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Federal Authorities Target Three Separate Oil & Gas Investment Frauds in Texas

October 10, 2016 Blog

The Securities and Exchange Commission (SEC), U.S. Department of Justice (DOJ) and other federal agencies are all working to protect unsuspecting individual investors against the growing prevalence of scams involving oil and gas investments. In Texas, the heart of the nation’s oil and gas industry, federal authorities recently targeted three such scams which reportedly cost investors in excess of $3 million.

Nine Days, Three Costly Oil & Gas Investment Fraud Scams Uncovered

1. Convicted Oil & Gas Scammers Held in Contempt After Launching New Fraud

On August 10, the SEC reported that a federal judge in Texas had held three men in contempt for violating an order that prohibited them from offering oil and gas securities. The original order was the result of a $4 million scam which resulted in more than $2.6 million in payments to one of the men and his family members, companies and employees. According to news reports, the men launched a new investment fraud scam in June that netted $77,500 in investor funds before federal authorities got involved.

2. $900,000 Fraud Involving Unregistered Securities for Oil & Gas Drilling Projects

The next day, the DOJ issued a press release announcing that it had charged a Texas man with a variety of federal offenses in relation to an alleged investment scam involving the sale of unregistered securities for oil and gas drilling projects in Colorado. According to the release, the man set up a company in his son’s name as a result of having previously been banned from selling unregistered securities, and misled investors as to both the use of their funds and his company’s role in the drilling operations. Rather than investing in the drilling projects, the DOJ alleges that the man “spent the vast majority of the funds on himself and the company’s fundraising operation.”

3. A $2.6 Million Oil & Gas Ponzi Scheme

Just one week later, U.S. Immigration and Customs Enforcement (ICE) released a statement publicizing the arrest of a 77-year-old man in connection with an alleged $2.6 million Ponzi scheme. According to ICE, the man offered investments in a “Land Lease Program” under prospectuses that offered an “assured” rate of return of nine to 15 percent and a guaranteed return of investors’ principal after three to five years. Some prospectuses even “estimated” returns as high as 35 percent.

In reality, it appears, investors funds were not invested in the oil and gas industry, but instead were used for other purposes, including employee payroll. The complaint in the case alleges that “dividend” payments to early investors were actually paid from an account used for depositing new investors’ funds, a practice “highly indicative of a Ponzi scheme.”

Oil & Gas Investment Losses? Contact Zamansky LLC for a Free Consultation

If you believe that you may be the victim of oil and gas investment fraud, the attorneys at Zamansky LLC may be able to help you recover your losses. To speak with an attorney about your case, call (212) 742-1414 or request a free consultation online today.