Kentucky: Oil Operator Admits Role in Multi-Million Dollar Securities Fraud Scheme

Kentucky: Oil Operator Admits Role in Multi-Million Dollar Securities Fraud Scheme

Mark Cornell faces maximum of 20 years in prison

FRANKFORT, Ky. (March 10, 2015) — A central Kentucky oil operator has admitted to his role in a scheme that defrauded investors nationwide out of millions of dollars.

On March 3, Mark Cornell pleaded guilty to securities fraud before U.S. District Judge Gregory Van Tatenhove. In January of this year, John G. Westine Jr., a leader of the scheme (see appended article), was convicted by a jury of mail fraud, money laundering conspiracy, and securities fraud. A third member of the scheme, Michael Hicks, pleaded guilty to mail fraud in November 2014. Westine and Hicks are scheduled to be sentenced in May.

In his plea agreement, Cornell admitted that his role in the scheme was to act as the local operator of a series of reworked wells for which production levels were exaggerated. Cornell was paid large sums of money by Westine and his associates to rework the wells and to provide guarantees of these excessive production levels. Those fraudulent guarantees were used by Westine and his associates to sell royalty interests in the wells to investors, via high-pressure telephone tactics.

In total the defendants defrauded approximately 200 investors nationwide out of more than $3 million.

The investigation started when investors submitted complaints to the Kentucky Department of Financial Institutions, Division of Securities.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky; Dugan Wong, Inspector in Charge of the U. S. Postal Inspection Service; and Charles Vice, Commissioner of the Kentucky Department of Financial Institutions, jointly announced the guilty plea.

The investigation was conducted by the U.S. Postal Inspection Service, including Postal Inspector Roberta Bottoms, and the Kentucky Department of Financial Institutions, Division of Securities.

Assistant U.S. Attorneys Ken Taylor and Neeraj Gupta are prosecuting this case on behalf of the federal government.

Cornell is scheduled to be sentenced in June. He faces a maximum sentence of 20 years imprisonment. The court will impose a sentence after carefully considering the U.S Sentencing Guidelines and the federal statutes.

http://www.lanereport.com/45583/2015/03/local-oil-operator-admits-role-in-multi-million-dollar-fraud-scheme/

California man is convicted in $3 million Kentucky oil-well scheme

BY BILL ESTEP

TRIBUNE NEWS SERVICE, January 18, 2015

jmack_headerA California man has been convicted of conducting a scheme that defrauded 200 people out of a total of more than $3 million through phony oil-well investments in Kentucky.

A federal jury on Friday found John G. Westine Jr. guilty on 26 charges of mail fraud and one charge each of securities fraud and conspiracy to launder money, according to a release from U.S. Attorney Kerry B. Harvey.

Each charge carries a maximum 20-year term. The court website does not list a sentencing date for Westine.

Westine had denied wrongdoing and represented himself in the case, filing a flurry of motions in the months before the trial.

Westine was charged with his half-brother, Michael A. Hicks; Mark Cornell, who had a company called JMACK Energy in Bowling Green; and Henry Irving Ramer, who listed a California address.

Hicks has pleaded guilty, and Cornell has asked for a hearing to plead guilty, according to court records.

The scheme involved interests in oil wells in southern Kentucky and lasted from mid-2012 until August 2014, according to the indictment in the case.

The investors were from around the country. Westine and others bought contact information for potential investors and also found leads from Internet advertisements, the indictment said.

The defendants used documents that included fake geological surveys to make it appear that the wells were producing substantial amounts of oil, or were about to, and that the sites had big reserves, the indictment said.

One claim the men made was that they planned to produce 60 to 100 barrels of oil each day from each lease site, but they knew the wells wouldn't produce anything close to that, the indictment alleged.

The indictment said the people charged in the case operated through shell companies but used legitimate, unsuspecting businesses such as accounting firms and commercial mailing companies to conduct transactions.

In June 2014, the defendants took some investors to see oil wells in southern Kentucky and gave them a bottle of oil to prove their money would start flowing in soon, the indictment said.

Westine and others allegedly siphoned off investors' money. The indictment included a forfeiture count under which the government moved to seize bank accounts and four luxury cars.

Westine was no stranger to fraud, according to a motion filed by Assistant U.S. Attorney Kenneth R. Taylor.

The motion said Westine was convicted in 1984 in an oil-well scam in California; in 1990 for tax evasion; and in 1992 in another oil and gas fraud case, in Ohio.

When he was locked up awaiting sentencing in the Ohio case, he used a phone at the jail to try to sell fake shares in a golf course development, the motion said.

Westine had been released after more than 20 years in prison not long before he undertook the oil-well scam in Kentucky, according to a court record.

http://www.kentucky.com/2015/01/18/3648594/california-man-is-convicted-in.html#storylink=cpy

  • Mr BMZ

    Tulga Demir The Con

    Save yourself the heartache of being ripped off and losing your savings. Tulga Demir is a fraud. Tulga Demir’s past investment programs are all complete failures, from real estate, night club to oil explorations, …. All failures and investors lost everything… But Tulga Demir kept a lot of money for himself, using the money to pay his lawyers related to past litigations in order to avoid jail time and to feed his expensive life style.

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    There are more than 20 claims from his ex business partners in Miami and Kentucky of embezzlement of funds from their companies they jointly owned.
    None of the investors have any idea what the status of their investments are or where their money went. The company has no employees. He has no employees to manage wells and oil exploration. and it is mismanaged by contractors that give him kickbacks on business… Tulga Demir pretends to be a very significant investor in every program to convince investors to trust the success of the investments – its not true –
    He also shows false oil production reports and false checks.

    Don’t beleive the You Tube videos Striking Oil although that wells in the videos produced some oil and that was the biggest success Tulga Demir has ever had, it was actually a huge failure. That wells have been abandoned for many months and did not produce for very long at all. Investors received very little of their investment funds back on that ones and will never see more money.

    Tulga Demir pissed away roughly $7,000,000 of investor funds drilling few holes most of them not producing oil or very little… Very different from his false backgroud performances and projections… However Mr Demir wired a lot fo money to his bank accounts from the investment partnership accounts and kept all that funds for personal expenses…

    Tulga Demir claims investors will only pay to complete drilled wells that will be viable oil producers. Tulga Demir even refers to drilling funds as “risk capital” and indicated well completion funds are not. It’s not true – his company made a huge profit on the completion funds and he completed nearly all the wells and nearly all turned out to be failures “dry holes” or very low producers.
    When asked to produce the investment records including receipts and bank statements and records for where investor money was spent for the investment partnerships, Tulga Demir frame them with false justification and false accounting.