Trust Issue

A trust set up by former Little Rock lawyer Gene Cauley is a sizable shareholder in a small, publicly traded oil and gas company in San Antonio.

Now, the shares of Cross Border Resources Inc. owned by S. Gene Cauley Child College Education Irrevocable Trust – 369,151 of them at last report – were worth less than $700,000 earlier this month, which wouldn’t go far to settling the millions of dollars in debt Cauley left behind when he went to federal prison in January 2010.

Cross Borders Resources is the new name of a company that was called Doral Energy Corp. until it acquired a private company called Pure Energy Group in a January deal initially valued at $40 million.

The Cauley Trust was apparently a major shareholder of Pure Energy because after the merger, a notice was filed with the Securities & Exchange Commission on behalf of its trustee, Little Rock homebuilder and Cauley business associate Rick Ferguson, declaring the trust to be the owner of 5.8 percent of Cross Border’s outstanding stock.

That was on March 3, at which time the Cauley Trust owned 726,294 shares worth about $2.1 million.

Three weeks later, an amendment was filed in which the number of shares owned was reduced by almost half, at which point the trust no longer reached the 5 percent ownership threshold that triggers the SEC reporting requirement.

It’s unclear whether the original filing was in error or shares were sold, and Ferguson said he didn’t know anything about the filings, which were apparently done by the corporation.

In the meantime, the value of the stock has also gone down by almost a third, trading at $1.80 when last we checked.

Could Cauley’s creditors actually go after his kids’ college fund?

Depending on when and why he set up the trust.