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Richardton man charged after allegedly selling unregistered securities

A Richardton man, who was issued a cease and desist order by the North Dakota Securities Department in July for allegedly selling a $40,000 fraudulent investment contract in a hydraulic fracturing wastewater disposal well, has been charged with nine felonies related to the matter.

Douglas E. Arends, born in 1965, has been charged with three counts of selling unregistered securities, three counts of selling securities without being registered, two counts of engaging in fraudulent securities scheme and one count of violation of cease and desist order of commissioner. All of the charges are Class B felonies.

He made his initial appearance on the matters in Southwest District Court on Wednesday morning in front of Judge Dann Greenwood. As the charges are felonies, Arends did not enter a plea. That part of the court process is handled during the preliminary hearing, which has been requested.

According to court documents, Arends allegedly willfully sold a security which was not registered under a section of the North Dakota Century Code on March 8, 2016. The security was allegedly for a $40,000 investment contract in a hydraulic fracturing wastewater disposal well.

A similar incident occurred again on Aug. 10, 2016 when Arends allegedly sold an unregistered partnership investment in mineral rights in the amount of $30,000. On or about that same day, Arends also allegedly sold another unregistered partnership investment in mineral rights in the amount of $15,000.

In all cases, Arends was allegedly not registered to do such business.

The incidents on Aug. 10, 2016 violated the provisions of a cease and desist order that was served to Arends on July 12, 2016, according to court documents. The order required him to immediately cease and desist from offering or selling unregistered securities, offering or selling securities as an unregistered agent and from engaging in a scheme or fraudulent practice.

During Arends' initial appearance, his attorney Thomas Murtha said Arends has been cooperative with all aspects of the investigation and has always stayed in contact with the appropriate people involved in the case.

Arends was released on a personal recognizance bond. His preliminary hearing is set for May 8.

Sydney Mook

Sydney Mook has been covering higher education at the Grand Forks Herald since May 2018. She previously served as the multimedia editor and cops, courts and health reporter at the Dickinson Press from January 2016 to May 2018.  She graduated from the University of South Dakota with a bachelor's degree in journalism and political science in three and half years in December 2015. While at the USD, she worked for the campus newspaper, The Volante, as well as the television news show, Coyote News. She also interned at South Dakota Public Broadcasting and spent the summer before her senior year interning in Fort Knox for the ROTC Cadet Summer Training program. In her spare time, Sydney enjoys cheering on the New York Yankees and the Kentucky Wildcats, as well as playing golf. If you've got an idea for a video be sure to give her a call!

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