I couldn't resist copying
from the RB board:
By: investoil06
15 Nov 2006, 02:49 AM EST
Msg. 7494 of 7507
Jump to msg. #
Food for Thought
The more I think about this sale and the more belated due diligence I do, the more the whole situation bothers me. It seems, despite unanimous claims on this board that everyone wants this sale to go through; there are people who seemed determined to stop it. I hope, I really hope, I am completely wrong.
As I said before the only reason I can think of is that anyone would want to stop the sale is to try to force Energytec into bankruptcy. Either they are so vindictive that they are willing to see all the investors in WI, ORR and shares lose all their investment just to get revenge on current management – or they believe that Energytec going into bankruptcy will stop lawsuits in which they are defendants. The latter makes more sense to me.
If the defendants are confident they are innocent, or at least have acted ethically then they shouldn’t be so worried about the lawsuits that they try to bankrupt Energytec to avoid them.
I was in the court house again today and stopped by the clerk’s office. What I found disturbed me.
As of this afternoon there have been 25 assignments sent in by 16 individuals or entities. Most have been officially accepted except two who were short funds and I believe the county clerk has contacted them to fix the problems. When they are accepted and stamped with the document number they are legal. The actual recording process will take much longer as it takes the clerk who does the recording more than a day for each assignment and the clerk has other duties. This isn’t the Dallas court house. That delay is because they have to enter about 130 detailed handwritten entries in the abstract books for each assignment.
This is what I found disturbing. Of the 13 individuals who are NOT defendants in the Energytec lawsuits the working interests ranged from 0.0625% to 0.3125% totaling 1.74% WI. The defendants who have sent assignments for recording had a total of --- well read for yourself. I will not use individual names but will use the correct company names - one downside of recording is it becomes public record (I also found out how much money my neighbor had to borrow for his new irrigation system).
Mr SM – 0.359% WI
Mr MS – 0.300% ORRI
Mr MS – 1.417% WI
Mr MS – 0.75% WI
Mr JS – 0.25% WI (Mr JS is not a defendant but has the same last name as Mr MS)
WYO-BIG OIL WE DIG LLC (formerly known as Petito Dynasty Enterprises Group) – 0.2083% WI
WYO-BIG OIL WE DIG LLC (formerly known as Petito Dynasty Enterprises Group) – 0.2083% WI (2nd assignment)
Petito Dynasty Enterprises Group – 0.833% WI
And yes, WYO-BIG OIL WE DIG LLC is spelled in all caps.
The assignments do not state the price paid. Did these people pony up the same bucks as other investors for their share? Hope so.
Obviously there are a lot more WI still out there so maybe this isn’t as appalling as it seems. Or maybe Energtec can vouch they paid their full share. Incidentally, there are about 6.5% to 7.0% of ORRI that predate Energytec’s involvement. These were issued to the people who put together the leases before Energytec bought them, probably as part of the purchase price.
A note on the Sales Agreement and the subsequent 8-K
The original Sales Agreement signed Oct 31 contains Schedule 3.1A – Escrow Agreement. So there always was an escrow agreement although I don’t know the details. Nothing in the 8-K indicates any change to the Escrow Agreement, in fact it states;
“The agreement provides for the purchase price for the property to be placed in escrow and the proceeds to be distributed directly to the third party interest owners on the basis of their respective interest and to Energytec. In other words, Energytec will not receive any funds due to any third party who holds an interest. Those parties will be paid directly out of the escrow account.”
So claims that the agreement has been changed under pressure do not fit with the facts as we know them. An escrow is standard operating procedure for this type sale and would almost certainly be required by the purchaser even if Energytec hadn't put it in.
Also an 8-K has to be attested to by corporate officers. This is similar in consequence as giving testimony under oath. So when the 8-K states;
“…..Energytec is advised that the proposed purchaser of the Wyoming Project has received communications from certain third party interest owners threatening to disrupt the closing or take other unfavorable action….”
I take it as PROOF that Energytec was so informed by the purchaser.
Also while I was at the court house today I ran into an acquaintance who is a lawyer and part time county judge. A few years ago he got a mineral right in lieu of legal fees which coincidently happens to be partially under Energytec’s leases, as is mine. I was filling him in on the ongoing saga, what I had found and mentioned the “brigade” and the Nevada meeting that have been discussed on this board. We were kidding about the whole thing when he suddenly had a thought and said he had never had the chance to go after some one on a RICO statute.
So I went home and looked up some RICO information that I thought I would share.
Under RICO, a person or group who commits any two of 35 specific crimes and which in the opinion of the US Attorney bringing the case, has committed those crimes with similar purpose or results can be charged with racketeering. Some of those crimes include mail fraud, wire fraud, bank fraud, extortion (such as the “brigade” demanding the company fire certain individuals before they will sign), and my personal favorite;
“RICO could be alleged if it can be shown that lawyers and/or their clients conspired and collaborated to concoct fictitious legal complaints solely in retribution and retaliation for themselves having been brought before the courts.”
I don’t think slavery applies but obscenity might. [That’s sarcasm for those of you who might take that literally].
Those found guilty of racketeering can be fined up to $25,000 and/or sentenced to 20 years in prison. In addition, the racketeer must forfeit all ill-gotten gains and interest in any business gained through a pattern of "racketeering activity."
And the crown jewel:
The act also contains a civil component - Section 1964(c) - that allows plaintiffs to sue and automatically receive judgment in the amount of three times their actual damages plus their costs and attorneys' fees if they are successful. The provision for private parties to sue says; a "person damaged in his business or property" can sue one or more "racketeers." This lawsuit, like all Federal civil lawsuits, can take place in either Federal or State court.
When the U.S. Attorney decides to indict someone under RICO, he has the option of seeking a pre-trial restraining order or injunction to prevent the transfer of potentially forfeitable property. I don’t know if this applies to a civil suit under RICO.
I like the part about treble damages although I doubt the conspirators, even with the millions they may have gotten from “commissions” and possible giveaways or discounts of WI and ORR, will have $300,000,000. Proving damages is the easy part if the “brigade” is successful at stopping the sale, actually proving they did it maliciously is harder.
The holding of secret or closed meetings, intimidation of participants in the transaction, filing frivolous lawsuits, threats of lawsuits, etc all fit perfectly into the RICO statute. The interstate nature of the transaction, meetings, etc. opens it up for federal jurisdiction. But as normal, trying to get Justice Department involvement is a protracted affair. Filing a private suit under RICO (or other) laws can be done swiftly. I am not saying any of these allegations have actually taken place but certainly comments on this board, such as post 7166, and the information in the latest 8-K would indicate the possibility.
Obviously the best solution for ALL parties is that the sale goes through. The WI and ORR holders get their money, the stock holders gain stock appreciation, the Texas WI holders, put and private placement stock owners have a chance at compensation or at least a negotiated settlement and Energtec has the chance to be an oil company instead of funding the retirement accounts of a bunch of attorneys. The “brigade” doesn’t compound their legal problems and I don’t have to spend a bunch of time with lawyers. The alternative increasingly looks like everyone comes up with a big fat zero.
