348-278051-15 filed tarrant county cause no. …€™ first amended original petition to wind up...

PLAINTIFFS’ FIRST AMENDED ORIGINAL PETITION TO WIND UP AND TERMINATE

DOMESTIC LIMITED LIABILITY COMPANY, FOR DAMAGES, AND INJUNCTIONS Page - 1

Cause No. 348-278051-15

7711 OPERATING COMPANY, LLC, § IN THE DISTRICT COURT

and PRESTON BRYANT, Individually, §

and as MANAGER OF 7711 OPERATING §

COMPANY, LLC, §

§

Plaintiffs, §

§

v. § 348th JUDICIAL DISTRICT

§

CHRISTOPHER WHITMAN, §

KIPP WHITMAN, BETH WHITMAN, §

BBL OIL COMPANY, LLC, and §

OIL PATCH KIDS, LLC, §

§

Defendants, § TARRANT COUNTY, TEXAS

PLAINTIFFS’ FIRST AMENDED ORIGINAL PETITION TO WIND UP AND

TERMINATE DOMESTIC LIMITED LIABILITY COMPANY, AND

FOR DAMAGES, AND INJUNCTIONS

Pursuant to the Texas Rules of Civil Procedure, and the Texas Business Organizations Code,

and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §1961-1968 (“RICO”), 7711

Operating Company, LLC, and Preston Bryant, Individually and as Manager of 7711 Operating

Company, LLC, file Plaintiffs’ First Amended Original Petition to Wind Up and Terminate

Domestic Limited Liability Company, for Damages, and Injunctions, as follows:

I.

PRELIMINARY STATEMENT

7711 Operating Company, LLC (“7711 Operating”) is a Texas limited liability company that

as a practical matter has reached its end. It is not reasonably practicable for it to carry on any further

business. Rather, it needs to wind up its affairs and for its existence to be terminated. Therefore,

pursuant to Chapter 11 of the Texas Business Organizations Code, the Court should order its

winding up and termination.

348-278051-15 FILEDTARRANT COUNTY8/7/2015 3:46:43 PM

THOMAS A. WILDERDISTRICT CLERK



Further, during early discovery 7711 Operating determined that it has been the victim of very

serious wrongful conduct that caused, and continues to cause, serious economic harm. Therefore,

7711 Operating must bring its claims against its tortfeasors in order to recover its damages, and wind

up its affairs with fairness to its creditors and mineral interest investors.

II.

DISCOVERY CONTROL STATEMENT

1. Plaintiffs intend to conduct Level 2 discovery.

III.

SERVICE OF PROCESS

A. Plaintiffs.

2. Preston Bryant is an individual, and a member of 7711 Operating Company, LLC,

serves as 7711 Operating Company, LLC’s Manager pursuant to the terms of the Company

Agreement, and is its President.

3. 7711 Operating Company, LLC (“7711 Operating”) is a Texas limited liability

company.

B. Defendants.

4. Christopher Whitman (“Chris Whitman”) is an individual residing in Texas, and

is a member of 7711 Operating Company, LLC. Chris Whitman has appeared and answered.

5. Kipp Whitman is an individual residing in Texas. He may be served with process

at his residence and usual place of business: 3402 Crossgate Circle S, Colleyville, Tarrant County,

Texas 76034, or wherever he may be found. Citation is requested. Service is not requested at

this time.

6. Beth Whitman is an individual residing in Texas. She may be served with process

at her residence and usual place of business: 3402 Crossgate Circle S, Colleyville, Tarrant County,

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Texas 76034, or wherever she may be found. Citation is requested. Service is not requested at

this time.

7. BBL Oil Company LLC is a Texas limited liability company. It may be served with

process by serving its registered agent: Benenati Law Firm, PC, 2816 Bedford Road, Bedford, Texas

76021. Citation is requested. Service is not requested at this time.

8. Oil Patch Kids LLC is a Texas limited liability company. It may be served with

process by serving its registered agent: (1) Benenati Law Firm, PC, 2816 Bedford Road, Bedford,

Texas 76021, or (2) by serving its sole director Christopher Whitman, who may be served with

process at his residence: 1125 Map Street, Apartment B, Austin, Texas 78721, or wherever he may

be found. Citation is requested. Service is not requested at this time.

IV.

JURISDICTION AND VENUE

A. Jurisdiction.

Subject Matter Jurisdiction as to Dissolution

9. The Court has subject matter jurisdiction of this Cause pursuant to Tex. Bus. Org.

Code §11.314 which states, in pertinent part:

A district court in the county in which the registered office or principal place ofbusiness in this state of a ... limited liability company is located has jurisdiction toorder the winding up and termination of the ... limited liability company onapplication by: ...(2) an owner of the ... limited liability company if the court determines that it is notreasonably practicable to carry on the entity’s business in conformity with itsgoverning documents.

More specifically here, the Company’s registered office or principal place of business is in Tarrant

County, Texas.

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Texas Court Jurisdiction of RICO, and Right to Civil Cause of Action

10. Texas courts have concurrent jurisdiction with the district courts of the United States

over civil RICO actions. Tafflin v. Levitt, 495 U.S. 915, 110 S.Ct. 1942 (1990) (the U.S. Supreme

Court, Justice O’Connor, held that state courts have concurrent jurisdiction with federal courts over

civil RICO claims).

11. Pursuant to 18 U.S.C.A. § 1964 (“Civil remedies”):

(a) The district courts of the United States shall have jurisdiction to prevent and restrainviolations of section 1962 of this chapter by issuing appropriate orders, including, but notlimited to: ordering any person to divest himself of any interest, direct or indirect, in anyenterprise; imposing reasonable restrictions on the future activities or investments of anyperson, including, but not limited to, prohibiting any person from engaging in the same typeof endeavor as the enterprise engaged in, the activities of which affect interstate or foreigncommerce; or ordering dissolution or reorganization of any enterprise, making due provisionfor the rights of innocent persons. ...

(c ) Any person injured in his business or property by reason of a violation of section 1962of this chapter may sue therefor in any appropriate United States district court and shallrecover threefold the damages he sustains and the cost of the suit, including a reasonableattorney’s fee, except that no person may rely upon any conduct that would have beenactionable as fraud in the purchase or sale of securities to establish a violation of section1962. ...

Statement Pursuant to Tex. R. Civ. P. 47 (c )

12. Plaintiff 7711 Operating seeks monetary relief over $1,000,000.00, and demands

judgment for all the other relief to which plaintiffs are entitled, within the meaning of Tex. R. Civ.

P. 47 (c ).

Personal Jurisdiction

13. The Court has personal jurisdiction of all defendants because each of them is a citizen

and resident of Texas.

B. Venue.

14. Venue of this action is is mandatory in Tarrant County pursuant to Tex. Bus. Org.

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Code §11.314 because 7711 Operating Company, LLC has both its: (1) registered office, and (2)

principal place of business in Tarrant County. Venue also is permissive in Tarrant County pursuant

to Tex. Civ. Prac. & Rem. Code §15.002 because: (1) all or a substantial part of the events or

omissions giving rise to plaintiffs’ claims occurred in Tarrant County; (2) natural person defendants

Kipp Whitman and Beth Whitman were residents of Tarrant County at the time plaintiffs’ cause of

action accrued; and (3) entities BBL Oil Company, LLC, and Oil Patch Kids, LLC maintain their

principal offices in this state in Tarrant County.

V.

FACTS GIVING RISE TO ALL COUNTS

A. Relationship of the Parties and Others Involved in the Facts Giving Rise to This Action

for Damages and Injunctions.

1. Plaintiffs

Preston Bryant

15. At twenty-three years old, Preston Bryant is still a very young man. When the facts

giving rise to this action began, he was but eighteen years old, still an undergraduate and, for good

reasons, vulnerable and impressionable. But he grew up in the Texas oil and gas business. His

father, Gary Bryant, was a successful and well-admired Texas oil man. When Preston was a baby,

his father would bring him out to the oil field and hang his bassinet from the pole wire of a rig,

where he would fall asleep to the rocking of the equipment. Preston’s dad brought Preston with him

to work regularly to teach him the industry.

16. Preston’s father died suddenly of a heart attack in 2011. Nevertheless, Preston

completed his studies and graduated Southern Methodist University, where he majored in economics

and the first energy program offered at the school. Soon after his father passed, Preston joined the

oil and gas business in his own right. He named his first well “Gary Bryant”, and continues his

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father’s legacy, including his goodwill.

17. It was through his father that Preston knew Kipp Whitman. In the 1980s they worked

on rigs together.

7711 Operating Company LLC

18. Non-party 7711 Oil Company, LLC (“7711 Oil”) was formed in August 2011 to enter

into various mineral leases, which it did. Preston Bryant is 7711 Oil’s sole director and officer.

19. Soon after, in December 2011, plaintiff 7711 Operating Company, LLC (“7711

Operating”) was formed to drill wells on the new leases and then to oversee their operations. Two

wells were successfully completed, and are producing: the “Gary Bryant I”, named by Preston for

his father, and the “Frankie J”. These two wells are at the center of this dispute.

20. 7711 Operating was formed with two owner-members: Preston Bryant, and nominally

defendant Christopher Whitman, each taking 50% ownership of the company. Here “nominally”

means that, as set out below, defendant Kipp Whitman, Chris’s father, enlisted his son to take legal

ownership so that Kipp’s name would not appear on any record of anything of value that could be

subject to execution. So it is with Kipp.

21 The two co-equal owners, Preston Bryant and Chris Whitman, are 7711 Operating’s

only Members, Directors, and Managers. Bryant is the President and Treasurer, and Chris is Vice

President and Secretary.

22. 7711 Operating is an “operating company”. Now that the Gary Bryant and the

Frankie J are drilled and producing, its role is to: (1) receive sales revenues from its contract mineral

purchasers, (2) coordinate and pay for various lease operations, and then (3) to make distributions

to the company’s working interest owners. That is pretty much it. Along with several outside

investors (comprised mainly of colleagues of Preston’s father), 7711 Operating also itself owns

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working interests in the Gary Bryant and the Frankie J leases.

23. Because Kipp Whitman came to the enterprise cloaked in familiarity and a prior

relationship with Preston’s father, he came to oversee the day-to-day operation of 7711 Operating.

With the benefit of hindsight, that put the “fox in the henhouse”, and the mischief began.

2. Defendants.

Overview of the Whitman Family Syndicate

24. Kipp Whitman, Beth Whitman, and Chris Whitman are family, in part by blood, and

in part by marriage. Kipp is Chris’s father, and Kipp is married to Beth. The power hierarchy of the

family is important. Kipp is definitely the family patriarch. He calls the shots, and is the true source

and repository of all the malice, dishonesty, and deceit involved in this case.

25. Beth Whitman is in some respects a dutiful wife, who was drawn into their dishonest

business without special malice. But she nevertheless is actively engaged - full time - in defendants’

ongoing scam to pilfer 7711 Operating. It should be noted that she lives pretty well, in a half-million

dollar home. One of the fruits of ill-gotten gains.

26. Chris the son seemingly was pulled into the family syndicate by his father. By day

he manages a popular Austin sushi restaurant and has his own life. On the side, however, he is his

father’s knowing collaborator and straw man, allowing his name and signature to be used on

important fraudulent documents, without which the family scheme to fleece 7711 Operating can not

work.

27. More details about these persons and their relationship to culpable facts are set out

below. The important fact to know first, however, is that the family business, as it involves 7711

Operating, all flows from, and back to, Kipp Whitman.

Kipp Whitman: Self-Described “Master Puppeteer”.

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28. Perhaps the most important fact about Kipp Whitman is that he holds zero legal or

equitable connection to 7711 Operating, although he is in practical control of the company, albeit

without legal right. He holds no ownership interest, or contract with the company. He is variously

described as a “consultant” or “advisor”.

29. Kipp Whitman was born on December 15, 1946 in Los Angeles, California. He is

an actor by trade, and still a member of the Screen Actors Guild. He is best known for appearing on

television in The Edge of Night (1956), and with his better-known older brother Stuart Whitman in

the films Bummer (1973) and The Ransom (1977). This matters in this action because it is a fact

that Kipp has an actor’s skills. He can, indeed, be charming and persuasive. These are core

attributes of every good con man. Kipp Whitman - by stock-in-trade - is better than average at

making pure fiction seem true. He can tell and act a lie about as easily as an ordinary person says,

“Would you please pass the butter?”

30. A couple of desades back, Kipp Whitman was the sometimes friend of plaintiff

Preston Bryant’s father, Gary Bryant. It was during the time just following his passing in 2011 that

Kipp reemerged and endeared himself to Preston, and cultivated a personal and business relationship

with him.

31. Kipp Whitman made and lost his own fairly modest real estate fortune. Although he

continues to be vague and sketchy about the details, he has written of a fraud conviction, and there

was a contentious bankruptcy, and ultimately judicial execution on his property. There are

apparently, upon information and belief, judgment creditors still out there who want whatever comes

Kipp’s way. That takes us to a highly important and operative fact: Kipp Whitman makes positively

certain that nothing of value ever becomes exposed property in his own name. Despite his direct and

indirect control, and participation in the conduct of the affairs of 7711 Operating, he is careful to

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keep his name off of anything of value, or that might expose him to liability. These days, much of

Kipp’s malfeasance is done in Beth or Chris’s name, or through shell companies Beth and Chris

nominally own. He does, in writing, moreover, fancy himself a “master puppeteer”. In short, Kipp

Whitman is directing and living a lie, a con, using his son and his wife as his actors, at 7711

Operating’s expense, and every single bad thing alleged herein has its original source and genesis

in him. His wife and son are affirmative actors, but Kipp sits the director’s chair.

Beth Whitman: Kipp’s “Bookkeeper”

32. Beth Whitman, Kipp Whitman’s current spouse, acts as 7711 Operating’s

“bookkeeper”, or perhaps its nominal administrator. According to her invoices, this is her full-time

vocation, for which she bills 7711 Operating for forty hours work per week. Basically she exercises

practical control of the company for Kipp. She, like Kipp, also holds no legal or equitable interest

in the company. She exerts control over the money, however, both when it comes in, and when it

goes out. Thus, she more than anyone else, is the actor who actually operates the “15% scam”

(described below), along with several other mechanisms that fleece the company to her own and

Kipp’s economic benefit.

Chris Whitman: Kipp’s “Straw Man” for Important Wrongful Conduct

33. Chris Whitman, Kipp’s adult son by a previous marriage, has a life and career outside

the oil and gas business. Primarily he manages an apparently popular sushi restaurant in Austin

known as “Uchi”. But Kipp Whitman is his father, and nothing good can come of that. It is not

much of an oversimplification to say that Chris’s role in 7711 Operating is just to sign whatever

Kipp tells him to sign. Hence, he is pretty much Kipp Whitman’s straw man. Yet, it is his actual

signature, not one of Kipp’s rather frequent forgeries, that is affixed to the fraudulent assignment of

valuable oil and gas interests Kipp stole from 7711 Operating and gave to BBL Oil Company, LLC,

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which is Beth Whitman’s entity, meaning Kipp actually conveyed the interests to himself.

34 Chris Whitman also is the sole director and officer, and apparently sole member, of

the entity Oil Patch Kids LLC (“Oil Patch Kids”), through which the lion’s share of Kipp’s 15%

scam is routed, and laundered, along with other unlawful conversions.

Oil Patch Kids LLC

35. Oil Patch Kids LLC (“Oil Patch Kids”) is nominally owned and managed by Chris

Whitman. But, like everything else described herein, it is Kipp who calls the shots and reaps the

ultimate benefits from conducting its affairs.

36. Also nominally, Oil Patch Kids is a major vendor to 7711 Operating. Beth Whitman,

for example, bills her time, forty hours per week, to 7711 Operating through Oil Patch Kids invoices.

She also directs nearly all of the oil field lease operation costs through it (i.e., hardware, equipment,

chemicals, fuels, service work), at a significant but unearned mark-up. This is a significant and

wrongful drain on 7711 Operating that is ultimately borne by its working interest investors.

BBL Oil Company LLC

37. Beth Whitman is the sole director and officer, and alter ego, and is believed to be the

sole member of BBL Oil Company LLC (“BBL Oil”). At Kipp Whitman’s direction, Chris Whitman

wrongfully assigned to BBL Oil, for no actual consideration, a huge part of 7711 Operating’s

working interests, valued in the neighborhood of $300 thousand dollars.

B. Defendants’ Scams, Thefts, and Other Misdeeds.

1. The Working Interest Thefts, and Fraudulent Conveyance in Avoidance of

Lawful Creditors.

38. By two notarized Assignments dated October 28, 2014, and recorded in the official

land records of Brazos County on October 29, 2014, Chris Whitman, acting nominally as Secretary

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of 7711 Operating, did unlawfully steal and convey to BBL Oil very substantial interests in oil and

gas mineral leases owned by 7711 Operating, worth approximately $300 thousand dollars. There

was no company authority for this and, indeed, Bryant was not even consulted or informed. It was

naked theft. But that is far from the end of the story, or the malfeasance.

39. Kipp Whitman probably committed crimes by stealing these lease interests from 7711

Operating and formally filing the phoney assignments in the Brazos County land records. Thus,

simply on the face of the assignments and the formal act of recording them, Kipp Whitman exposed

7711 Operating, Chris Whitman, BBL Oil, Beth Whitman, and himself to potential prosecutions.

40. But that still does not complete the tale of Kipp’s unlawful conduct: This was done

intentionally as a fraudulent conveyance in avoidance of bona fide creditors.

41. In the months preceding the assignments, 7711 Operating was in litigation with two

vendors that participated significantly in drilling the wells. The cases were settled at mediation,

attended by Bryant and Kipp, on terms that gave the claimants enforceable lien rights against the

wells in the event of payment default. What Kipp did, merely days before the settlement became

judicially effective, was fraudulently to convey away the greatest part of 7711 Operating’s lease

interests before these vendors’ lien rights could be perfected by filing their lien papers in the Brazos

County land records. That not only is unlawful, but also further exposes 7711 Operating to litigation

and liability.

42. Upon information and belief, this unlawful transaction was accomplished using the

U.S. Postal Service, or by using a private or commercial interstate carrier, within the meaning of 18

U.S.C. §1341 (commonly “mail fraud”), and by using the wires of interstate commerce within the

meaning of 18 U.S.C. §1343 (commonly “wire fraud”).

43. The Court should understand this blatant fraud and theft for what it is; a blindingly

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clear example of Kipp Whitman’s fundamental and very general dishonesty, which stains everything

he touches and fouls everything he does. As regards the facts asserted here, lying, cheating, and

stealing truly is Kipp Whitman’s expertise and stock-in-trade.

2. Violations of Texas Penal Code § 16.02 (“Unlawful Interception, Use, or

Disclosure of Wire, Oral, or Electronic Communications”) and Texas Civil

Practice & Remedies Code § 123.001, et seq. (“Wiretapping”)

44. When Bryant learned of Kipp Whitman’s wrongful assignments of mineral interests,

together with further culpable conduct by Kipp involving the vendor litigation, he undertook to

distance himself and 7711 Operating from the man. This infuriated Kipp Whitman, and he

retaliated. Kipp Whitman unlawfully and wrongfully intercepted Bryant’s telephone

communications, disclosed them to his attorneys who, in turn, knowing they were intercepted,

intentionally sought to use them against Bryant.

45. As is common in business, 7711 Operating provided Bryant, and Kipp and Beth

Whitman with cellular telephones for business and personal use. Kipp Whitman was given

administrator access to the account, which he shared with Beth so she could pay the company’s bills

and otherwise manage the subscription. Neither Kipp nor Bether were authorized, however, to

intercept anyone’s communications.

46. On or about May 2015, Kipp and/or Beth Whitman accessed the 7711 Operating

cellular telephone account, transferred Bryant’s telephone number to Beth Whitman, and changed

the account subscriber name to her company BBL Oil. Instantly Bryant’s telephone was dead.

Investors, and the Texas Railroad Commission, and every other person with whom Bryant conducts

business, were unable to reach him. Instead, their calls and voicemails went to Beth Whitman, they

were intercepted. Bryant was unable to undo the changes because the account was re-named to BBL

Oil and, thus, he was not allowed access. Beyond that, Kipp and Beth were thereby able to access

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Texas Civil Practice & Remedies Code § 123.001, et seq. provides a civil cause of action1

and the following remedies: (1) an injunction prohibiting a further interception, attemptedinterception, or divulgence or use of information obtained by an interception; (2) statutory damagesof $10,000 for each occurrence; (3) all actual damages in excess of $10,000; (4) punitive damagesin an amount determined by the court or jury; and (5) reasonable attorney's fees and costs.

Texas Penal Code § 16.02 makes it a felony of the second degree to:(1) intentionally intercept a wire, oral, or electronic communication;(2) intentionally discloses to another person the contents of a wire, oral, or electronic

communication if the person knows or has reason to know the information was obtained through theinterception of a wire, oral, or electronic communication; or

(3) intentionally uses or endeavors to use the contents of a wire, oral, or electroniccommunication if the person knows or is reckless about whether the information was obtainedthrough the interception of a wire, oral, or electronic communication in violation of this subsection.



all of Bryant’s calls, voicemails, and text messages, hundreds of them, without Bryant’s consent.

47. With that done, the next time Bryant was confronted with his commincations was

during his deposition when Kipp’s lawyer confronted him with them. Among other things, Kipp’s

lawyer sought to use communications Bryant exchanged to a buy home delivery chicken dinner to

accuse him, on the record, of a totally nonexistent drug deal. In other words, Kipp and Beth

Whitman unlawfully intercepted Bryant’s communications, and knowingly divulged that information

to their lawyers, in violation of Texas Civil Practice & Remedies Code § 123.001, et seq., and Texas

Penal Code § 16.02. Plaintiffs submit, moreover, that the: (1) interception, (2) disclosure, and (3)1

use of the intercepted communications, including during Bryant’s deposition, each establish a

separate violation of Texas Penal Code § 16.02, and violations Texas Penal Code § 16.04 (“Unlawful

Access to Stored Communications”).

3. The Oil Patch Kids 15% Scam.

48. Beth Whitman bills 7711 Operating for forty hours worked per week, at $40 per hour,

week in and week out. That is “full time”. She invoices her services through Oil Patch Kids,

however, and writes herself checks made out to Oil Patch Kids in the amount of $6,400.00 per month

(half from the Gary Bryant, and half from the Frankie J). It should be noted that the going rate for

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the service she provides is approximately $1,800.00 per month. So, as a threshold matter, she is in

fact overcharging 7711 Operating by $4,600.00 per month.

49. But that is just the tip of the iceberg. The real money is stolen using a “15% scam”

on pretty much everything 7711 Operating purchases (i.e., hardware, equipment, chemicals, fuels,

service work). An example will illustrate how the scam works. Consider, for example, the April

10, 2014 invoice from Coastal Chemical Company, LLC for 150 gallons of Mobil Pegasus 505

Series Engine Oil, for $1,609.50. The invoice reflects that the order was placed verbally (a phone

call), FOB Bryan, Texas, for the Gary Bryant lease location. There is not a reason under the sun why

Beth Whitman could not purchase this lubricant directly by and for 7711 Operating. But instead, she

placed the order with Oil Patch Kids as the purchaser, marked it up to $1,851.00 (15%) billable to

7711 Operating, and pocketed the difference of $241.50, never having so much as handled the

material or added any value whatsoever. She literally works from her home in Colleyville, orders

materials and services from vendors that are nearby and serve Brazos County wells, marks up the

transaction by 15% and charges it to 7711 Operating. Then she over bills 7711 Operating by

$4,600.00 per month for her time, just for the privilege of having its pocket picked.

50. In short, for no good business reason, and for no value added, and while on the clock

for 7711 Operating, Beth Whitman runs both wells’ nearly entire lease operating expenses through

Oil Patch Kids simply to pad and skim 15%, nominally for the benefit of Chris Whitman’s company

but, like everything else described herein, to the ultimate and wrongful benefit of Kipp Whitman

who calls all the shots and reaps the rewards. This pad and skim scam is happening basically across

the board at both the Gary Bryant and the Frankie J. Preliminary estimates of damages from this

scam exceed approximately $100,000 in lease operating expense overcharges.

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4. Other Scams.

51. The Whitman’s scams seem never to end. It was recently discovered, in fact by an

investor, that Kipp and Beth Whitman apparently picked the outside investors’ pockets for

approximately $27 thousand by failing to account for vendor credits owed back to 7711 Operating.

More specifically, during September 2014 the Gary Bryant required and received workover services

from Key Energy Services. The amount $27,308.53 was billed and passed through pro rata to the

company’s working interest investors because monthly revenues fell short of operating expenses.

The Whitman’s billed the investors for the shortfall, and required a cash call. But in fact, Key

Energy credited that amount back to 7711 Operating, although the refund never got beyond Beth

Whitman. There was no adjustment of revenues and costs, nor was the pro rata cash call to the

investors adjusted. So, Beth Whitman billed the company $3,200 against the Gary Bryant (for $900

of work at going rates), plus 15% added to operating expenses through Oil Patch Kids, kept the $27

grand, and then passed on any shortfall in revenues to the company’s investors to square the books.

Again, Kipp Whitman will make sure he gets what he wants, even if it means cheating the investors

into a fraudulent cash call.

5. Theft by Company Credit Card.

52. During the period January 2014 through May 2015 the Whitmans charged personal

purchases to 7711 Operating’s credit card in the amount of approximately $40 thousand. Some of

the most glaring examples of their larceny are these:

Lodging, Newport Beach, CA $ 613.35 Anderson Dentistry $1,489.00 LA Fitness (recurring monthly) $ 37.88 Central Market $ 241.01Clearview Eyecare $2,213.00Wine Orders $1,039.08Restaurant $ 86.80

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Wall Street Journal $ 250.90Uber $ 94.00Moutons Hair Salon $ 48.00Container Store $ 200.12Walgreens $ 381.09

53. In other words, Kipp and Beth Whitman simply treat 7711 Operating as their personal

cash machine, without regard for the company’s well-being, or its investors.

C. Connections to Interstate Commerce.

54. All of the wrongful conduct set out above required and did use the U.S. Postal

Service, and/ or private or commercial interstate carriers, within the meaning of 18 U.S.C. §1341

(commonly “mail fraud”), and/or the wires within the meaning of 18 U.S.C. §1343 (commonly “wire

fraud”). Further, 7711 Operating, the Whitman’s victim, operates in interstate commerce as its

production is sold into interstate commerce, and it production inputs are from interstate commerce.

Further still, these unlawful activities involved extensive use of national banks (i.e., JP Morgan

Chase, N.A., member FDIC) which is interstate commerce. Thus, the Whitman’s bad acts were done

in interstate commerce within requirements of RICO.

D. Facts Requiring Winding Up and Dissolution.

55. Preston Bryant and Chris Whitman are the only legal members of 7711 Operating,

and they own it in equal shares of 50% and 50% each. Further, pursuant to the company’s

regulations there can be no disposition of any interest without the consent of both members.

56. As set out above, since 7711 Operating was formed in December 2011, Preston

Bryant and Chris Whitman (and Whitman’s family) have fallen out, severely so. Here, “fallen out”

means the rift between these equal half-owners is total, absolute, complete, and irreconcilable. There

is no way these two individuals will ever conduct business together ever again. In the lexicon of the

law, “it is not reasonably practicable to carry on the entity’s business in conformity with its

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governing documents”.

57. For this reason, the Company should be ordered to wind up it affairs, and its existence

should be judicially terminated.

58. The Company has only one significant debt, the additional sums due pursuant to the

vendor litigation and the settlement which resolved it (described above). Kipp Whitman’s

mishandling of those obligations was and is, moreover, a driving reason why Bryant will never be

able to conduct business with any member of the Whitman family ever again.

59. The good news, however, is that the company has no other substantial debts,

obligations, or liabilities. In addition, when the company’s lease interests that were wrongfully

assigned to the Whitman family are properly restored, sufficient value should be available to

extinguish those liabilities in full. Hence, as to its creditors, winding up the company’s affairs will

be straightforward.

60. 7711 Operating’s damages claims, when reduced to judgment, will accrue to the

benefit of its investors, and to the company.

61. A new operating company is needed to take over from 7711 Operating, the sooner

the better. That, however, is a common and easily accomplished change within the industry.

62. After that, what remains will be the modest statutory steps (i.e., obtain tax clearance

from the comptroller and file notice of termination with the Secretary of State).

63. Taken together, 7711 Operating Company, LLC should be wound-up according to

law, and its existence terminated.

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VI.

CLAIMS FOR RELIEF

COUNT ONE: Violations of the Racketeer Influenced and Corrupt Organizations Act

(“RICO”), 18 U.S.C. §1961-1968.

64. Plaintiffs incorporate paragraphs 1 through 63 above.

Structure of RICO Violation

65. The Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §1962, states,

in pertinent part:

(b) It shall be unlawful for any person through a pattern of racketeering activity ... to acquireor maintain, directly or indirectly, any interest in or control of any enterprise which isengaged in, or the activities of which affect, interstate or foreign commerce.

(c ) It shall be unlawful for any person employed by or associated with any enterpriseengaged in, or the activities of which affect, interstate or foreign commerce, to conduct orparticipate, directly or indirectly, in the conduct of such enterprise’s affairs through a patternof racketeering activity ... .

(d) It shall be unlawful for any person to conspire to violate any of the provisions ofsubsection (a), (b), or (c ) of this section.

RICO Definitions

66. 18 U.S.C.A. § 1961 states, in pertinent part:

(1) “racketeering activity” means ... (B) any act which is indictable under any of thefollowing provisions of title 18, United States Code: ... section 1341 (relating to mail fraud),section 1343 (relating to wire fraud), section 1344 (relating to financial institution fraud), ...section 1952 (relating to racketeering), ... section 1956 (relating to the laundering ofmonetary instruments), section 1957 (relating to engaging in monetary transactions inproperty derived from specified unlawful activity) ... .

(3) “person” includes any individual or entity capable of holding a legal or beneficial interestin property;

(4) “enterprise” includes any individual, partnership, corporation, association, or other legalentity, and any union or group of individuals associated in fact although not a legal entity;...

(6) “pattern of racketeering activity” requires at least two acts of racketeering activity, one

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of which occurred after the effective date of this chapter and the last of which occurredwithin ten years (excluding any period of imprisonment) after the commission of a prior actof racketeering activity;

Applicable Predicate Acts of Racketeering Activity

67. The predicate acts of racketeering established by the above-alleged conduct are,

perhaps among others:

(1) 18 U.S.C. §1341 (“Frauds and swindles”, commonly “mail fraud”) which makes

unlawful:

Whoever, having devised or intending to devise any scheme or artifice to defraud, orfor obtaining money or property by means of false or fraudulent pretenses,representations, or promises, ... for the purpose of executing such scheme or artificeor attempting so to do, places in any post office or authorized depository for mailmatter, any matter or thing whatever to be sent or delivered by the Postal Service, ordeposits or causes to be deposited any matter or thing whatever to be sent ordelivered by any private or commercial interstate carrier, or takes or receivestherefrom, any such matter or thing, or knowingly causes to be delivered by mail orsuch carrier according to the direction thereon, or at the place at which it is directedto be delivered by the person to whom it is addressed, any such matter or thing, ...

(2) 18 U.S.C. §1343 (“Fraud by wire, radio, or television”, commonly “wire fraud”)

which makes unlawful:

Whoever, having devised or intending to devise any scheme or artifice to defraud, orfor obtaining money or property by means of false or fraudulent pretenses,representations, or promises, transmits or causes to be transmitted by means of wire,radio, or television communication in interstate or foreign commerce, any writings,signs, signals, pictures, or sounds for the purpose of executing such scheme orartifice ...

(3) 18 U.S. Code § 1344 (“Bank fraud”) which makes unlawful:

Whoever knowingly executes, or attempts to execute, a scheme or artifice— ...(2) to obtain any of the moneys, funds, credits, assets, securities, or other propertyowned by, or under the custody or control of, a financial institution, by means of falseor fraudulent pretenses, representations, or promises;

(4) 18 U.S. Code § 1952 (“Interstate and foreign travel or transportation in aid of

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racketeering enterprises”, commonly known as the “Travel Act”) which makes unlawful:

Travel in interstate or foreign commerce, or the use of mail or any facility ininterstate or foreign commerce, with intent to — ... (1) distribute the proceeds of anyunlawful activity; or ... (3) otherwise promote, manage, establish, carry on, orfacilitate the promotion, management, establishment, or carrying on, of any unlawfulactivity, and thereafter performs or attempts to perform ... (b)(3) any act which isindictable under 18 U.S. Code §1956 (“Laundering of monetary instruments”) or 18U.S. Code §1957 (“Engaging in monetary transactions in property derived fromspecified unlawful activity”).

(5) 18 U.S.C.A. § 1956 (“Laundering of monetary instruments”) which makes unlawful:

(a)(1) Whoever, knowing that the property involved in a financial transactionrepresents the proceeds of some form of unlawful activity, conducts or attempts toconduct such a financial transaction which in fact involves the proceeds of specifiedunlawful activity-- ...

(B) knowing that the transaction is designed in whole or in part--(i) to conceal or disguise the nature, the location, the source, theownership, or the control of the proceeds of specified unlawfulactivity; or (ii) to avoid a transaction reporting requirement underState or Federal law, ... .

For purposes of this paragraph, a financial transaction shall be considered tobe one involving the proceeds of specified unlawful activity if it is part of aset of parallel or dependent transactions, any one of which involves theproceeds of specified unlawful activity, and all of which are part of a singleplan or arrangement. ...

(7) the term “specified unlawful activity” means--(A) any act or activity constituting an offense listed in section 1961(1) of this title ...;and

(6) 18 U.S.C.A. § 1957 (“Engaging in monetary transactions in property derived from

specified unlawful activity”) which makes unlawful:

(a) Whoever, in any of the circumstances set forth in subsection (d), knowinglyengages or attempts to engage in a monetary transaction in criminally derivedproperty of a value greater than $10,000 and is derived from specified unlawfulactivity, shall be punished as provided in subsection (b). ...

(d) The circumstances referred to in subsection (a) are--

(1) that the offense under this section takes place in the United States or inthe special maritime and territorial jurisdiction of the United States; ...

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(f) As used in this section-- ... (3) the terms “specified unlawful activity” and“proceeds” shall have the meaning given those terms in section 1956 of this title.

Application of the Facts to RICO

68. Kipp Whitman, Beth Whitman, Chris Whitman, Oil Patch Kids, and BBL Operating

are “persons” within the definition of 18 U.S.C. §1961(3).

69. 7711 Operating, Oil Patch Kids, and BBL Oil are “enterprises” within the definition

of 18 U.S.C. §1961(4).

70. The conduct set out above by Kipp Whitman, Beth Whitman, Chris Whitman, Oil

Patch Kids, and BBL Oil constitutes “racketeering activity” within the definition of

18 U.S.C. §1961(1). More specifically, the conduct set out above violates:

(1) 18 U.S.C. § 1341 (mail fraud); (2) 18 U.S.C. § 1343 (wire fraud); (3) 18 U.S.C. §1344

(financial institution fraud), (4) 18 U.S.C. § 1952 (racketeering), (5) 18 U.S.C. § 1956

(money laundering), and (6) 18 U.S.C. § 1957 (monetary transactions in property derived

from unlawful activity).

71. Further, this conduct constitutes and establishes a “pattern of racketeering activity”

comprised of more than two acts of racketeering activity within the past ten years, within the

definition of 18 U.S.C. §1961(5), that are “related” to each other and have “continuity” as required

by case law.

72. Therefore, Kipp Whitman, Beth Whitman, Chris Whitman, Oil Patch Kids, and BBL

Oil are liable for, within the meaning and proscriptions of 18 U.S.C. §1962:

(b) Acquiring or maintaining, directly or indirectly, interest in or control of 7711 Operating,the activities of which affect interstate commerce;

(c ) conducting or participating, directly or indirectly, in the conduct of 7711 Operating’saffairs through a pattern of racketeering activity; and

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(d) conspiring to violate 18 U.S.C. §1962 (b) and (c), and in violation of the RacketeerInfluenced and Corrupt Organizations Act.

73. Therefore, pursuant to 18 U.S.C. §1964(c), 7711 Operating is entitled to bring this

action, and to recover threefold its damages sustained, and the costs of suit, including a reasonable

attorney’s fee.

74. Further, pursuant to 18 U.S.C. §1964(a) the Court should order Kipp Whitman, Beth

Whitman, Chris Whitman, Oil Patch Kids, and BBL Oil divested of their interests, direct or indirect,

in 7711 Operating; and place reasonable restrictions on their future activities by prohibiting them

from such conduct; or ordering dissolution or reorganization of their entities, making due provision

for the rights of innocent persons.

COUNT TWO: Breach of Fiduciary Duties.


76. At all pertinent times, Chris Whitman was, and is, a member, manager, and officer

of 7711 Operating.. Similarly, Kipp Whitman and Beth Whitman were confidants to 7711

Operating, and were Chris Whitman’s agents to the company. While serving in these offices, Chris

Whitman, Kipp Whitman, and Beth Whitman, by and through alter ego companies BBL Oil and Oil

Patch Kids, engaged in wrongful self dealing: (1) in the wrongful assignment of 7711 Operating’s

working interests in the Gary Bryant and Frankie J mineral leases to themselves; (2) skimming a

15% mark-up in lease operating expenses; (3) intercepting, disclosing and using Bryant’s electronic

communications; (4) using the company credit card for personal purposes without authorization; and

(5) misapplying vendor credits owed to 7711 Operating to enrich themselves.

77. Therefore, 7711 Operating is entitled to recover its economic damages from

defendants.

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COUNT THREE: Interception of Communications.


79. Texas Civil Practice & Remedies Code § 23.002 (“Cause of Action”) states:

(a) A party to a communication may sue a person who:

(1) intercepts, attempts to intercept, or employs or obtains another to intercept orattempt to intercept the communication; [or]

(2) uses or divulges information that he knows or reasonably should know wasobtained by interception of the communication; ...

80. As set out above, Kipp and Beth Whitman intercepted Bryant’s communications and,

with their attorney, divulged and used information they knew or reasonably should have known was

obtained by interception of the communications.

81. Therefore, pursuant to Texas Civil Practice & Remedies Code § 123.004

(“Damages”) 7711 Operating and Bryant are entitled to:

(1) an injunction prohibiting a further interception, attempted interception, or divulgence or

use of information obtained by an interception;

(2) statutory damages of $10,000 for each occurrence;

(3) all actual damages in excess of $10,000;

(4) punitive damages in an amount to be determined by the court or jury; and

(5) reasonable attorney’s fees and costs.

COUNT FOUR: Texas Civil Practice & Remedies Code § 134.001, et seq. (“Texas Theft

Liability Act”).


83. As set out above, defendants Kipp Whitman, Beth Whitman, Chris Whitman, Oil

Patch Kids, and BBL Oil engaged in multiple instances of theft against 7711 Operating within the

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meaning of Tex. Civ. Prac. & Rem. Code §134.002 and Tex. Penal Code § 31.03 (“Theft”).

84. Therefore, pursuant to Tex. Civ. Prac. & Rem. Code §134.005 (“Recovery”), 7711

Operating is entitled to recover the amount of its actual damages and, in addition to actual damages,

$1,000 per theft, plus court costs and reasonable and necessary attorney’s fees..

COUNT FIVE: Civil Conspiracy.


86. An actionable civil conspiracy is a combination by two or more persons to accomplish

an unlawful purpose or to accomplish a lawful purpose by unlawful means. The elements are: (1)

two or more persons; (2) an object to be accomplished; (3) a meeting of minds on the object or

course of action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result.

87. As set out above, defendants Kipp Whitman, Beth Whitman, Chris Whitman, Oil

Patch Kids, and BBL Oil engaged in an actionable civil conspiracy to harm 7711 Operating by: (1)

stealing its mineral lease interests; (2) conducting the 15% scam, (3) intercepting communications,

(4) cheating the company’s investors out of a $27 thousand vendor credit, and (5) breaching their

fiduciary duties, to benefit themselves at the expense of 7711 Operating and Bryant.

88. Therefore, the Court should impose joint and several liability on all co-conspirators

for actual damages resulting from their acts in furtherance of the conspiracy.

COUNT SIX: Breach of Contract, No Consideration Received for Assignments.

89 Plaintiffs incorporate paragraphs 1 through 88 above.

90. The above-referenced two notarized Assignments dated October 28, 2014, a

conveyance to BBL Oil, and recorded in the official land records of Brazos County on October 29,

2014, executed by Chris Whitman, acting nominally as Secretary of 7711 Operating, recite that

consideration was paid for these interests. No consideration was received, however, by 7711

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Operating. Therefore, 7711 Operating is entitled to be paid honest consideration for these interest,

in an amount to be determined at trial, which amount 7711 Operating alleges to be approximetely

$300 thousand dollars.

91. Further. 7711 Operating is entitled to recover its costs of court, including attorney’s

fees.

COUNT SEVEN: Judgment to Wind Up and Terminate the Company.

92 Plaintiffs incorporate paragraphs 1 through 91 above.

93 As demonstrated by the facts set out above, and pursuant to Tex. Bus. Org. Code

§11.314, the Court should order the winding up and termination of 7711 Operating on this application

of its member Preston Bryant because it is not reasonably practicable to carry on the entity’s business

in conformity with its governing documents.

94 More specifically, the Court should appoint Bryant (or his nominee) to act as the

liquidator contemplated in the 7711 Operating company agreement to fulfill the duties and

accomplish the goals established therein, order that the 7711 Operating’s affairs be wound up,

including payment of franchise taxes and any other debts which may become known, and order

distribution of all net remaining amounts to the company’s members in accordance with the

company’s regulations, the members’ proportional claims based upon their capital contributions and

Texas law, order termination of the company’s existence, plus enter such other and further orders as

are necessary and sufficient to conclude the company’s business, terminate its legal existence, and

dissolve it as a membership organization.

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VII.

REQUEST FOR DISCLOSURE

95. Pursuant to Rule 194, you are requested to disclose, within 30 days of service of this

request, the information or material described in Rule 194.2.

VIII.

REQUEST FOR RELIEF

For the foregoing reasons, the Court should grant judgment in plaintiffs favor on all of

plaintiffs’ claims and defenses, and against defendants on all of defendants’ claims and defenses, and

award plaintiffs the follow relief:

A. Damages, Injunctions, and Related Remedies

1. Pursuant to 18 U.S.C. §1964(c), award threefold the damages it sustained, and thecosts of suit, including a reasonable attorney’s fee; plus

2. Pursuant to 18 U.S.C. §1964(a), order that Kipp Whitman, Beth Whitman, ChrisWhitman, Oil Patch Kids, and BBL Oil be divested of their interests, direct or indirect,in 7711 Operating; and place reasonable restrictions on their future activities byprohibiting them from such conduct; or ordering dissolution or reorganization of theirentities, making due provision for the rights of innocent persons; plus

3. Actual and exemplary damages; plus

4. Statutory damages as invoked above; plus

5. Punitive damages pursuant to Texas Civil Practice & Remedies Code § 123.004; plus

6. Pursuant to Texas Civil Practice & Remedies Code § 123.004 an injunctionprohibiting a further interception, attempted interception, or divulgence or use ofinformation obtained by an interception; plus

7. Joint and several liability; plus

8. Costs of Court, including attorney’s fees; plus

9. Pre-Judgment and Post-Judgment interest at the highest rates permitted by law; plus

10. Such other and further relief to which plaintiffs show themselves to be entitled,whether at law or in equity; plus

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B. Dissolution Remedies

11. Appoint Preston Bryant (or his nominee) as the liquidator contemplated in theCompany Agreement; plus

12. Receive into its registry any monies owed or which may become owed to theCompany; plus

13. Order that the Company’s affairs be wound up, including payment of any franchiseor other taxes and any other debts which may become known; plus

14. Order distribution of all net remaining amounts to the Company’s members inaccordance with the Company’s regulations, the members’ proportional claims basedupon their capital contributions and Texas law; plus

15. Order termination of the Company’s existence; plus

16. Enter such other and further orders as are necessary and sufficient to conclude theCompany’s business, terminate its legal existence, and dissolve it as a membershiporganization; plus

17. Award plaintiff reasonable and necessary costs, including attorney’s fees; plus

18. Grant such other and further relief which is appropriate or required, whether at law orin equity.

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Respectfully submitted,

/s/ Charles H. Steen

Charles H. SteenTexas Bar No. 00785040Charles H. Steen, P.C.2911 Turtle Creek Blvd., Suite 300Dallas, Texas 75219Telephone: (214) 559-4446Telecopier: (214) 559-4423

Email: [email protected]

Robert P. KubickiTexas Bar No. 117452251320 Prudential Drive, Suite 204Dallas, Texas 75235Telephone: (214) 244-8119Telecopier: (214) 219-7978

ATTORNEYS FOR PLAINTIFFS

CERTIFICATE OF SERVICE

I certify that I have caused a true and correct copy of the above and foregoing Plaintiffs’ First

Amended Original Petition to Wind up and Terminate Domestic Limited Liability Company, for

Damages, and Injunctions to be served upon defendant Christopher Whitman, by and through his

attorney in charge, pursuant to Tex. R. Civ. P. 21a, on August 7, 2015.

/s/ Charles H. Steen

Charles H. Steen

348-278051-15

348-278051-15 filed tarrant county cause no. …€™ first amended original petition to wind up...

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