KANSAS CITY, Mo. (AP) — Despite the best efforts by federal prosecutors to portray the company he founded in 2007 as worthless, Isreal Owen Hawkins told jurors Tuesday that Petro America Corp. is real, has real assets, and is in trouble only because big government decided to destroy it.
Hawkins, 57, and four co-defendants are charged in federal court in Kansas City with conspiracy to commit securities fraud and assorted other counts involving Petro America, which company leaders touted as having $284 billion in assets — second in the U.S. only to Exxon — despite being in existence less than three years.
Hawkins, who represented himself in the more than three-week trial, showed jurors several large binders during closing arguments Tuesday, telling them they contained contracts for billions of dollars in mining and oil operations.
"The government is trying to convince you that this company isn't real," he said. "They're railroading people. They're railroading shareholders."
Of the five defendants on trial, Hawkins was the only one who claimed the case against Petro America was part of a "big government" conspiracy. Attorneys for the other four — Theresa Brown, Johnny Heurung, William Miller and Martin Roper — claimed their clients were true believers in the company who acted on good faith, and that any misrepresentations to shareholders were because that's what Hawkins had told them.
In her closing arguments, Assistant U.S. Attorney Kate Mahoney questioned whether Hawkins was "delusional or really that stupid" to believe he could build what would be the nation's second-largest corporation with no financial investment of his own in such a short period of time.
"You don't have to be around him very long to realize he is utterly incompetent," Mahoney said. "He doesn't follow through, he just makes excuses. He thinks this is how business is done."
Brown is charged with six counts of wire fraud and one count of securities fraud, in addition to the conspiracy count. Her attorney, Willie Epps Jr., acknowledged that she kept millions of dollars from the sale of her shares and spent it on lavish things like boats and expensive luggage. But he said she acted like anyone else might when they come into a large amount of money in a short time.
"Theresa Brown thought Petro America was legitimate, was a real company, and was her lottery ticket, essentially," Epps said. "She thought everyone was going to get rich."
Rather than hiding her purchases, she left an easily followed paper trail of receipts and bank transactions because she thought everything was legal, he said.
Heurung, who was portrayed as a pitch man who had the ability to get investors excited about the company over regular telephone conferences, is charged with two counts of wire fraud in addition to conspiracy.
Heurung believed everything he told shareholders because he was passing on information he had received from Hawkins, his attorney Lance Sandage said.
Sandage said his client never sold any of the shares that had been gifted to him by Hawkins, and he truly believed mining operations he had located for the company were legitimate investment opportunities.
"Johnny was taken advantage of by Petro America," Sandage said.
Miller's attorney, David Guastello, said his client got excited about Petro America because of what he had been told by others in the company, including Hawkins. It was clear Miller didn't intend to defraud investors, Guastello said, because most of the people he recruited were his family and friends.
Instead, Miller believed it when Hawkins told him the Missouri cease and desist order had been taken care of, and he believed the company was on the verge of going public.
"Bill Miller thought he was sitting on $25 million," Guastello said.
Jack West said his client, Roper, is a lifelong Kansas City-area resident who was just acting like everybody else but wasn't a part of any conspiracy to defraud investors.
Roper merely repeated what he heard from Hawkins when making claims about the company's assets and promising it was on the verge of going public, West said.
"A lot of people believed in Owen Hawkins and Petro America, and a lot of people still do," West said.
The maximum sentence for conspiracy is five years in prison. Some of the other charges, such as wire fraud and mail fraud, come with maximum 20-year prison terms.
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