James M. McConathy of Lipan, Texas, who pleaded guilty in May 2014 to money laundering from an oil and gas scheme was sentenced 60 months in federal prison and ordered to pay $112,746 in restitution by U.S. District Judge John McBryde.
According to the FBI Press Release, the scheme worked as follows:
McConathy purchased an oil and gas lease located in Navarro County Texas for $20,000 and contacted an individual in Evanston, Wyoming, and offered him a 50% interest in the lease for $125,000, based upon a fraudulent misrepresentation about the amount of oil being produced from the lease. After selling the interest, McConathy tried to cover the money trail by loaning $75,000 to Southlake Energy, who repaid the loan immediately to McConathy’s wife. Over the following months, McConathy sent the unsuspecting victim in Wyoming checks purported to be from oil production on the lease which served as a fraudulent inducement for the victim to send another $7,500 supposedly intended to cover new drilling costs.
Lesson to be learned: do some due diligence before investing, including —Know who you are dealing with, check their references and obtain source documents from the Texas Railroad Commission that would substantiate the actual production history of the lease .
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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