The oil and gas fields of Texas are almost as alluring for potential fraud schemes as they are for would-be oil and gas investors. The Securities Exchange Commission recently underlined this point by filing significant fraud charges against a group of individuals who control The Heartland Group Ventures, LLC, Heartland Production and Recovery, LLC, and six other Heartland affiliated entities and against a number of affiliated individual oil and gas operators.
The claims of fraud
According to the SEC, the claims center around entities and operators with their operations centered in Graham, TX. The allegations were announced in a complaint filed in Federal District Court in Fort Worth. The defendants were charged with obtaining approximately $122,000,000 from almost 700 investors. The money obtained from the investors were supposedly going to be used for working over existing oil wells or drilling new wells.
The complaint alleges that the perpetrators of the alleged fraud spent only about ½ of the funds they raised on oil and gas projects, which collectively generated less than $500 thousand in revenue. The complaint also alleges that the defendants used more than $26 million of investors’ money to make payments to new investors and made material misrepresentations regarding the future of oil and gas projects.
How the investors’ money was spent
The SEC’s complaint also contains specific allegations about how the defendants spent the investors’ money. “Millions of dollars” were spent to purchase a private jet, a helicopter, real estate in the Bahamas, and personal items for the founders of the alleged scheme. The individuals charged with creating the various schemes are alleged to have made several material representations about how investors’ money would be used.
The defendants in this case are facing very serious criminal charges. If convicted, they may face significant jail terms with the possibility of being required to return a significant portion of the investors’ money. Anyone facing similar charges may wish to consult an experienced criminal defense attorney for an evaluation of the charges and an assessment of the changes of negotiating an acceptable plea agreement.