Wednesday, June 15, 2011 10:49:06 PM
More details about the scam released
Halliburton plea agreement:
http://www.justice.gov/usao/mow/news2011/halliburton_plea.pdf
Harrell plea agreement:
http://www.justice.gov/usao/mow/news2011/harrell_plea.pdf
Good reads with some more detailed information about the scam.
So 8 new people charged today. I'll be interested to see the full list of who all got added to the Indictment.
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Edward Halliburton has lived in the Kansas City area for 30 years and has been a pastor for over 20 years. He has worked as a full time janitor at Fairfax Elementary in Kansas City, Kansas for 18 years. Halliburton held bank accounts at Argentine Santa Fe Credit Union, Midwest Regional Credit Union, Mainstreet Credit Union and Bank of America. He has never been licensed to sell stock.
Halliburton first became involved with Petro America around September 2008 through Pastor Arthur Perkins. Based on information provided by Perkins and others, Halliburton decided to invest. Initially, he paid for his shares. Halliburton’s first purchase was $200 for 200,000 shares. He paid Allen Collins, and he received a stock certificate. He began attending Tuesday shareholder meetings, which, early on, had approximately 60 people in attendance and were held at a church off Blue Ridge Boulevard. At one early meeting, Halliburton listened to a lengthy presentation by John Hammonds touting Petro. Hammonds said he had a background in stocks.
CEO Owen Hawkins attended about half of the shareholder meetings, and he conducted Thursday shareholder conference calls every week. Hawkins frequently said that Petro was about to “go public” and its stock would open at $24 a share. Ten thousand people were going to become millionaires or billionaires. Hawkins said Petro was worth $284 billion, bigger than Wal-Mart, and this value was from gold mines and a couple of oil fields. Petro would help the community and bring jobs to the people. Speakers at the Tuesday meetings explained how the shareholders could create trust accounts and corporations to prepare for the time when Petro went public and they became wealthy. Teresa Hill and Allen Collins collected money for Hawkins at the meetings.
Following his initial purchase, Halliburton began making additional purchases every two weeks of 100,000 shares for $100. Halliburton was told that if he brought in 10 new investors, he would be gifted 1,000,000 Petro shares. Halliburton learned from Wells Fargo that the shares were not trading and were unregistered and Halliburton could not cash them.
Halliburton began selling Charles Hooker’s Petro shares sometime in late 2009. He split the proceeds 50-50 with Hooker. Halliburton told people at his church about Petro, and he mentioned it at other churches he visited. Nobody knew Halliburton was selling Hooker’s shares, and Halliburton did not tell buyers where the shares came from. Halliburton never disclosed to any buyers the risks of investing in Petro or that the stock was unregistered. He did not disclose what he had learned from Wells Fargo. If a prospective buyer did not already know, Halliburton did not tell them about the state regulatory actions, nor did he provide a copy of the C&D orders. He never offered a prospectus to the buyers.
Halliburton sold about 50,000,000 of Hooker’s shares for around $50,000, and he gave Hooker around $25,000 in cash. The sales price was usually $100 for 100,000 shares, which later became $1,000 for 1,000,000 shares, although Halliburton did not disclose the basis for setting the price at those levels. Halliburton painted a rosy picture about Petro’s chances for success, including the many assets that Petro supposedly had, and how the company’s value would greatly increase when the company soon went public. In addition to the Missouri order, early in 2010, Hawkins told Halliburton about an additional C&D order that had been issued by the State of Kansas. However, Halliburton did not disclose this second order to investors either. Halliburton stopped selling Hooker’s stock on April 22, 2010, although Hooker continued selling shares.
Halliburton first heard about the “Minister’s Alliance” from Pastor McGowan. The Minister’s Alliance prayed for the company and many members of the Minister’s Alliance also sold Petro shares to their congregants and to others. If you were a minister and involved with Petro, then you were automatically welcome in the Minister’s Alliance. There were 15 main members who met once a month at a Denny’s restaurant to talk about Petro. They also met approximately five times at 5 p.m. before the 6 p.m. weekly Tuesday shareholder meetings. Members included Martin Roper, Pastor Perkins, Allen Collins, Michael Warren, Pastor Ricky Tyler, Bishop Tyler, Anthony Johnson, Curtis White, Kevin Jackson from Maryland, and Charles Hooker. Hawkins gave each of the Minister’s Alliance members, and a couple other Petro supporters who were not ministers, a box containing a white Fedora hat. They began calling themselves the “White Hat Guys.”
Petro CEO Owen Hawkins carefully choreographed his entrance to the shareholder meetings. Hawkins entered first and the White Hat Guys walked in behind him. After the Thursday night conference calls, on about 25 occasions, Hawkins and the White Hat Guys went to Brio Tuscan Grille on the Plaza. Marcia Parker frequently went along. After Brio, many in the group went to the Epicurean Night Club for music and cocktails, where Hawkins would frequently play chess.
Pastor McGowan, the original President of the Minister’s Alliance, was receiving money from Hawkins. Sometime before April 2010, Halliburton told Hawkins that he wanted more Petro stock, and he would like to become the new President of the Minister’s Alliance. Hawkins made Halliburton the President of the Minister’s Alliance and gifted him 100,000,000 shares of Petro stock. Hawkins said any shares Halliburton sold would be replaced so Halliburton’s total shares would not fall below 100,000,000. Subsequently, Halliburton sold the shares and funneled about 10% of the proceeds back to Hawkins. Halliburton told buyers that the shares were his, and he did not disclose that he had not paid for them. Halliburton never told purchasers about the kick-backs to Hawkins.
For one example, On June 28, 2010, Halliburton received $12,000 consisting of four $3,000 Western Union Money Orders from Canadian residents C.E. and J.E. in exchange for Petro stock. Halliburton did not disclose that he had not paid for the shares, or that Hawkins would receive a kick-back of approximately $1,200, and he did not disclose any material negative information about Petro.
Halliburton was aware that other persons who had been gifted Petro stock would also give part of the proceeds from sales to Hawkins. Halliburton estimates that he gave Hawkins $25,000 to $30,000 in cash. As far as he knows, none of the money from Halliburton’s sale of Petro shares actually went back to Petro. Halliburton saw Collins giving money to Hawkins on several occasions, usually in an envelope. Curtis White and Roper told Halliburton they also gave money to Hawkins.
Halliburton heard Martin Roper say that the state of Missouri had barred Roper from selling Petro shares. But Roper was trying to get around the C&D Order, so he would tell prospective buyers that someone else would sell them Petro shares. Roper was getting money from somewhere, so he may have been getting a referral fee. Allen Collins said he did a Petro stock sale deal with Roper and they split the proceeds. Collins told Halliburton he was also selling his own shares. Collins bought a Mercedes and purchased a $5,000 electronic gate for his house. Collins also bought a black truck for $17,000 along with nice wheels for it. He put down a large deposit. Curtis White bought a black 2000 S420 Mercedes.
Owen Hawkins and Johnny Heurung were the public face of Petro America. Hawkins gave Petro money to numerous people, including Hammonds, Collins and Alvin Sykes, a local community activist. Halliburton saw a list where Hawkins gave $335,000 to people. Hawkins gave everyone positive things to say about Petro. Hawkins told everybody numerous times to post positive messages about Petro America on IHUB, an online message board. One time, at a Tuesday meeting, Owen Hawkins said that Petro’s accounts had been frozen. Hawkins claimed it was “government intervention” and said “we have this but it was interference.” This “fired up” the people at the meeting.
Around March 2010, Johnny Heurung spearheaded taking a number of Petro investors and potential investors on a cruise. After the cruise ended, Halliburton, Hooker and Teresa Hill started getting phone calls from all over the country because people on the cruise spread their names to friends and relatives. Halliburton does not know Heurung well but he has met him a couple of times. Heurung was an investment guy, and when he finished talking, listeners would think that Petro was going public. Heurung held an additional weekly conference call after the Thursday Petro call. Heurung sent a couple of people to Halliburton to purchase stock after April 2010. Heurung said Petro had seven gold mines and one or two granite mines. Heurung said one of the gold mines had tapped into a vein and possibly might be worth three to four trillion dollars.
Teresa Brown sent emails updating and summarizing the Petro meetings and conference calls. Brown had a huge amount of Petro shares, which she often sold. Hawkins said that Brown should not have been selling shares. Hawkins never said if he was getting some of the money from Brown’s stock sales.
In June 2010, Hawkins passed around a letter at the Minister’s Alliance meeting which was from a CPA, Clarence Moore. Hawkins indicated that the CPA had signed off and everything was legitimate. Hawkins showed a letter from Moore at the regular shareholder meeting, but did not pass it around.
Whenever he sold stock, Halliburton would send an email to Marcia Parker so that the Petro database could be updated with the new owners’ information.
During this time frame, any money deposited into Halliburton’s bank accounts that was related to Petro was for stock sales. Halliburton formed Getting Wealth Corp. in February 2010, and he deposited some Petro stock sales money into the account. In July 2010, Halliburton purchased a 2004 S500 Mercedes for $20,000. Some of the money came from Petro proceeds. Halliburton used $81,000 in proceeds to satisfy the mortgage on his house, located at 8741 Cleveland, Kansas City, Kansas, including a $75,000 wire transfer to Saxon Mortgage on June 22, 2010, from his Argentine Santa Fe Credit Union account, which contained Petro proceeds. He also bought a lot of clothes, a tennis bracelet for his wife, he spent about $10,000 on travel, and he spent approximately $17,000 remodeling his residence. He purchased a rental property, at 656 Rowland Ave, Kansas City, Kansas for $5,000. Halliburton also purchased a doctorate degree from Tabernacle Bible College for $1,794. To obtain the degree, Halliburton was asked to write a resume, listing the things he did over the years as a pastor. Halliburton feels he did not have to do much work to obtain the doctorate, so he does not feel comfortable telling people about it. Pastor Perkins also purchased a doctorate from Tabernacle. On one occasion, Halliburton mentioned his doctorate to Hawkins after a meeting at Denny’s.
Halliburton’s last Petro stock sale was in October 2010. He stepped away from Petro on October 28, 2010, after speaking with a criminal defense attorney. Halliburton has refunded money to some of the people he sold stock to. Halliburton did not claim the Petro stock sales on his 2009 tax return and was unsure of how to report it on his 2010 tax return.
Halliburton genuinely believed that Petro America was a company and that there was a chance that it could become publicly-traded. While much of the time Halliburton simply repeated information to investors that he had heard from others, he knew that it was incomplete and potentially misleading. He admits that he has never been licensed to sell securities. He is not knowledgeable about all of the rules, including disclosure rules, required under federal and state law in order to sell securities. He admits that he did not take steps to learn from state and federal authorities whether his sale of Petro America stock was lawful. The reason for this is that he wanted to sell and profit from the sale of Petro America stock. Further, he admits that he intentionally did not provide certain material information to investors, including the that the stock was unregistered, that he paid kick-backs to Hawkins and Hooker, and information contained in the C&D orders.
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Joseph Harrell is a minister who lives in Waco, Texas. He has been involved in multi- level marketing (“MLM”) programs in the past. Harrell was initially recruited to Petro as an investor around February 2010 by Russell Hopkins. Harrell bought shares from Teresa Brown for $.01 per share, wiring the money to her Windsong account, because he thought the company presented a good opportunity. In March 2010, Harrell went to a Petro meeting in Dallas, Texas that included approximately 100 people. Brown talked to the crowd about what a great opportunity Petro was. Harrell remembers listening to Owen Hawkins on conference calls, and Hawkins was very believable. Hawkins said Petro had assets worth $284 billion, he said the stock’s par value was $2 per share, and the book value was $24 per share. In June 2010, Hawkins gave Harrell a letter signed by Clarence Moore supporting this valuation. Harrell genuinely believed that Petro America was a company and that there was a chance that it could become publicly-traded. His role changed over time.
In June 2010, Harrell assumed the role of CFO of Petro America. He traveled to Kansas City 5 to 10 times, toured purported Petro subsidy Performance Packaging (“PPG”), and worked actively with the Minister’s Alliance. Hawkins told Harrell that Petro owned 51% of PPG and PPG was generating revenue for Petro. The Minister’s Alliance was Hawkins’ idea. Members were his buddies and part of his entourage. Some ran errands for Hawkins, and acted like the Secret Service protecting Hawkins.
Harrell received multiple notices that the company was fraudulent, and through these and other occurrences, he became aware of fraud and many other red flags with the company and its other leaders. But he knew that Owen Hawkins, Teresa Brown, Johnny Heurung, and others were continuing to hold weekly shareholder meetings in Kansas City, and weekly conference calls every Thursday night, where hundreds of investors in dozens of states would call in. During the meetings and on the calls, Harrell knew that the conspirators were providing false and misleading information about Petro America.
Nonetheless, in order to make money for himself, Harrell agreed with Hawkins that he would sell stock, and he provided money from his sales back to Hawkins. Harrell sold stock to over 90 investors, depositing $385,460 in proceeds into his Kingdom Wealth LLC account, which he set up expressly to receive the proceeds. He has never been licensed to sell securities. He admits he is not knowledgeable about all of the rules, including disclosure rules, required under federal and state law in order to sell securities. He admits he did not take steps to learn from state and federal authorities whether his sale of Petro America stock was lawful and whether the law allowed him to make such sales without a license.
Depending on who was buying, he fluctuated back and forth between $.01 per share to at least $.10 per share. He frequently said the investment was not risky, it was guaranteed to make the purchaser a millionaire, Petro was within days of going public, it would open at $20 per share, and on one occasion where regulatory problems were discussed, he said the only state where Petro was not registered was Missouri. He couched many of his sales pitches in religious language, stating that Petro was a blessing from God.
Acting as CFO of Petro, Harrell also wrote checks for purported Petro expenditures that he knew were not legitimate business expenses. He also sent confirmation emails to investors for shares that he had sold despite knowing that Petro was subject to two cease and desist orders, issued by Missouri in November 2008 and Kansas in April 2010. At no point did Harrell ascertain with state authorities, or with the Securities and Exchange Commission, whether the C&D orders were still in effect and what that meant, whether the CUSIPs listed on the certificates were any good, or whether the shares were registered. The reason for this is that he wanted to sell and profit from the sale of Petro America stock.
While much of the time Harrell simply repeated information to investors that he had heard from others, he knew that the information he was providing was incomplete and misleading. Further, he intentionally did not provide certain material information to investors, including 1) the existence of the C&D orders; 2) specific negative information contained in the C&D orders; 3) the stock was unregistered; 4) he paid kick-backs from his proceeds to Hawkins, including checks from the Kingdom Wealth account that Harrell wrote for Hawkins’ personal use; 5) the stock was either gifted to him, or sold to him at a price grossly discounted from his offer price; and 6) that Harrell had learned, at least by August 2010, that Hawkins was spending large amounts of money obtained from Petro investors on purely personal expenses. Harell told some investors that he worked for Petro, knowing that they would wrongly believe that they were buying stock from Petro, not from Harrell. Harrell told other investors he was selling his personal shares, implying that he had paid a fair price for those shares. Harrell also made and adopted numerous statements to investors concerning Petro’s future potential to become a publicly-traded company, and of its claimed assets, which were untrue.
Hawkins gifted Harrell millions of shares of Petro America. But Harrell represented to some investors that he was reselling his own shares, or the shares of another investor, when he knew that he had not paid anything for some of the shares, and a relative pittance for other shares, and that this was not made clear to investors who were making a purchasing decision. He sold the stock for whatever price he thought they could bring.
Harrell tried to “protect” his newly-acquired assets by placing them in LLCs. He drove nice cars and was living significantly better than prior to his involvement in Petro, including renting cars for $423 per week and buying world series tickets. He frequently used Petro money to pay for meals at expensive restaurants for himself and others. During this time, Harrell was receiving an income-dependant Social Security disability benefit. Until at least May 2010, he was receiving food stamp benefits through the Department of Agriculture.
On February 26, 2010, Harrell told an investor over the phone that Petro was going public the next day, and that if she wanted to buy stock, she needed to do it immediately. He said the stock would open from $10 to $20 per share. He told her he was selling shares for Petro and did not disclose how he obtained the stock, or what if anything he paid for it. The investor thought she was buying shares from Petro and not his personal stock. He did not disclose that cease and desist orders had been issued against Petro in Missouri and Kansas. If she had known about the cease and desist orders, she says she would not have purchased the stock. He participated in selling her more stock in March, and more stock in May, totaling $25,000, saying that Petro had extended the time it would offer stock prior to going public. Harrell directed $23,000 of the proceeds into Kingdom Wealth account.
In addition, Harrell made or received numerous transfers of proceeds of over $10,000 into accounts that he set up specifically to receive the proceeds, and for the purpose of “protecting” it from others. He wrote numerous Petro checks at Hawkins’ direction, including for the benefit of a person who was losing their house, and to people who Hawkins said had “done him favors.” He continued to write checks to Hawkins for Hawkins’ personal expenses even after July 2010, when he told others that he was cutting Hawkins off from the money after developing suspicions about Hawkins. Harrell told an investor that most of the checks were for “payroll,” when in actuality, Petro had no W2 employees. Hawkins told him to write “consultants” on the memo lines of checks, but Harrell should have known, or taken steps to learn, that many or most of the expenses were not for anything related to“consultants.” As he knew, many or most of the people called consultants were not doing work that realistically furthered Petro’s business interests.
Harrell received numerous proceeds checks through the United States mail. For one example, around June 3, 2010, Harrell received, through the mail, a check made out to Joseph Harrell from an investor for $1,000 for 1000 shares of Petro. He told another investor from Fort Worth that he worked for Petro, that it was a great investment, and he had been looking at the company for two years. The investor sent him four checks totaling $3,700, mailed to Harrell at a P.O. box. Harrell first sold the shares at $.10 per share, and later lowered the price to $.01 per share so the investors would think they were getting a special deal. Harrell did not disclose that there were registration problems with the stock, and he did not disclose the cease and desist orders. When the investor found out Hawkins had been arrested, he asked for his money back, but did not receive it.
In addition, Harrell solicited many investors in other states, including many investors in Florida, over the phone. Harrell told one Florida investor over the phone that the investor needed to purchase $3,000 worth of shares soon, or the opportunity would be closed. The investor bought shares for $2,450, wiring the money to Harrell’s Kingdom Wealth LLC account on July 14, 2010, September 25, 2010, and October 2, 2010. Harrell sent numerous interstate emails to this investor and others. After the criminal charges were made public, the Florida investor contacted Harrell, who said he could receive a refund, but never sent it.
E.L. purchased 60,000,000 shares from Harrell for $60,000. He also purchased 15,000,000 shares from Russell Hopkins for $109,000. Hopkins asked Harrell to call E.L. and lie and say it was a mistake and change his price on the shares he sold E.L. Harrell refused. When Harrell discovered Hawkins was flying through the money in August 2010, he contacted Hopkins. Hopkins agreed he thought something was wrong with what Hawkins was doing. At one point, Hawkins was furious that Hopkins was not turning over money to Hawkins from his sale of shares. Hopkins guaranteed money back to Petro shareholders if the company did not pan out.
In October 2010, Hawkins took Harrell, J.A., investor O.F., and J.T. to a printer in the Kansas City area. Hawkins told Harrell he was taking them because he was scared that J.A. was going to get Hawkins into trouble. Hawkins had the following stock certificates printed: a) investor O.F. received 100,000,000 shares for $105,000; b) Harrell received 100,000,000 shares; c) J.T., C.R. and C.T received 25,000,000 shares each for being ministers; and d) J.A. received 25,000,000 shares because Hawkins told Harrell this was to cool off J.A. so she would not get him in trouble. Harrell asked Hawkins why he was backdating the stock certificates to 2008. Hawkins explained that was when he could sell shares. Hawkins cited to Harrell a code from the securities laws that supposedly justified him backdating the shares.
After Hawkins was indicted and released from prison, he called Harrell numerous times begging Harrell for money to get Petro public. Hawkins asked Harrell to come to Kansas City and bring money. In February 2011, Harrell met Hawkins in Kansas City because Cornley did not do his job and get Harrell’s stock holders their stock certificates. Hawkins refused to let Harrell see the new CEO Gladys Hankins. Hawkins also refused to let Harrell see Greg Cornley. Hawkins said these other CEO’s are incompetent and he is running the company. Harrell told Hawkins he was not giving any money until investors’ stocks were registered with the transfer agent. Hawkins called Martin Roper on his cell phone and put Harrell on the phone with Roper. Roper said he would take care of getting that information to the transfer agent. Harrell said his stock holders received e-mail confirmations after this.
Approximately 45 days ago, Hawkins had a friend call Harrell to ask him again for money. Harrell said he was talking to the FBI and the person hung up the phone.
Harrell met with Johnny Heurung on 3 or 4 occasions at the Crown Plaza and elsewhere in Kansas City from June to August 2010. Heurung told Harrell on one of those occasions that the Missouri cease and desist order had been dropped in 2009 and was fine for shareholders to sell shares. Heurung bragged about Petro and how he made the company. Heurung brought a “strips and coupons” program to Petro, and told shareholders they needed to buy at least $3,000 to get in. Harrell did not trust Heurung and thought he was a con-man. Heurung also promoted a hedge fund in Kansas City. Harrell said Heurung knew this was a scam. Heurung offered a 6% commission when it should have been 1%.
Martin Roper input shareholders into the database. He did errands for Hawkins. He ran Petro meeting after Hawkins was indicted. Roper was still selling his shares after the Missouri C&D was filed on him in November 2008. In July 2010, M.H., an investor who purchased shares from Harrell, found a website with Roper’s name and number saying he had Petro shares to sell. M.H. contacted Harrell and asked why Roper was selling his shares for less than Harrell. Harrell told her that Roper is not supposed to be selling shares. In July 2010, when Harrell asked Hawkins about Roper selling his shares, Hawkins said Roper was keeping all the money. He told Harrell to keep the price of the shares at 1/10 of a penny. Harrell confronted Roper at Brio’s and said he would take down the website but did not know how and he could not help it if people called for shares. Harrell Googled Petro America and Roper’s website appeared. The website contained Roper’s contact information and had other information about Petro. Hawkins was furious when he found out about Roper’s website.
Allen Collins was head of the Minister’s Alliance at some point. Collins often called Harrell begging for money for himself and Hawkins. Collins was selling his shares. Collins told Harrell he needed money and asked Harrell to sell his shares for him. Harrell refused. Collins drove a nice truck and maybe a Mercedes. He also did errands for Hawkins.
In August or September 2010, Harrell told Curtis White that Petro was not looking good. White told Harrell everything was okay, there was nothing wrong. White sold shares before July 2010, but he led Harrell to believe he had stopped selling. White asked Harrell for money in January 2011 because he needed to buy groceries and other things. White drove a nice car. He did a lot of errands for Hawkins.
Halliburton plea agreement:
http://www.justice.gov/usao/mow/news2011/halliburton_plea.pdf
Harrell plea agreement:
http://www.justice.gov/usao/mow/news2011/harrell_plea.pdf
Good reads with some more detailed information about the scam.
So 8 new people charged today. I'll be interested to see the full list of who all got added to the Indictment.
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Edward Halliburton has lived in the Kansas City area for 30 years and has been a pastor for over 20 years. He has worked as a full time janitor at Fairfax Elementary in Kansas City, Kansas for 18 years. Halliburton held bank accounts at Argentine Santa Fe Credit Union, Midwest Regional Credit Union, Mainstreet Credit Union and Bank of America. He has never been licensed to sell stock.
Halliburton first became involved with Petro America around September 2008 through Pastor Arthur Perkins. Based on information provided by Perkins and others, Halliburton decided to invest. Initially, he paid for his shares. Halliburton’s first purchase was $200 for 200,000 shares. He paid Allen Collins, and he received a stock certificate. He began attending Tuesday shareholder meetings, which, early on, had approximately 60 people in attendance and were held at a church off Blue Ridge Boulevard. At one early meeting, Halliburton listened to a lengthy presentation by John Hammonds touting Petro. Hammonds said he had a background in stocks.
CEO Owen Hawkins attended about half of the shareholder meetings, and he conducted Thursday shareholder conference calls every week. Hawkins frequently said that Petro was about to “go public” and its stock would open at $24 a share. Ten thousand people were going to become millionaires or billionaires. Hawkins said Petro was worth $284 billion, bigger than Wal-Mart, and this value was from gold mines and a couple of oil fields. Petro would help the community and bring jobs to the people. Speakers at the Tuesday meetings explained how the shareholders could create trust accounts and corporations to prepare for the time when Petro went public and they became wealthy. Teresa Hill and Allen Collins collected money for Hawkins at the meetings.
Following his initial purchase, Halliburton began making additional purchases every two weeks of 100,000 shares for $100. Halliburton was told that if he brought in 10 new investors, he would be gifted 1,000,000 Petro shares. Halliburton learned from Wells Fargo that the shares were not trading and were unregistered and Halliburton could not cash them.
Halliburton began selling Charles Hooker’s Petro shares sometime in late 2009. He split the proceeds 50-50 with Hooker. Halliburton told people at his church about Petro, and he mentioned it at other churches he visited. Nobody knew Halliburton was selling Hooker’s shares, and Halliburton did not tell buyers where the shares came from. Halliburton never disclosed to any buyers the risks of investing in Petro or that the stock was unregistered. He did not disclose what he had learned from Wells Fargo. If a prospective buyer did not already know, Halliburton did not tell them about the state regulatory actions, nor did he provide a copy of the C&D orders. He never offered a prospectus to the buyers.
Halliburton sold about 50,000,000 of Hooker’s shares for around $50,000, and he gave Hooker around $25,000 in cash. The sales price was usually $100 for 100,000 shares, which later became $1,000 for 1,000,000 shares, although Halliburton did not disclose the basis for setting the price at those levels. Halliburton painted a rosy picture about Petro’s chances for success, including the many assets that Petro supposedly had, and how the company’s value would greatly increase when the company soon went public. In addition to the Missouri order, early in 2010, Hawkins told Halliburton about an additional C&D order that had been issued by the State of Kansas. However, Halliburton did not disclose this second order to investors either. Halliburton stopped selling Hooker’s stock on April 22, 2010, although Hooker continued selling shares.
Halliburton first heard about the “Minister’s Alliance” from Pastor McGowan. The Minister’s Alliance prayed for the company and many members of the Minister’s Alliance also sold Petro shares to their congregants and to others. If you were a minister and involved with Petro, then you were automatically welcome in the Minister’s Alliance. There were 15 main members who met once a month at a Denny’s restaurant to talk about Petro. They also met approximately five times at 5 p.m. before the 6 p.m. weekly Tuesday shareholder meetings. Members included Martin Roper, Pastor Perkins, Allen Collins, Michael Warren, Pastor Ricky Tyler, Bishop Tyler, Anthony Johnson, Curtis White, Kevin Jackson from Maryland, and Charles Hooker. Hawkins gave each of the Minister’s Alliance members, and a couple other Petro supporters who were not ministers, a box containing a white Fedora hat. They began calling themselves the “White Hat Guys.”
Petro CEO Owen Hawkins carefully choreographed his entrance to the shareholder meetings. Hawkins entered first and the White Hat Guys walked in behind him. After the Thursday night conference calls, on about 25 occasions, Hawkins and the White Hat Guys went to Brio Tuscan Grille on the Plaza. Marcia Parker frequently went along. After Brio, many in the group went to the Epicurean Night Club for music and cocktails, where Hawkins would frequently play chess.
Pastor McGowan, the original President of the Minister’s Alliance, was receiving money from Hawkins. Sometime before April 2010, Halliburton told Hawkins that he wanted more Petro stock, and he would like to become the new President of the Minister’s Alliance. Hawkins made Halliburton the President of the Minister’s Alliance and gifted him 100,000,000 shares of Petro stock. Hawkins said any shares Halliburton sold would be replaced so Halliburton’s total shares would not fall below 100,000,000. Subsequently, Halliburton sold the shares and funneled about 10% of the proceeds back to Hawkins. Halliburton told buyers that the shares were his, and he did not disclose that he had not paid for them. Halliburton never told purchasers about the kick-backs to Hawkins.
For one example, On June 28, 2010, Halliburton received $12,000 consisting of four $3,000 Western Union Money Orders from Canadian residents C.E. and J.E. in exchange for Petro stock. Halliburton did not disclose that he had not paid for the shares, or that Hawkins would receive a kick-back of approximately $1,200, and he did not disclose any material negative information about Petro.
Halliburton was aware that other persons who had been gifted Petro stock would also give part of the proceeds from sales to Hawkins. Halliburton estimates that he gave Hawkins $25,000 to $30,000 in cash. As far as he knows, none of the money from Halliburton’s sale of Petro shares actually went back to Petro. Halliburton saw Collins giving money to Hawkins on several occasions, usually in an envelope. Curtis White and Roper told Halliburton they also gave money to Hawkins.
Halliburton heard Martin Roper say that the state of Missouri had barred Roper from selling Petro shares. But Roper was trying to get around the C&D Order, so he would tell prospective buyers that someone else would sell them Petro shares. Roper was getting money from somewhere, so he may have been getting a referral fee. Allen Collins said he did a Petro stock sale deal with Roper and they split the proceeds. Collins told Halliburton he was also selling his own shares. Collins bought a Mercedes and purchased a $5,000 electronic gate for his house. Collins also bought a black truck for $17,000 along with nice wheels for it. He put down a large deposit. Curtis White bought a black 2000 S420 Mercedes.
Owen Hawkins and Johnny Heurung were the public face of Petro America. Hawkins gave Petro money to numerous people, including Hammonds, Collins and Alvin Sykes, a local community activist. Halliburton saw a list where Hawkins gave $335,000 to people. Hawkins gave everyone positive things to say about Petro. Hawkins told everybody numerous times to post positive messages about Petro America on IHUB, an online message board. One time, at a Tuesday meeting, Owen Hawkins said that Petro’s accounts had been frozen. Hawkins claimed it was “government intervention” and said “we have this but it was interference.” This “fired up” the people at the meeting.
Around March 2010, Johnny Heurung spearheaded taking a number of Petro investors and potential investors on a cruise. After the cruise ended, Halliburton, Hooker and Teresa Hill started getting phone calls from all over the country because people on the cruise spread their names to friends and relatives. Halliburton does not know Heurung well but he has met him a couple of times. Heurung was an investment guy, and when he finished talking, listeners would think that Petro was going public. Heurung held an additional weekly conference call after the Thursday Petro call. Heurung sent a couple of people to Halliburton to purchase stock after April 2010. Heurung said Petro had seven gold mines and one or two granite mines. Heurung said one of the gold mines had tapped into a vein and possibly might be worth three to four trillion dollars.
Teresa Brown sent emails updating and summarizing the Petro meetings and conference calls. Brown had a huge amount of Petro shares, which she often sold. Hawkins said that Brown should not have been selling shares. Hawkins never said if he was getting some of the money from Brown’s stock sales.
In June 2010, Hawkins passed around a letter at the Minister’s Alliance meeting which was from a CPA, Clarence Moore. Hawkins indicated that the CPA had signed off and everything was legitimate. Hawkins showed a letter from Moore at the regular shareholder meeting, but did not pass it around.
Whenever he sold stock, Halliburton would send an email to Marcia Parker so that the Petro database could be updated with the new owners’ information.
During this time frame, any money deposited into Halliburton’s bank accounts that was related to Petro was for stock sales. Halliburton formed Getting Wealth Corp. in February 2010, and he deposited some Petro stock sales money into the account. In July 2010, Halliburton purchased a 2004 S500 Mercedes for $20,000. Some of the money came from Petro proceeds. Halliburton used $81,000 in proceeds to satisfy the mortgage on his house, located at 8741 Cleveland, Kansas City, Kansas, including a $75,000 wire transfer to Saxon Mortgage on June 22, 2010, from his Argentine Santa Fe Credit Union account, which contained Petro proceeds. He also bought a lot of clothes, a tennis bracelet for his wife, he spent about $10,000 on travel, and he spent approximately $17,000 remodeling his residence. He purchased a rental property, at 656 Rowland Ave, Kansas City, Kansas for $5,000. Halliburton also purchased a doctorate degree from Tabernacle Bible College for $1,794. To obtain the degree, Halliburton was asked to write a resume, listing the things he did over the years as a pastor. Halliburton feels he did not have to do much work to obtain the doctorate, so he does not feel comfortable telling people about it. Pastor Perkins also purchased a doctorate from Tabernacle. On one occasion, Halliburton mentioned his doctorate to Hawkins after a meeting at Denny’s.
Halliburton’s last Petro stock sale was in October 2010. He stepped away from Petro on October 28, 2010, after speaking with a criminal defense attorney. Halliburton has refunded money to some of the people he sold stock to. Halliburton did not claim the Petro stock sales on his 2009 tax return and was unsure of how to report it on his 2010 tax return.
Halliburton genuinely believed that Petro America was a company and that there was a chance that it could become publicly-traded. While much of the time Halliburton simply repeated information to investors that he had heard from others, he knew that it was incomplete and potentially misleading. He admits that he has never been licensed to sell securities. He is not knowledgeable about all of the rules, including disclosure rules, required under federal and state law in order to sell securities. He admits that he did not take steps to learn from state and federal authorities whether his sale of Petro America stock was lawful. The reason for this is that he wanted to sell and profit from the sale of Petro America stock. Further, he admits that he intentionally did not provide certain material information to investors, including the that the stock was unregistered, that he paid kick-backs to Hawkins and Hooker, and information contained in the C&D orders.
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Joseph Harrell is a minister who lives in Waco, Texas. He has been involved in multi- level marketing (“MLM”) programs in the past. Harrell was initially recruited to Petro as an investor around February 2010 by Russell Hopkins. Harrell bought shares from Teresa Brown for $.01 per share, wiring the money to her Windsong account, because he thought the company presented a good opportunity. In March 2010, Harrell went to a Petro meeting in Dallas, Texas that included approximately 100 people. Brown talked to the crowd about what a great opportunity Petro was. Harrell remembers listening to Owen Hawkins on conference calls, and Hawkins was very believable. Hawkins said Petro had assets worth $284 billion, he said the stock’s par value was $2 per share, and the book value was $24 per share. In June 2010, Hawkins gave Harrell a letter signed by Clarence Moore supporting this valuation. Harrell genuinely believed that Petro America was a company and that there was a chance that it could become publicly-traded. His role changed over time.
In June 2010, Harrell assumed the role of CFO of Petro America. He traveled to Kansas City 5 to 10 times, toured purported Petro subsidy Performance Packaging (“PPG”), and worked actively with the Minister’s Alliance. Hawkins told Harrell that Petro owned 51% of PPG and PPG was generating revenue for Petro. The Minister’s Alliance was Hawkins’ idea. Members were his buddies and part of his entourage. Some ran errands for Hawkins, and acted like the Secret Service protecting Hawkins.
Harrell received multiple notices that the company was fraudulent, and through these and other occurrences, he became aware of fraud and many other red flags with the company and its other leaders. But he knew that Owen Hawkins, Teresa Brown, Johnny Heurung, and others were continuing to hold weekly shareholder meetings in Kansas City, and weekly conference calls every Thursday night, where hundreds of investors in dozens of states would call in. During the meetings and on the calls, Harrell knew that the conspirators were providing false and misleading information about Petro America.
Nonetheless, in order to make money for himself, Harrell agreed with Hawkins that he would sell stock, and he provided money from his sales back to Hawkins. Harrell sold stock to over 90 investors, depositing $385,460 in proceeds into his Kingdom Wealth LLC account, which he set up expressly to receive the proceeds. He has never been licensed to sell securities. He admits he is not knowledgeable about all of the rules, including disclosure rules, required under federal and state law in order to sell securities. He admits he did not take steps to learn from state and federal authorities whether his sale of Petro America stock was lawful and whether the law allowed him to make such sales without a license.
Depending on who was buying, he fluctuated back and forth between $.01 per share to at least $.10 per share. He frequently said the investment was not risky, it was guaranteed to make the purchaser a millionaire, Petro was within days of going public, it would open at $20 per share, and on one occasion where regulatory problems were discussed, he said the only state where Petro was not registered was Missouri. He couched many of his sales pitches in religious language, stating that Petro was a blessing from God.
Acting as CFO of Petro, Harrell also wrote checks for purported Petro expenditures that he knew were not legitimate business expenses. He also sent confirmation emails to investors for shares that he had sold despite knowing that Petro was subject to two cease and desist orders, issued by Missouri in November 2008 and Kansas in April 2010. At no point did Harrell ascertain with state authorities, or with the Securities and Exchange Commission, whether the C&D orders were still in effect and what that meant, whether the CUSIPs listed on the certificates were any good, or whether the shares were registered. The reason for this is that he wanted to sell and profit from the sale of Petro America stock.
While much of the time Harrell simply repeated information to investors that he had heard from others, he knew that the information he was providing was incomplete and misleading. Further, he intentionally did not provide certain material information to investors, including 1) the existence of the C&D orders; 2) specific negative information contained in the C&D orders; 3) the stock was unregistered; 4) he paid kick-backs from his proceeds to Hawkins, including checks from the Kingdom Wealth account that Harrell wrote for Hawkins’ personal use; 5) the stock was either gifted to him, or sold to him at a price grossly discounted from his offer price; and 6) that Harrell had learned, at least by August 2010, that Hawkins was spending large amounts of money obtained from Petro investors on purely personal expenses. Harell told some investors that he worked for Petro, knowing that they would wrongly believe that they were buying stock from Petro, not from Harrell. Harrell told other investors he was selling his personal shares, implying that he had paid a fair price for those shares. Harrell also made and adopted numerous statements to investors concerning Petro’s future potential to become a publicly-traded company, and of its claimed assets, which were untrue.
Hawkins gifted Harrell millions of shares of Petro America. But Harrell represented to some investors that he was reselling his own shares, or the shares of another investor, when he knew that he had not paid anything for some of the shares, and a relative pittance for other shares, and that this was not made clear to investors who were making a purchasing decision. He sold the stock for whatever price he thought they could bring.
Harrell tried to “protect” his newly-acquired assets by placing them in LLCs. He drove nice cars and was living significantly better than prior to his involvement in Petro, including renting cars for $423 per week and buying world series tickets. He frequently used Petro money to pay for meals at expensive restaurants for himself and others. During this time, Harrell was receiving an income-dependant Social Security disability benefit. Until at least May 2010, he was receiving food stamp benefits through the Department of Agriculture.
On February 26, 2010, Harrell told an investor over the phone that Petro was going public the next day, and that if she wanted to buy stock, she needed to do it immediately. He said the stock would open from $10 to $20 per share. He told her he was selling shares for Petro and did not disclose how he obtained the stock, or what if anything he paid for it. The investor thought she was buying shares from Petro and not his personal stock. He did not disclose that cease and desist orders had been issued against Petro in Missouri and Kansas. If she had known about the cease and desist orders, she says she would not have purchased the stock. He participated in selling her more stock in March, and more stock in May, totaling $25,000, saying that Petro had extended the time it would offer stock prior to going public. Harrell directed $23,000 of the proceeds into Kingdom Wealth account.
In addition, Harrell made or received numerous transfers of proceeds of over $10,000 into accounts that he set up specifically to receive the proceeds, and for the purpose of “protecting” it from others. He wrote numerous Petro checks at Hawkins’ direction, including for the benefit of a person who was losing their house, and to people who Hawkins said had “done him favors.” He continued to write checks to Hawkins for Hawkins’ personal expenses even after July 2010, when he told others that he was cutting Hawkins off from the money after developing suspicions about Hawkins. Harrell told an investor that most of the checks were for “payroll,” when in actuality, Petro had no W2 employees. Hawkins told him to write “consultants” on the memo lines of checks, but Harrell should have known, or taken steps to learn, that many or most of the expenses were not for anything related to“consultants.” As he knew, many or most of the people called consultants were not doing work that realistically furthered Petro’s business interests.
Harrell received numerous proceeds checks through the United States mail. For one example, around June 3, 2010, Harrell received, through the mail, a check made out to Joseph Harrell from an investor for $1,000 for 1000 shares of Petro. He told another investor from Fort Worth that he worked for Petro, that it was a great investment, and he had been looking at the company for two years. The investor sent him four checks totaling $3,700, mailed to Harrell at a P.O. box. Harrell first sold the shares at $.10 per share, and later lowered the price to $.01 per share so the investors would think they were getting a special deal. Harrell did not disclose that there were registration problems with the stock, and he did not disclose the cease and desist orders. When the investor found out Hawkins had been arrested, he asked for his money back, but did not receive it.
In addition, Harrell solicited many investors in other states, including many investors in Florida, over the phone. Harrell told one Florida investor over the phone that the investor needed to purchase $3,000 worth of shares soon, or the opportunity would be closed. The investor bought shares for $2,450, wiring the money to Harrell’s Kingdom Wealth LLC account on July 14, 2010, September 25, 2010, and October 2, 2010. Harrell sent numerous interstate emails to this investor and others. After the criminal charges were made public, the Florida investor contacted Harrell, who said he could receive a refund, but never sent it.
E.L. purchased 60,000,000 shares from Harrell for $60,000. He also purchased 15,000,000 shares from Russell Hopkins for $109,000. Hopkins asked Harrell to call E.L. and lie and say it was a mistake and change his price on the shares he sold E.L. Harrell refused. When Harrell discovered Hawkins was flying through the money in August 2010, he contacted Hopkins. Hopkins agreed he thought something was wrong with what Hawkins was doing. At one point, Hawkins was furious that Hopkins was not turning over money to Hawkins from his sale of shares. Hopkins guaranteed money back to Petro shareholders if the company did not pan out.
In October 2010, Hawkins took Harrell, J.A., investor O.F., and J.T. to a printer in the Kansas City area. Hawkins told Harrell he was taking them because he was scared that J.A. was going to get Hawkins into trouble. Hawkins had the following stock certificates printed: a) investor O.F. received 100,000,000 shares for $105,000; b) Harrell received 100,000,000 shares; c) J.T., C.R. and C.T received 25,000,000 shares each for being ministers; and d) J.A. received 25,000,000 shares because Hawkins told Harrell this was to cool off J.A. so she would not get him in trouble. Harrell asked Hawkins why he was backdating the stock certificates to 2008. Hawkins explained that was when he could sell shares. Hawkins cited to Harrell a code from the securities laws that supposedly justified him backdating the shares.
After Hawkins was indicted and released from prison, he called Harrell numerous times begging Harrell for money to get Petro public. Hawkins asked Harrell to come to Kansas City and bring money. In February 2011, Harrell met Hawkins in Kansas City because Cornley did not do his job and get Harrell’s stock holders their stock certificates. Hawkins refused to let Harrell see the new CEO Gladys Hankins. Hawkins also refused to let Harrell see Greg Cornley. Hawkins said these other CEO’s are incompetent and he is running the company. Harrell told Hawkins he was not giving any money until investors’ stocks were registered with the transfer agent. Hawkins called Martin Roper on his cell phone and put Harrell on the phone with Roper. Roper said he would take care of getting that information to the transfer agent. Harrell said his stock holders received e-mail confirmations after this.
Approximately 45 days ago, Hawkins had a friend call Harrell to ask him again for money. Harrell said he was talking to the FBI and the person hung up the phone.
Harrell met with Johnny Heurung on 3 or 4 occasions at the Crown Plaza and elsewhere in Kansas City from June to August 2010. Heurung told Harrell on one of those occasions that the Missouri cease and desist order had been dropped in 2009 and was fine for shareholders to sell shares. Heurung bragged about Petro and how he made the company. Heurung brought a “strips and coupons” program to Petro, and told shareholders they needed to buy at least $3,000 to get in. Harrell did not trust Heurung and thought he was a con-man. Heurung also promoted a hedge fund in Kansas City. Harrell said Heurung knew this was a scam. Heurung offered a 6% commission when it should have been 1%.
Martin Roper input shareholders into the database. He did errands for Hawkins. He ran Petro meeting after Hawkins was indicted. Roper was still selling his shares after the Missouri C&D was filed on him in November 2008. In July 2010, M.H., an investor who purchased shares from Harrell, found a website with Roper’s name and number saying he had Petro shares to sell. M.H. contacted Harrell and asked why Roper was selling his shares for less than Harrell. Harrell told her that Roper is not supposed to be selling shares. In July 2010, when Harrell asked Hawkins about Roper selling his shares, Hawkins said Roper was keeping all the money. He told Harrell to keep the price of the shares at 1/10 of a penny. Harrell confronted Roper at Brio’s and said he would take down the website but did not know how and he could not help it if people called for shares. Harrell Googled Petro America and Roper’s website appeared. The website contained Roper’s contact information and had other information about Petro. Hawkins was furious when he found out about Roper’s website.
Allen Collins was head of the Minister’s Alliance at some point. Collins often called Harrell begging for money for himself and Hawkins. Collins was selling his shares. Collins told Harrell he needed money and asked Harrell to sell his shares for him. Harrell refused. Collins drove a nice truck and maybe a Mercedes. He also did errands for Hawkins.
In August or September 2010, Harrell told Curtis White that Petro was not looking good. White told Harrell everything was okay, there was nothing wrong. White sold shares before July 2010, but he led Harrell to believe he had stopped selling. White asked Harrell for money in January 2011 because he needed to buy groceries and other things. White drove a nice car. He did a lot of errands for Hawkins.
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