(Source: FBI) – DALLAS—This week, another oil and gas company executive John Arthur Apple, Jr., 53, of Lewisville, Texas, pleaded guilty to felony offenses stemming from his operation of Western Pipeline Corporation. He is the fifth defendant to be convicted in that investment fraud case. Apple pleaded guilty to one count of conspiracy to commit securities fraud and one count of securities fraud and faces a maximum statutory sentence of five years in prison and a $250,000 fine on each count. Sentencing is set for April 16, 2012, before U.S. District Judge Sam A. Lindsay.
In making today’s announcement, U.S. Attorney Sarah R. Saldaña of the Northern District of Texas, said, “During roughly the last two years, this office has mounted an aggressive campaign against investment fraud in the oil and gas business, which has led to the conviction of 19 individuals on felony charges of fraud and conspiracy. Prison sentences for the eleven defendants who have been sentenced total nearly 70 years. The remaining defendants awaiting sentencing are each facing five to 25-year prison sentences.” Saldaña continued, “This office will continue to work side-by-side with our law enforcement partners to prosecute those fraudsters who put their greed above the law.”
From October 2006 to July 2007, Apple was the majority owner of Western Pipeline, and through Western Pipeline he raised money from investors by selling and causing others, including co-conspirators Christopher Scott Cent, Clifford Duane Stall, Mickey Glen Horn, and James Timothy “J.C.” Nealy, to sell investments in purported oil and gas development projects. Apple and his co-conspirators misled, deceived and defrauded prospective investors by misrepresenting and failing to disclose material facts. As part of their roles, the co-conspirators assumed false identities when communicating with prospective investors, and, in the guise of those false identities, claimed to be investors in past Western Pipeline oil and gas development projects that supposedly had been successful. Cent, Stall, Horn and Nealy have separately pleaded guilty to securities fraud or conspiracy charges based on their involvement with Western Pipeline. They are awaiting sentencing and each faces up to five years in prison.
Aspen Exploration, Inc.
Five defendants, four of whom are family members, were convicted for their various roles with Aspen Exploration, Inc. Aspen was the managing partner of oil and gas well programs offered and sold to investors throughout the U.S. Investors purchased securities in the form of joint venture programs created to promote and sell working interests in oil and gas leases. Among other things, the perpetrators of the scheme diverted investor funds for their own use, and failed to disclose that a key manager had been convicted of several federal offenses, including bank fraud and money laundering, and had served nearly seven years in federal prison for those convictions.
Brothers Gregory Keith Rand, aka “Greg Rand,” and William Nicholas Rand, aka “Bill Rand,” both of Dallas, were sentenced to 18 years and 14 years, respectively, in prison. Their father, William Anthony Rand, aka “Tony Rand,” of Plano, Texas, was sentenced to five and one-half years in prison. Tony Rand’s son, Mark Albert Rand, also of Plano, was sentenced to 88 months in prison and Joel William Petersen, of Frisco, Texas, was sentenced to five years in prison. In addition, the defendants were ordered to pay $99,707,758 in restitution and forfeit numerous assets to the government, including real estate, boats and other personal water crafts, luxury vehicles, artwork, including an original Picasso, furniture, antiques, musical instruments, jade, expensive jewelry and wine.
Prosper Oil & Gas, Inc.
Alan Todd May, who formed Prosper Oil and Gas and was its president, ran a scheme from July 2008 to March 2010 to obtain approximately $7,000,000 from investors by false and fraudulent pretenses. May operated a Ponzi scheme that included selling mineral interests that Prosper didn’t own; overselling mineral interests that it did own; wildly overstating the production revenue for Prosper’s leases; and mailing Ponzi payments, disguised as royalty payments, to investors. May pleaded guilty to mail fraud and admitted using investor funds for extravagant personal expenses and payments to his mother, daughter, brother and ex-wife. He is awaiting sentencing and faces up to 20 years in prison. May’s associates, Mera Lee and Kenneth Paul Stephens, Jr., both pleaded guilty to conspiracy to commit mail fraud. Both are awaiting sentencing; each faces up to five years in prison.
Excalibur Energy Corporation
Robert Baxter Wilson, III was the founder and chief executive of Dallas-based Excalibur Energy Corporation. Wilson raised nearly $4,000,000 from several dozen investors by selling interests in oil and gas development ventures. The ventures were real, but Wilson committed fraud by lying to investors about his experience and qualifications. Wilson also concealed from investors his criminal history and the fact that the Pennsylvania Securities Commission had accused one of his other companies of violating Pennsylvania’s securities laws. Wilson pleaded guilty to securities fraud and received a sentence of probation. He forfeited assets to the government that will be sold to make partial repayment of his victims’ losses.
T-Bar Resources, LLC
Tommy Eugene Barber, acting through T-Bar Resources, LLC, raised approximately $13,500,000 from investors through multiple fraudulent offerings of investments in oil and gas development deals. Among other things, Barber simply stole much of the money he raised, spending it on his lavish lifestyle rather than using it for any purpose that might have earned profits for his investors. Barber pleaded guilty to two counts of securities fraud and is presently serving a 10-year prison sentence.
Reunion Resources, LLC
Tracy Lee Pool, the founder and owner of Reunion Resources, LLC, used the company to raise more than $3,000,000 from investors through the fraudulent sale of investments in oil and gas deals. Among other things, Pool misappropriated much of the investors’ money and spent it on himself, then made Ponzi payments to investors, which he held out to be profits from oil and gas deals. Pool pleaded guilty to securities fraud and was sentenced to 51 months in prison.
United Star Petroleum and North Texas Partners
After working as an investment salesman for Pool and Reunion Resources, Joshua Wayne Bevill started two Dallas companies—United Star Petroleum and North Texas Partners. Along with his associates, Hannibal Jacob Boone, Dennis Shields and Jay Allen Marshall, Bevill raised several million dollars from investors by selling interests in supposed oil and gas development projects. In fact, Bevill and Boone were simply stealing the investors’ money rather than using it to earn profits in the oil and gas business. In selling the investments, Bevill, Boone, Marshall and Shields all pretended to be investors in past United Star or North Texas deals, and told prospective investors they had been well-satisfied with their investments. Bevill, Boone, Marshall and Shields all pleaded guilty to securities fraud. Marshall received a five-year prison sentence; Boone was sentenced to 46 months in prison; and Shields received a sentence of probation. Bevill is still awaiting sentencing, and he faces up to five years in prison.
Progressive Investment Partners
When he pleaded guilty to securities fraud in connection with United Star Petroleum and North Texas Partners, Joshua Wayne Bevill was already carrying out a new investment fraud through a company he called Progressive Investment Partners. Using a false identity, Bevill contacted potential investors and sold them investments in a supposed oil and gas business. He then simply stole their money and spent it to pay for his lavish lifestyle. Bevill pleaded guilty to effecting a monetary transaction in criminally-derived funds and is awaiting sentencing. He faces up to 20 years in prison for that crime, in addition to any sentence he receives for his involvement with United Star Petroleum and North Texas Partners.
Securities fraud is a major focus of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
U.S. Attorney Saldaña praised the investigative work of multiple state and federal agencies that have been instrumental in bringing these cases, including the FBI, the Postal Inspectors, the Secret Service, the Securities and Exchange Commission, and the Texas State Securities Board.
A number of Assistant U.S. Attorneys for the Northern District of Texas have prosecuted the cases mentioned above, often assisted by Special Assistant U.S. Attorneys from offices such as the Securities and Exchange Commission, the Texas State Securities Board and the Dallas County District Attorney’s Office.