Oil and gas scheme spanned 9 states, victimizing 10 investors for 3 million dollars
After a four year investigation by Indiana Secretary of State Connie Lawson’s office and a two and half year prosecution by Floyd County Prosecutor Keith Henderson, 15 people have been convicted of securities related charges. The investigation began when oil and gas investments in Earth Energy Exploration attracted the attention of the Federal Bureau of Investigation.
When the FBI shifted attention to other related cases, the Secretary of State’s office was notified and assumed the case. Sifting through bank accounts and a number of investor complaints, the office was able to piece together the framework of a massive criminal enterprise.
The scheme began in 2007, when David Rose, founded Earth Energy Exploration, Inc., which offered investments in oil exploration and production companies. Rose hired employees to make cold calls to potential victims. Once an individual showed some interest, a closer would take over the call to get the victim to agree to invest and send money. The money was not invested as promised. Instead, it was used for the personal expenses of Earth Energy Exploration employees and laundered into related businesses.
“It took my team years to uncover the true nature of the scheme,” said Indiana Secretary of State Connie Lawson. “This was homegrown organized crime that spread through 9 states with a base in New Albany, Indiana. The convoluted scheme used Wyoming as a mail drop and Indiana as a base for calls, with investors stretching from Pennsylvania to Texas. With so many intricate details, this was not an easy case to prosecute. I appreciate Prosecutor Henderson’s leadership and dedication to pursuing justice for victims.”
Rose and his partners made several unusual attempts to increase their income, including the creation of an adult film organization that they would push to potential oil exploration investors. When these ventures sagged, they sent employees to Las Vegas to try and recoup losses through gambling, which backfired.
“This was a massive amount of information to sift through and a tremendous amount of credit goes to Charlie Williams and the entire Secretary of State investigative team,” said Floyd County Prosecutor Henderson. “I am pleased we were able to get convictions on all 15 defendants.
“This case should serve as a reminder that all potential investors should call the Secretary of State’s office to verify an investment advisor and the investment are registered and that potential defendants who want to prey on investors should be aware they will be prosecuted and held accountable.”
In addition to the Secretary of State’s office and the Floyd County Prosecutor, the Secret Service, and the FBI helped with this case. Thanks to the work of numerous members of law enforcement agencies, this scheme has come to a halt, leading to the arrest and convictions of those involved.
The names and sentences of those prosecuted in this case are below in alphabetical order.
- Thomas Berry provided assistance to Brian Rose and pled guilty to corrupt business influence. Berry was sentenced to 4 years, 1.5 to be served in prison and 2.5 on probation.
- David Brown was a sales closer and pled guilty to aiding the sale of unregistered securities. Brown was sentenced to 4 years in prison.
- Richard Collins was a sales closer and pled guilty to aiding the sale of unregistered securities. Collins was sentenced to 6 years in prison.
- Bruce Fox was a president of Earth Energy Exploration, Inc. and pled guilty to securities fraud and the sale of an unregistered security. Fox was sentenced to 6 years in prison and returned $5000 to victims.
- Brent Loveall acted as a sales closer and pled guilty to acting as an unregistered broker-dealer. Loveall was sentenced to 6 years in prison.
- Robert McGregor was a sales closer and pled guilty to the sale of unregistered securities. McGregor was sentenced to 4 years with 18 months of probation.
- Keith Mohney was a CPA and the Earth Energy Exploration, Inc. tax preparer. He pled guilty to aiding the sale of unregistered securities. Mohney was sentenced to 4 years with 4 years of probation.
- Colin Purcell pled guilty to aiding securities fraud. Purcell was sentenced to 3 years with 3 years of probation and returned $5000 to victims.
- Brian Rose, an owner of Earth Energy Exploration, Inc, pled guilty to securities fraud and corrupt business influence. Brian Rose was sentenced to 8 years in prison with 2 years’ probation and returned $25,000 to victims.
- David Rose, who was a leader of the scheme, pled guilty to securities fraud and was sentenced to 8 years, 4 of which will be executed in prison.
- Hugh Sackett was a sales consultant and pled guilty to aiding the sale of unregistered securities. Sackett was sentenced to 4 years in prison with 2 years of probation and returned $6000 to victims.
- Jeffery Smith laundered money for Brian Rose and pled guilty to conversion. He was sentenced to 1 year and returned $1000 to victims.
- Jason Towe was a sales closer and a president of Earth Energy Exploration, Inc, he pled guilty to corrupt business influence. Towe was sentenced to 4 years with 4 years of probation and returned $15,000 to victims.
- Mandy Ward-Rose ran a small pornography company and wrote investment paperwork for Earth Energy Exploration, Inc. She pled guilty to theft and was sentenced to 3 years, while returning $22,000 to victims.
- Michael Wood was a president of an Earth Energy Exploration, Inc affiliate company and pled guilty to aiding the sale of unregistered securities. Wood was sentenced to 4 years in prison.
