene Oliveira, a Democrat, to represent him and Hochberg. State lawmakers have a “legislative exemption” that halts all litigation involving them for the duration of the legislative session. His own exemption would suffice for himself, but his friend and partner Hochberg would be exposed.

Since hiring Oliveira, they’ve avoided testifying.

However, their unwillingness to expose themselves to risk has undermined the criminal case against Paxton, which comes down to their testimony about what sort of arrangement they had.

Jon Cassidy can be reached at [email protected]org.

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Jon Cassidy is a reporter for The Texas Monitor and a contributing editor for The American Spectator. He has been an investigative reporter for Watchdog.org and an editor and reporter for The Orange County Register. His work has also appeared in The Wall Street Journal, City Journal, The Federalist, Fox News, Chronicles, Reason, and other publications. He was a 2014 Robert Novak Journalism Fellow, and is a graduate of the University of Southern California. He and his wife Michelle live just outside Houston with their two children.

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