Everything is Bigger in Texas… Including Oil and Gas Scams
In May of 2010 the Dallas Business Journal published a story on unscrupulous oil and gas companies in Dallas. It revealed major losses for many investors.
Our law firm believes it’s vital that you are aware of the key elements in this story and their potential implications. We’ve prepared this summary with commentary, based on our experience litigating many fraud cases.
-Roughly half of all the investor losses under investigation by the Dallas FBI office involve oil and gas frauds.
COMMENT: Nearly 98% of our clients who have invested in oil and gas projects were victims of a fraud.
-Investors have lost more than $633,000,000.00 in oil and gas frauds currently under investigation.
COMMENT: In the past few years, we have secured judgments for investors across the United States who were defrauded in oil and gas scams. These cases involved more than $13,000,000.00.
-At the time of the Dallas Business Journal story securities fraud investigations by the FBI’s Dallas office total about $1,200,000.00 in losses. “Oil and gas fraud has been trending upward for the past five years,” said Robert Casey, special agent in charge of the Dallas FBI office.
COMMENT: Since the story was published, and based on our experience, that figure will quickly and substantially increase, as oil and gas scammers tell prospective investors: “Now is the time to invest since oil & gas prices are low. When the prices increases, you will make a ‘killing.’”
-Dallas-Fort Worth is home to a large number of legitimate oil and gas promoters. Con artists using oil and gas as part of their Ponzi schemes naturally set up shop here. “It’s reasonable for them to be based here,” Casey said. “In securities fraud, perception is reality.”
COMMENT: This is spot on. Many of our past and current clients were lured into making substantial investments in numerous oil and gas projects and for many reasons — one of them being, they think that it is “exciting” to own part of an oil well. The scam artists know that the potential investors think that way, and that makes them easy “marks.”
-Casey said that the typical oil and gas fraud involves promoters selling investors shares in a drilling opportunity, an operating well or some other profit center in the oil patch, without any legitimate effort to engage in that business, Casey said. In essence, their Ponzi schemes are cloaked in the appeal of investing in the oil business, he added.
COMMENT: Recently, one officer of a scam oil and gas company we are suing testified that people like to invest in oil and gas because it makes them feel important. Our firm is suing this corporate officer.
-The success of the Barnett Shale, combined with investors’ desire for stronger returns on their investments, make oil and gas schemes more attractive to potential victims in North Texas.
COMMENT: And the scheme involves representing to potential investors that they will achieve huge tax credits. In fact, individual investors may earn the credits, while most likely losing their entire investment.
-While Dallas-Fort Worth is a nexus for oil and gas fraudsters, their victims can be found nationwide, Casey said.
COMMENT: While representing defrauded clients across the U.S., we’ve learned the behavior of the con artists. Texas fraudsters pursue victims from other states because the scammers are confident their defrauded investors are not likely to travel to Texas to personally confront them. Sadly, most victims don’t.
-Before investing in oil or gas securities, investors should do their own homework on a project, he said. That includes checking in with regulators in the oil and securities industries to make certain the business is legitimate. In Texas, that means the Texas State Securities Board, the Securities and Exchange Commission and Texas Railroad Commission.
COMMENT: This is basic but essential advice. CAUTION: These salesmen are excellent at convincing people to invest. In our experience, most potential investors will not “check out” the oil & gas company prior to sending them a check.
BOTTOM LINE. Do not invest a penny until you have done your due diligence.
Texas Oil and Gas Scams
The Law Firm of Mark A. Alexander. P.C. is here to help. Call us today at (972) 544-6968.
