September 5, 2012 in City

Six face charges in drilling scam

Fictitious project promised big returns
Matthew Brown Associated Press
 
Alleged offenses

A criminal complaint filed by prosecutors last month detailed three alleged offenses by the defendants: conspiracy to commit fraud, which carries a maximum penalty of five years in prison, and investment fraud by mail and investment fraud by wire, which carry a maximum 20 years apiece. Each of the three offenses also carries a maximum fine of $250,000.

BILLINGS – Authorities said Tuesday that six California residents face fraud and conspiracy charges for an alleged scam in which investors were promised a stake in a fictitious oil and gas project on Montana’s Fort Peck Indian Reservation.

The first of the suspects, Mike Campa, of Yorba Linda, Calif., made an initial appearance Tuesday in Great Falls before U.S. Magistrate Judge Keith Strong.

He did not enter a plea and said he plans to hire his own attorney, said Assistant U.S. Attorney Carl Rostad. Campa is currently detained.

An affidavit submitted by an FBI agent in the case shows that beginning in 2009, dozens of people across the country invested about $673,000 into a drilling project being promoted by the defendants.

Potential investors contacted by email and telephone were promised lucrative returns: Their initial investments were to be repaid within six months and then regular monthly checks would begin flowing thereafter. To make the story more believable, the defendants presented a copy of a 2006 letter from the federal Bureau of Indian Affairs approving three oil and gas leases on land owned by a Fort Peck tribal member. The northeastern Montana reservation sits atop the Bakken oil patch, one of the richest oil-producing regions in the U.S.

But those federal leases had been canceled for nonpayment in 2007, court documents show. And authorities said the two companies created by the defendants – Domestic Energy Solutions and U.S. Oil and Gas LLC – never really pursued the oil and gas project, which was also said to include a refinery, pipelines and other infrastructure.

“Neither company has ever made any meaningful efforts to spend the money on development of oil and gas ventures at Fort Peck or anywhere else,” FBI agent David Burns in Glasgow wrote in his affidavit.

The six defendants were arrested by authorities Aug. 24 in California, documents show.

Three of them – Suzette Gal and sons Andras and Krisztian Zoltan Geoge Gal – have been released on $25,000 bond pending a Sept. 11 court appearance in Montana. The other defendants are Steven William Carpenter, who is currently detained awaiting a hearing in California, and Dana Yvonne Kent, who was detained and being transferred to Montana on Tuesday, Rostad said.

Indictments have not yet been filed in the case. “We anticipate formal charges will be forthcoming,” Rostad said.

Investor George Jordan, a retired veterinarian from Centereach, N.Y., said Tuesday that he invested twice with the company. That included $7,500 in 2009, according to court records, and then another $2,000 to $3,000 in recent months.

Although Jordan did not know about the criminal investigation until being contacted by an Associated Press reporter on Tuesday, Jordan said he already had decided he wasn’t going to get his money back.

“They were going to drill for oil and they were going to get some kind of refinery going,” he said. “But none of the promises about getting paid or money flows or staying in reasonable contact were achieved. I’m developing very little faith in the company.”

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