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Petro America trial nears end of 3rd week, judge admonishes lead defendant for delays
THE ASSOCIATED PRESS
May 09, 2013 - 4:46 pm EDT
KANSAS CITY, Missouri — A federal trial for five people involved with Kansas City-based Petro America Corp. is nearing the end of its third week with testimony from defense witnesses who say they still believe in the company.
Isreal Owen Hawkins and four others are accused of selling $7.2 million in unregistered Petro stock to unqualified investors with promises that they would all become millionaires when the stock went public.
Federal prosecutors say Petro America did not have $284 billion in assets, as its leaders had touted, and had received cease and desist letters from both Missouri and Kansas. They say the company's claimed assets are worthless.
At least three Petro shareholders testified Thursday that they still believe in the company, despite the federal charges.
Closing arguments are expected to begin Monday.
I talked to Tina at US attorney office she said that the trial will be going into next week at least.
Any news on the trial? It should be almost finished.
Can't find anything current.
received this email today from another shareholder:
maybe this is not completely lost, just yet if, any truth to it.
To My PetroAmerica Shareholder Family,
I have worthy news about the status of PetroAmerica from the company officials. This information could--and please note the word "could"-- positively change the future of PetroAmerica Corp, which would therefore change ours.
Mr. Winston G. Robinson is a respected businessman from the East Coast who also happens to be a Petro shareholder, as well. He has spoken with the owner of one of the most viable assets of PetroAmerica Corp, and held preliminary discussions with legal and trading professionals. Based on the information he has accessed, and these discussions, Mr. Robinson is prepared to pursue taking the company public and serving as the CEO of PetroAmerica.
Additional meetings are in progress with the appropriate attorneys and trading professionals, all at Mr. Robinson's expense, to determine if it is truly a viable course of action. All expenditures in reference to this preliminary funding will be made known to the shareholders, and all legal inquiries can be channeled through the attorney assigned to the company.
Here's how you can help:
I know you have gone through this exercise before, but this information is critical to the outcome of these meetings. In order to determine the stock price, Mr. Robinson must ascertain the number of shares each shareholder holds, both purchased and gifted. Therefore, the information you provide to substantiate this ownership is necessary. I will be asking you in a separate email to submit this information, probably to the attorney involved.
One more issue... there may be shareholders who are not on my email list of whom you are aware. Please have them get in touch with me so they can be included in this effort.
If you have concerns about the standing of Petroamerica Corp in the State of Kansas, please view the attachment below and you will see that the company status is "Active and In Good Standing" at this time. Or, if you wish, feel free to do your own research at www.kansas.gov or click <click here>.
As soon as I have more information regarding your involvement in this effort, I will let you know how to proceed. I do have another request right now—that you please do not respond to this email. At this time, I have nothing more to report other than I am waiting to hear from Mr. Robinson as to how we move forward on this.
As always, you have my best regards.
Hasn't he had YEARS to hire a competent attorney? Why wait until in front of a judge.
You sure did...and that due diligence paid off too!
Are you really serious? How much evidence do you need. To think this can trade is a delusional thought. I'm not trying to insult anyone, but LOOK at the EVIDENCE.
PTRZ is not a part of Petro of America Kansas. It's a Delaware shell that was once ASWD some music company shell Owen bought. He alleged that he was going to reverse merge Petro America Kansas into PTRZ then they could trade. He never did, nor could he. He couldn’t sell stock, because of the cease and desist order….they will NEVER TRADE!
It means there are still people out there making bad decisions, and others wantig to sell off their usless stocks. Maybe Owen needs money and he's selling off his stocks for attorney's fees.
A man who is his own lawyer has a fool for a
client;
http://www.sfgate.com/news/crime/article/Lead-defendant-in-Petro-America-case-drops-lawyer-4451465.php
someone sent me this email awhile back. anyone know these clowns?
Hi everyone in Petro,
I decided to contact Teddi that is very close to the Petro ordeal. After listening to a Chozan Behn conference call from July, there was an update then that indicated that not only was Petro very much alive but moving forward but under the radar. This is because until the lawsuits with certain officers and others is completed, they don’t want to expose their plans which are very much progressing. I was delighted to know that our investment in this venture is not a bust. I think you will too.
I have below the place where you can listen to the call. It is about the last 10 minutes of the call and you can drag your mouse forward to that point to listen to her words. Let me know if I can help further.
Steve
You can listen to this call -- www.freeconferencecalling.com
Hit "listen to recordings" tab.
Enter information requested...name, e-mail and code.
The "code" is 756832, same as call code...this will not change
A list of all recordings will come up and you can choose
the recording desired
Chozan#29 From July 13th, 2011
From: Teddi Berkowitz
Sent: Tuesday, January 24, 2012 10:15 PM
To: steve
Subject: Re: Can you share any updates about Petro?
Hi Steve,
There is a new management team working to bring Petro to trade. However, it is expected that this will not take place until after all the litigation pending is completed. I have been advised from a former Petro board member that no matter what the outcome of the litigation and regardless of what the decision is regarding any individual being tried, that Petro will still be able to move forward.
On Tue, Jan 24, 2012 at 4:07 PM, steve wrote:
Hi Teddi,
I was just listening to an archived conference call from July with Chozan. Sounded like petro was at least going forward. Can you give any update of where it is now about 6 months later from this call?
Thank you in advance for any information you can share,
Steve
--
Best Regards...
Teddi Berkowitz
anyone have an update on the trial? it started yesterday correct?
Nice to see this is finally moving forward. I don't believe it will take the Jury long on this one.
Dr H
Petro America case headed to trial
Posted by Steve Vockrodt on Thu, Apr 11, 2013 at 2:17 PM
Tuesday was another tough day in court for Isreal Owens Hawkins leading up to his April 17 trial for running the alleged Petro America racket.
On that day, a federal judge denied without explanation Hawkins' attempt to get another lawyer on his case.
Hawkins, who is accused of trumping up a purported $284 billion oil and natural resource company for which he was president and CEO as a vehicle for an affinity scam in Kansas City and elsewhere, has a public defender for his federal court case.
He claimed his lawyer isn't experienced in white collar or securities law cases, hasn't prepared witnesses, hasn't hired an accounting firm to review the finances of his Kansas City company that would have been second to Exxon in the United States in revenues at the time and insists that the lawyer is overworked and can't handle the case. And the lawyer also won't subpoena a geologist.
Hawkins doesn't explain what the geologist would testify to, but perhaps Hawkins wants a professional to look into Petro America's supposed mining interests that federal investigators tracked down and insist are nothing more than piles of dirt.
Federal prosecutors handed down indictments against four defendants in 2010 and eight more the following year after looking into Petro America and claiming that the company had no assets to speak of, but convinced enough investors to buy $24 shares to raise $7.2 million.
Some of the accused have flipped and are apparently ready to testify against the remaining defendants.
Hawkins has done a fair bit of his own legal research, filing his own motions to get the case dismissed or to get a new lawyer for various reasons.
None have held up in court.
Jury selection will begin this coming Wednesday in a trial of five defendants linked to the Petro America case.
Prosecutors on April 4 filed a lengthy trial brief.
http://www.pitch.com/plog/archives/2013/04/11/petro-america-case-headed-to-trial
Good luck
yes I talked with the court and got a notice from DOJ April 17th is the trail date. Not sure how long everything will go.
So is the trial date still set for April?
Any idea how long it will last?
I noticed their website is still there, but the last data input was in 2011. Anyone know when this company is going to start trading....
It means people are living in fantasy land, when it comes to this bogus stock. I can't believe how lucky I was to get my money back.
Dr. HARLEY YOU WERE RIGHT ABOUT EVERYTHING. LOOKS LIKE THERE IS JAIL TIME AHEAD OF THEM, AN MAYBE BEHIND THEM. THEY WILL BE MAKING CLOSE FRIENDS IN PRISON.
It is a 100% completely true FACT. Petro never existed to begin with; there never was, never has been, nor ever will be any Petro America Kansas shares. All shares were printed in a fake office, non-certified, non-binding, sold illegally by criminals. If there was ever a more obvious dupe and scam than this one, it will be hard pressed to find it.
I earned my PHD on this story~
Dr H
luckymjp, there was never any real stock or any stock that could possibly become real stock sold by Petro America;
This was the most cut and dry obvious scam ever. Many people were hurt bad while others made out and avoided justice.
Good luck.
Is that your personal thoughts on it or are these facts?
When will the stock trade after the trial?
April 15, what's the irony in that! lol
it means people are still gullible!!1
I just left a message with DOJ court regarding the trial date for Owen Hawkins being taken off the schedule for March 11th, the April 13th one is still on but I want to see what the hell all the extensions are about . Its really annoying!
Now it looks like Owen has 2 court dates March 11th and April 15th
Considering the size of the trade, it likely means someone sold out their position for a tax loss. The proceeds would have been under $1 before commissions.
anyone else notice for the first time in a year + that PTRZ actually traded? not much but it went up. What does that mean?
So now the trial date is March 11th 2013. When is this guy going to man up for what he did!!
http://www.justice.gov/usao/mow/calendar.html
Two Web sites have been established to collect information from the victims of the alleged securities fraud scheme and to provide updated information about the status of the case. Investors of Petro America are encouraged to provide information via an online form at http://www.postalinspectorsurvey.com/survey2008/Lists/Petro%20America%20Survey/NewForm.aspx?Source=http://www.postalinspectorsurvey.com/PetroAmerica/Finish.aspx .
Due to the volume of expected responses, this process has been automated and placed online; all communication from potential victims regarding the case should be made via this Web site. Updates about the status of the case will be posted at http://www.justice.gov/usao/mow/divisions/petro.html
Another Pleads Guilty in Petro America Corporation Fraud
Wednesday, October 10, 2012 :: Staff infoZine
http://www.infozine.com/news/stories/op/storiesView/sid/53373/
9 down; 4 to go: Ninth defendant pleads guilty in Petro America case
BY MARK DAVIS
The Kansas City Star
Ninth defendant pleads guilty in Petro America case.
A ninth defendant has pleaded guilty to federal charges in the Petro America Corp. scheme that prosecutors said took in $7.2 million from thousands of investors in the United States and Canada.
Clarence D. Moore, an Atlanta resident who falsely claimed to be a certified public accountant, pleaded guilty today to charges of conspiracy to commit securities fraud and wire fraud.
Prosecutors say he was the individual who put the $284 billion value on the Kansas City-based company that helped lure investors to its stock.
Federal tax returns he signed showed the company’s assets were worth $150,000 in 2007 but ballooned to the $284 billion total in 2010, according to the 20-page plea agreement.
A letter that Moore, 65, signed vouched for the company’s worth though he made his valuation “over the phone and without examining any documents or conducting any due diligence,” federal prosecutors said. He also put his signature to falsified records showing Petro America’s holdings, false federal tax returns and investor “lulling letters,” according to prosecutors.
Moore’s efforts and false credentials added validity to Petro America’s claims it owned several gold mines, oil and multiple operating companies. Prosecutors said the company had none of those assets and no employees other than its chief executive officer and founder, Isreal Owen Hawkins Jr.
Moore faces up to five years in prison without parole, a fine of up to $250,000, and a possible order to make restitution.
Hawkins and four other defendants face various federal charges. The trial date, most recently set for later this month, has been continued. A new date has not been set.
Others who have pleaded guilty in the conspiracy were Curtis White, 56, of Independence; Charles Hooker, 50, and Teresa Hill, 56, both of Kansas City; the Rev. Edward D. Halliburton, 58, of Kansas City, Kan.; Allen Collins, 56, of Raymore; Joseph Harrell, 50, of Waco, Texas; Brian Langenbach, 43, of Globe, Ariz.; and Russell Hopkins, 48, of Tuscaloosa, Ala.
Assistant U.S. attorneys Daniel M. Nelson and Kathleen D. Mahoney are prosecuting the case. It is based on investigations by the Internal Revenue Services’ criminal investigation unit, the U.S. Postal Inspection Service and the Office of the Missouri Securities Commissioner.
To reach Mark Davis, call 816-234-4372 or send email to mdavis@kcstar.com
Posted on Tue, Oct. 09, 2012 02:56 PM
http://www.kansascity.com/2012/10/09/3859387/ninth-defendant-pleads-guilty.html
Good luck.
I haven't seen this letter, but I'm sure I'm still on their list...guess I need to check my email...anyway, to believe that anyone who would trust anything they say, after their horrible performance regarding Petro, might be in for a rude awakening. This company will never trade, and it's beyond my grandest imagination how anyone could still believe anything the "leaders" of Petro would have to say. They just don't give up...thank you for posting this information godfather8. It will be interesting to listen to it, and probably somewhat entertaining, as well.
Has anyone else received a similar email?
They still think it will trade.... What is going on????
After listening to a Chozan Behn conference call from July, there was an update then that indicated that not only was Petro very much alive but moving forward but under the radar. This is because until the lawsuits with certain officers and others is completed, they don’t want to expose their plans which are very much progressing. I was delighted to know that our investment in this venture is not a bust. I think you will too.
I have below the place where you can listen to the call. It is about the last 10 minutes of the call and you can drag your mouse forward to that point to listen to her words. Let me know if I can help further.
You can listen to this call -- www.freeconferencecalling.com
Hit "listen to recordings" tab.
Enter information requested...name, e-mail and code.
The "code" is 756832, same as call code...this will not change
A list of all recordings will come up and you can choose
the recording desired
Chozan#29 From July 13th, 2011
Hi XXXXX,
There is a new management team working to bring Petro to trade. However, it is expected that this will not take place until after all the litigation pending is completed. I have been advised from a former Petro board member that no matter what the outcome of the litigation and regardless of what the decision is regarding any individual being tried, that Petro will still be able to move forward.
Would it be rude of me to say AMEN! to that statement....???
I think you are getting ready to get your wish...they are dropping like flies, and will soon be in prison...I miss the board too. There are a lot of nice people that were in this unfortunate business. We didn't always believe the same, but never the less...I hope everyone is doing ok, and those that have been hurt will heal from this. It's sad....
soon!.....www.justice.gov/usao/mow/calendar.html
Thank you. Has he been tried by the court yet?
Petro is dead. We are all just waiting around for the last of the criminal cases to be decided.
And Owen going to prison.
lol....sure looks like we were right on the target with this one...so glad I got out early and got my money back....my whole family had $5000.00 tied up in it...we got it back...luckily....I feel so bad for those who have lost money in this scam...but maybe they will get some justice....
What ever happen to Johnny....???? Where is Owen now???
I see you are still a practicing DRin Stock...I thought this thing had died a long time ago...I can't believe it's still afloat.
Only 6 left; KC-area minister becomes 8th defendant to plead guilty to conspiracy in Petro America case
THE ASSOCIATED PRESS
Updated: August 14, 2012 - 5:45 pm
KANSAS CITY, Mo. — An eighth person has pleaded guilty in Missouri to his role in a $7.2 million securities fraud scheme that targeted church members with promises of riches beyond their wildest dreams.
The U.S. Attorney's Office says 56-year-old Curtis White of Independence pleaded Tuesday to a conspiracy charge related to Petro America Corp.
The company told investors it had $284 billion in assets, including gold mines and oil. But prosecutors say its assets were virtually worthless.
White was a member of the Ministers Alliance, a group of local ministers who supported Petro and persuaded often-poor congregation members to buy company stock.
He admitted that he was not licensed to sell securities and didn't tell investors of a cease-and-desist order issued by the state in 2008.
Charges are still pending six defendants.
Good luck.
So this really WAS a scam....golly gee!
Dr H
Arizona Man Pleads Guilty to Petro America Securities Fraud Conspiracy
Saturday, June 23, 2012 :: Staff infoZine
http://www.infozine.com/news/stories/op/storiesView/sid/52280/
scheme targeted thousands of investors nationwide
Kansas City, MO - infoZine - A Globe, AZ, man pleaded guilty in federal court to his role in a $7.2 million securities fraud conspiracy that victimized thousands of investors across the United States and Canada who bought shares in Petro America Corporation, which was purported to be a profitable company with $284 billion in assets.
Brian Langenbach, 43, of Globe, pleaded guilty before U.S. District Judge Brian C. Wimes to the charge contained in a June 15, 2011, federal indictment.
By pleading guilty today, Langenbach admitted that he participated in a conspiracy to commit securities fraud and wire fraud. Contrary to the fraudulent representations Langenbach and others made to victim-investors, Petro America had no oil, no realistic prospects for obtaining, transporting or storing large amounts of oil, no significant assets, no revenue and no employees other than the CEO.
Langenbach was not licensed to sell securities. He was self-employed as a cattle rancher during this time and he has not filed a federal tax return since 2003.
Langenbach admitted that he sold Petro America stock to at least 180 investors, receiving at least $400,000 in proceeds, from Aug. 20, 2009, to March 2, 2010. Although Langenbach became aware of red flags with the company, including the existence of cease and desist orders in Missouri and Kansas, he continued to sell shares anyway. When he sold shares, he relayed inflated expectations, and he did not disclose material negative information to investors, including the existence of the cease and desist orders.
Langenbach received at least $638,568 into a bank account he opened in the name LFV Management, LLC. From that amount, at least $137,127 was withdrawn in cash, $38,200 was transferred to Langenbach’s personal accounts, $115,117 was transferred to a co-defendant and $43,290 was spent on retail items.
Langenbach personally spoke on behalf of Petro during business dealings, and he personally attended at least one investor meeting and one update meeting in Arizona. Langenbach spoke on behalf of the company in negotiating business deals, and on multiple occasions entered into purported deals on behalf of his own company in partnership with Petro. Langenbach frequently spoke for Petro and sought out deals in order to bring purported assets into Petro so as to inflate the value of the stock.
Langenbach attempted to use Petro shares as collateral to fund gold mine deals. Langenbach tried to purchase interests in gold mines to “put assets on the Petro books.” Any ownership interest in or option to purchase and interest in a mine was secured with Petro shares. Since Petro did not go public, those interests ended in late August to November 2010. Several witnesses said that Langenbach owned gold mines and was working in gold mines but none actually saw any gold mines that he purported to have owned or saw any that were producing anything. Langenbach’s bank records report no income from revenue associated with mining.
Langenbach is the seventh defendant to plead guilty in this case. Charles Hooker, 50, and Teresa Hill, 55, both of Kansas City; the Rev. Edward D. Halliburton, 57, of Kansas City, Kan.; Allen Collins, 55, of Raymore, Mo.; Joseph Harrell, 50, of Waco, Texas, who acted as the CFO of Petro America; and Russell Hopkins, 48, of Tuscaloosa, Ala., have also pleaded guilty to participating in the conspiracy.
Under federal statutes, Langenbach is subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing is scheduled for Nov. 13, 2012. By pleading guilty today, Langenbach must forfeit at least $400,000 to the government.
Two Web sites have been established to collect information from the victims of the alleged securities fraud scheme and to provide updated information about the status of the case. Investors of Petro America are encouraged to provide information via an online form at www.postalinspectorsurvey.com/PetroAmerica link . Due to the volume of expected responses, this process has
been automated and placed online; all communication from potential victims regarding the case should be made via this Web site. Updates about the status of the case will be posted at http://www.justice.gov/usao/mow/divisions/petro.html
http://www.infozine.com/news/stories/op/storiesView/sid/52280/
Petro America securities fraud scam lands a
seventh guilty plea
Kansas City Business Journal by Steve
Vockrodt, Reporter
Date: Friday, June 22, 2012, 2:48pm CDT
Related: Legal Services, Crime, Investing
Steve Vockrodt
Reporter- Kansas City Business Journal
The $7.2 million Petro America Corp. securities fraud
scam has prompted another guilty plea.
This time, Brian Langenbach pleaded guilty in U.S.
District Court in Kansas City to a 2011 federal
indictment that charged him with the unlicensed sale
of securities.
The self-employed cattle rancher from Arizona said
he made $400,000 by selling unregistered Petro
America stock to nearly 200 investors.
Petro America, which operated out of downtown
Kansas City offices, held itself out as a massive oil
company with $284 billion in assets, but prosecutors
said it was a vehicle for an affinity scam and had no
products or employees.
Federal prosecutors said Langenbach was not simply
taken in by the scam but continued to sell shares and
promote Petro America despite his suspicions about
the legitimacy of the company’s business and
despite knowing that Kansas and Missouri securities
regulators had ordered Petro America’s CEO to stop
selling shares.
Langenbach is the seventh defendant to plead guilty
to Petro America-related charges.
At his Nov. 13 sentencing, he could face a maximum
sentence of five years in prison and $250,000 in
fines; he already has been ordered to forfeit $
400,000 to the U.S. Department of Justice .
Another defendant pleaded guilty on Monday.
Good luck.
Sixth Petro America defendant pleads guilty
By MARK DAVIS
The Kansas City Star
Posted on Mon, Jun. 18, 2012 10:27 PM
http://www.kansascity.com/2012/06/18/3664210/sixth-petro-america-defendant.html
A sixth defendant has pleaded guilty to a federal charge in the sale of $7.2 million of stock in Petro America Corp.
Charles Hooker, a 50-year-old Kansas City minister, pleaded guilty Monday to conspiracy to commit securities fraud and wire fraud, according to federal prosecutors. He previously pleaded not guilty to that charge.
He maintained his not guilty plea to a charge of money laundering, and prosecutors expect it to be dropped at sentencing.
The indictment cites two instances in which Hooker sold shares of Petro America, a Kansas City company that claimed to own assets worth $284 billion, most notably in gold mines and oil. It said Hooker failed to tell the buyers about risks he knew about with an investment in Petro, including a cease-and-desist order that Missouri securities regulators had issued against the company.
Prosecutors said Monday that Hooker had been given millions of shares of Petro America and sold them, spending the cash or keeping it at his house rather than in a bank account.
They have described a scheme that spread Petro shares to investors throughout the United States and in Canada, often through churches.
Hooker faces up to five years in federal prison without parole, a fine of up to $250,000 and an order of restitution.
The plea comes two weeks after a trial for Hooker and eight other defendants was moved to Oct. 22. His sentencing date has been set for Nov. 13.
To reach Mark Davis, call 816-234-4372 or send email to mdavis@kcstar.com.
http://www.kansascity.com/2012/06/18/3664210/sixth-petro-america-defendant.html
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May 15, 2013 04:51 PM EST | Associated Press
Compare and versions
KANSAS CITY, Mo. — A jury on Wednesday convicted the founder of a Kansas City company and four associates of cheating investors by selling them millions of dollars of worthless stock and spending the money on themselves.
Petro America Corp. founder Isreal Owen Hawkins and his associates were accused of illegally selling unregistered stock in Petro America from 2008 through 2010, much of it to poor investors. Prosecutors said investors were told the company had $284 billion in assets and that they'd be rich once it went public.
Hawkins was convicted of conspiracy, securities fraud, aggravated currency structuring, money laundering and two counts of wire fraud. He could be sentenced to up to 20 years in prison for the most serious charge, wire fraud.
Hawkins, who had been out of jail on bond, was taken into custody immediately after the hearing and the government moved to have his bond revoked. The court set a bond hearing for next week to rule on the government's motion.
Hawkins' co-defendants – Teresa Brown, Johnny Heurung, William Miller and Martin Roper – each were convicted of conspiracy to commit fraud, which carries a maximum sentence of five years in prison. All were released pending sentencing.
The five were accused of selling $7.2 million worth of unregistered stock and targeting poor investors who weren't qualified to purchase shares. Under federal securities law, a person must have a net worth of at least $1 million or an annual income of $200,000 for the last two years to qualify as an accredited investor and be allowed to take part in high risk investments such as Petro America.
Hawkins called Petro America "The People's Company," and told investors his goal was to win a Nobel Prize for creating massive wealth.
Hawkins, who represented himself at the trial, told jurors the company was legitimate and had real assets, and the only reason it didn't go public was because the federal government wanted to destroy it.
Attorneys for some of his co-defendants expressed disappointment Wednesday in the verdicts and vowed to appeal the decision to the 8th Circuit U.S. Court of Appeals.
"We have strong issues for an appeal to the 8th Circuit, but at this time it's really not about Miss Brown and the results," one of Brown's attorneys, Willie Epps Jr., told The Associated Press. "It's about the thousands of Petro America victims who lost significant resources. For that, Miss Brown is sorry and we hope in time she will be seen as another Petro America victim and not a Petro America leader."
Lance Sandage, who represented Heurung, said his client also plans to appeal.
"We're disappointed in the jury's verdict, but we respect the process," Sandage said.
Attorneys for Miller and Roper didn't immediately return calls for comment.
Attorneys for all of the co-defendants told jurors Hawkins had duped their clients. They said the four didn't know that the stock sale was a scam because they said Hawkins was the primary source of information about the company. With no real corporate structure, the co-defendants said they relied on what they were told by Hawkins – including that the Missouri cease and desist order had been resolved – when promoting and selling the stock.
Prosecutors, however, said all five defendants knew that Kansas and Missouri regulators had sent cease-and-desist orders barring the sale of Petro America stock, but that they chose to ignore them.
On Wednesday, Brown also was convicted of securities fraud and six counts of wire fraud, Miller was convicted of money laundering and wire fraud, and Heurung was convicted of one count of wire fraud. Nine others who were charged in the case pleaded guilty to conspiracy and are awaiting sentencing.
NEWS RELEASE
OFFICE OF THE UNITED STATES ATTORNEY
WESTERN DISTRICT OF MISSOURI
BETH PHILLIPS
Contact Don Ledford, Public Affairs ? (816) 426-4220 ? 400 East Ninth Street, Room 5510 ? Kansas City, MO 64106
www.justice.gov/usao/mow/index.html
OCTOBER 27, 2010
FOR IMMEDIATE RELEASE
KCK MAN CHARGED IN $7.2 MILLION FRAUD SCHEME THAT TARGETED THOUSANDS OF INVESTORS NATIONWIDE
KANSAS CITY, Mo. – Beth Phillips, United States Attorney for the Western District of Missouri, announced today that a Kansas City, Kan., man has been charged in federal court for his role in a $7.2 million securities fraud scheme that victimized thousands of investors across the United States.
“A federal criminal complaint alleges that Petro America was an empty facade of a business run by deception and false promises,” Phillips said. “Petro’s founder is charged with defrauding unwary investors by selling them worthless stock in order to support his lavish lifestyle.”
Isreal Owen Hawkins, 55, of Kansas City, Kan., was charged in a two-count criminal complaint filed in the U.S. District Court in Kansas City, Mo. Hawkins is the president and CEO of Petro America Corporation. A related civil forfeiture was filed against Petro America on Friday, Oct. 22, 2010.
The criminal complaint charges Hawkins with securities fraud and with structuring financial transactions in order to evade federal reporting requirements. Hawkins founded Petro America, which bills itself as a holding company for crude oil and gold mines (among other claimed assets) in 2007.
Count One: Securities Fraud
According to an affidavit filed in support of the criminal complaint, Hawkins began selling shares of unregistered stock to investors in 2008. At the time, the affidavit says, Petro America had no oil, no realistic prospects for obtaining, transporting or storing large amounts of oil, no significant assets, no revenue and no other employees. The government is aware of no evidence that Petro America has seriously pursued any opportunities to acquire oil fields or conducted oil trading operations. Nevertheless, the affidavit says, Hawkins and others have touted excellent prospects for Petro’s rapid growth in the oil industry.
According to the affidavit, more than 9,000 victims have invested in excess of $7.2 million since August 2008, but instead of using that revenue for legitimate business-related purposes, Hawkins and his co-conspirators allegedly withdrew investors’ funds from Petro America’s bank accounts in cash, which they spent on personal expenditures such as a house by the lake, luxury cars, a $5,700 fur coat, a $37,000 boat, a $5,200 piece of Louis Vuitton luggage purchased in Switzerland, expensive jewelry and travel.
Hawkins, the only full-time employee of Petro America, paid himself an annual salary of $595,000 under a contract that also granted him a $175,000 bonus, 500 million shares that are immediately exercisable, a company car, a company apartment in Missouri, and a dining card. Hawkins drew his salary in cash, in random amounts at inconsistent times, and the company did not withhold taxes.
Conspirators often recruited investors through churches and used religious language in their pitches, the affidavit says, including promoting Petro America as a once-in-a-lifetime opportunity to “share the blessing.” Petro America cultivated a relationship with the African American Ministers Alliance Group, the affidavit says, and according to its records made large payments to multiple Kansas City-area pastors, religious leaders and a local civil rights activist.
Investors lost from $100 to $100,000 each. Initially, many of the investors were drawn into the scheme with the promise that $100 would buy 100,000 shares of Petro America stock, the affidavit says, which Hawkins claimed was “book valued” at $2 per share. As the scheme progressed, conspirators raised the price to invest and claimed an ever-higher “book value” for the shares. The affidavit alleges that this allowed conspirators to unload shares to new investors at an increasing profit. To date, the affidavit says, the stock has never been properly registered or listed on any exchange.
Hawkins allegedly promised “meteoric returns” on investments. At the height of the scheme, the affidavit says, up to $700,000 flooded into the company each month.
Hawkins claimed that Petro America would be “the first African-American holding oil company to go public in the United States,” according to the affidavit. Investors were frequently told that they would be rich when the company “goes public.” Going public, the conspirators allegedly have said for over two years, is just weeks away. In reality, the affidavit says, the company has no significant assets or revenue stream (other than investor proceeds).
Alleged False Claims
Today’s affidavit alleges that Hawkins and co-conspirators provided materially false information to investors. For example, Petro America’s Web site includes a prominent photograph of the luxury office building at Two Pershing Square, ostensibly Petro’s “world corporate headquarters.” In reality, the affidavit says, Hawkins contracts with Regus Management Group LLC, a secretarial service that provides such services as telephone answering, fax and mail handling, use of the address and 16 hours of office usage for an initial monthly fee of $225.
According to the affidavit, conspirators have touted Petro America acquisitions in gold and rock mines as valuable holdings worth hundreds of billions of dollars. In reality, the affidavit says, Petro America’s interests in the gold and rock mines are essentially worthless. Petro America allegedly adopts wildly high valuations for the mines, most or all of which are not producing anything. Many or all of the mines are not actually mines at all, but mining claims. A mining claim is merely a plot of government-owned land upon which a person or corporation has filed a claim of rights to a mineral deposit, which may or may not actually exist.
Based on these representations, Hawkins and others claim that Petro’s assets are worth more than $284 billion. According to the affidavit, if this valuation were accurate, Petro America would be the second-largest company in the United States by market capitalization, larger than Wal-Mart, Apple or Microsoft. America’s largest company is Exxon Mobil, which has a market capitalization of $312.28 billion.
Count Two: Structuring Financial Transactions
Under federal law, banks are required to file Currency Transaction Reports for financial transactions that exceed $10,000 in one day. It is illegal to conduct multiple cash withdrawals in amounts less than $10,000 for the purpose of evading that federal reporting requirement.
The affidavit alleges that Hawkins and others made large cash withdrawals from Petro America’s bank accounts, which were structured to avoid bank reporting laws. For example, according to the affidavit, Hawkins and an unidentified co-conspirator visited Mazuma Credit Union several times each week. Sometimes they made big deposits of multiple checks into the company’s bank account; on most visits, the affidavit says, they withdrew $7,500 to $9,800, often on consecutive days. In this manner, Hawkins obtained at least $537,515 in cash from Petro’s account at Mazuma. The affidavit also alleges that Hawkins structured currency withdrawals out of Petro America accounts at U.S. Bank and Bank of America.
Web Site Support For Fraud Victims
Two Web sites have been established to collect information from the victims of the alleged securities fraud scheme and to provide updated information about the status of the case. Investors of Petro America are encouraged to provide information via an online form at http://www.postalinspectorsurvey.com/PetroAmerica Due to the volume of expected responses, this process has been automated and placed online; all communication from potential victims regarding the case should be made via this Web site. Updates about the status of the case will be posted at http://www.justice.gov/usao/mow/petro.html
Phillips cautioned that the charges contained in this complaint are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson. It was investigated by IRS-Criminal Investigation, the U.S. Postal Inspection Service and the Office of the Missouri Securities Commissioner.
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This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available on-line at
http://www.justice.gov/usao/mow/index.html
NEWS RELEASE
OFFICE OF THE UNITED STATES ATTORNEY
WESTERN DISTRICT OF MISSOURI
BETH PHILLIPS
Contact Don Ledford, Public Affairs ? (816) 426-4220 ? 400 East Ninth Street, Room 5510 ? Kansas City, MO 64106
www.justice.gov/usao/mow/index.html
NOVEMBER 22, 2010
FOR IMMEDIATE RELEASE
PETRO AMERICA
FOUR DEFENDANTS INDICTED IN $7.2 MILLION
SECURITIES FRAUD CONSPIRACY
SCHEME TARGETED THOUSANDS OF INVESTORS NATIONWIDE
KANSAS CITY, Mo. – Beth Phillips, United States Attorney for the Western District of Missouri, announced that four defendants were indicted by a federal grand jury today for their roles in a $7.2 million securities fraud conspiracy that victimized thousands of investors across the United States who bought shares in Petro America Corporation, which was purported to be a profitable oil trading company.
Isreal Owen Hawkins, 55, of Kansas City, Kan., Teresa Brown, 52 of Bandera, Texas, Johnny Heurung, 56, of Saint Paul, Minn., and Clarence Moore, 62, of Atlanta, Ga., were charged in an 14-count indictment returned by a federal grand jury in Kansas City, Mo. Today’s indictment replaces a federal criminal complaint that was filed against Hawkins on Oct. 26, 2010, and includes additional defendants and charges.
Today’s indictment alleges that, since Sept. 1, 2008, Hawkins, Brown, Heurung and Moore have participated in a conspiracy to commit securities fraud and wire fraud. Hawkins, Brown and Heurung were among those who promoted Petro America and sold shares to investors. Moore did accounting work, including tax preparation, for Petro America.
According to the indictment, Hawkins and Brown – who have never been licensed to sell securities – began an unregistered offering of shares of Petro America to investors in August 2008. In the first four months, the indictment says, Petro America raised about $1 million by selling stock through its Web site and presentations to church congregations, and continued raising money afterwards.
According to an affidavit filed in support of the original criminal complaint, more than 9,000 victims have invested in excess of $7.2 million since August 2008.
The defendants used religious language in their pitches and often recruited through churches, the indictment says. They allegedly gave payments to church figures, who recruited members of their congregations to invest.
Alleged False Claims
The federal indictment alleges that the sale of Petro America stock was accomplished by making fraudulent material misrepresentations and omissions to investors. For example, the indictment says, defendants falsely claimed that Petro America was worth $284 billion and Petro America stock was worth $24 per share in order to induce people to invest. There was no basis for those numbers, the indictment says.
Hawkins allegedly approved a series of press releases that were materially misleading and failed to disclose material facts related to investing in Petro America.
Heurung and Brown allegedly sent e-mails to investors in June 2009, falsely claiming that Petro America had gone public and its stockholders had become millionaires. In reality, the indictment says, Petro America had not been publicly listed on any exchange, nor had it merged with any company that was publicly traded.
The indictment alleges that defendants fraudulently attempted to create the appearance that Petro America had tangible assets. This was allegedly done by swapping stocks for interests in gold mines, for example, and by claiming that Petro America had conducted “reverse mergers” with two other companies.
The indictment also cites false and misleading statements made by Heurung during a series of conference calls in which he stated, “this stock is forecasted to do better than Microsoft ... right now we’re larger than Coca-Cola ... I am looking at a room of more millionaires in one place than I’ve been in a long time ... there’s gonna be some major billionaires in here.”
Alleged Personal Expenditures
From September 2008 through April 2010, Hawkins received nearly $2 million from Petro investors into accounts he controlled. Very little of these funds were reinvested into the company. Instead, Hawkins used investor money to purchase such items as a Chrysler 300, a Hummer H3, a 2004 Mercedes S430, 16 designer suits totaling $8,709 that were purchased on eBay and a $5,700 fur coat. In October 2009, Hawkins attempted to purchase a lakefront house in Kansas City, Kan. The purchase fell through, but Hawkins continued to make monthly rental payments of $3,025, which totaled at least $42,815. In addition, Hawkins paid himself a salary of $595,000 and had a contract that provided a guaranteed bonus of $175,000, a company car and a dining card.
Hawkins allegedly distributed at least $303,200 of investor money to at least 36 friends and shareholders of his choosing; in addition, Hawkins allegedly made cash payment totaling $217,859 to 21 “vendors and consultants.”
From June 2009 through April 2010, Brown spent at least $542,197 of Petro America investor proceeds on personal expenditures, including a boat, an SUV, travel to Switzerland, Cape Cod, Europe, Panama and elsewhere, several expensive handbags, designer luggage, home design items, more than $81,000 worth of jewelry and the mortgage on a timeshare in Virginia Beach.
Additional Charges
In addition to the criminal conspiracy, Hawkins is charged with one count of money laundering, two counts of wire fraud and one count of structuring financial transactions in order to evade federal reporting requirements. Hawkins and Brown are charged together in one count of securities fraud. Brown is also charged with six counts of wire fraud. Heurung is also charged with two counts of wire fraud.
Today’s indictment also contains a forfeiture allegation, which would require Hawkins, Brown and Heurung to forfeit to the government any property derived from the proceeds of the alleged offenses.
Web Site Support For Fraud Victims
Two Web sites have been established to collect information from the victims of the alleged securities fraud scheme and to provide updated information about the status of the case. Investors of Petro America are encouraged to provide information via an online form at www.postalinspectorsurvey.com/PetroAmerica Due to the volume of expected responses, this process has been automated and placed online; all communication from potential victims regarding the case should be made via this Web site. Updates about the status of the case will be posted at www.justice.gov/usao/mow/petro.html
Phillips cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson. It was investigated by IRS-Criminal Investigation, the U.S. Postal Inspection Service and the Office of the Missouri Securities Commissioner.
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This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available on-line at
http://www.justice.gov/usao/mow/index.html
Copies of the Affidavit and Complaint filed by the U.S. Attorney's Office against Petro America Corp:
http://media.kansascity.com/smedia/2010/10/22/22/Affidavit.source.prod_affiliate.81.pdf
http://media.kansascity.com/smedia/2010/10/22/22/Complaint.source.prod_affiliate.81.pdf
Federal prosecutors have set up two websites for victims of the alleged scheme.
39 page criminal complaint against Owen Hawkins:
http://media.kansascity.com/smedia/2010/10/27/19/hawkins_complaint__1_.source.prod_affiliate.81.pdf
More charges for Petro America founder, others
http://economy.kansascity.com/?q=node/8975
Doc 16 PDF file
http://viewer.zoho.com/docs/qEbjW0
Copy of the certificates used by the perpetrators of this alleged scam:
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