Fort Worth oil and gas man admits role in investment scheme

by PegNews wire

In federal court Thursday morning in Dallas, James O. Retz, the former president of a Fort Worth oil and gas investment company, pled guilty before U.S. Magistrate Judge Paul D. Stickney to one count of mail fraud, announced U.S. Attorney Richard B. Roper of the Northern District of Texas. Retz, 47, faces a statutory maximum sentence of 20 years in prison, a $250,000 fine and restitution. He is scheduled to be sentenced by U.S. District Judge Sam A. Lindsay on September 2.

Retz was President of Big Rock Ranches, an oil and gas investment company located on Parkview Drive in Fort Worth. Big Rock raised capital for oil and gas exploration and development by selling percentages of oil and gas well projects to investors throughout the U.S. Investors bought percentages of oil and gas well projects for an amount established by Retz.

Retz was also President of several other entities including Big Rock Land and Exploration, Big Rock Reef Petroleum, Sandstone Petroleum, Sendero Hydrocarbons, Brady Cody Ranches, R&H Methane, and H&R Methane. However, neither Retz, Big Rock, nor any of the above-listed entities, were licensed as oil and gas operators by the Texas Railroad Commission.

In documents filed in court, Retz admitted that beginning in March 1999 and continuing to July 2005, he ran an investment scheme in which he 1) directed his employees to solicit investors to purchase percentages of oil and gas well projects in Texas and Wyoming; 2) directed his employees to mail contracts to investors upon receipt of their money; 3) deposited investors’ money into one of several bank accounts that he controlled. While Retz received accurate well production data from licensed oil and gas well operators, he concealed the true well production data from his employees and from investors and used investors’ money, as opposed to income derived from the sale of oil or gas, to pay other investors in the form of “royalty payments.”

Retz also directed his employees to prepare and send “royalty payment” checks, financial statements and newsletters to investors based on fraudulent information including fraudulent well production data provided by Retz. The fraudulent royalty payment checks, financial statements and newsletters were designed to mislead investors about the nature and value of their investments and, consequently, caused the investors to reinvest and to recommend to others that Retz’s oil and gas well projects were sound investments.

Retz sold interests in approximately 210 gas wells in Wyoming, claiming that these gas wells were drilled and producing in Wyoming when, in fact, only one gas well was drilled and it did not produce gas.

Retz claimed to investors that Big Rock was operating oil and gas well projects when, in fact, neither Big Rock nor Retz were licensed as oil and gas operators by the Texas Railroad Commission.

Retz sold interests in approximately eight oil wells in Texas called the Liberty Project, claiming that these wells were drilled and were producing approximately 133-157 barrels of oil per day when, in fact, there was only one pre-existing well and it did not produce oil.

Retz sold interests in approximately three oil wells in Texas called the Scurry Project, claiming that these wells were drilled and were producing approximately 120 barrels of oil per day when, in fact, only one well was drilled. The well produced oil for approximately one week, was plugged and abandoned.

Retz sold interests in approximately three oil and gas wells in Texas called the Stansberry Heirs Project, claiming that these wells were drilled and were producing approximately 32-56 barrels of oil per day and approximately 75-88 MCF of gas per day when, in fact, no well was drilled.

Retz sold interests in approximately nine oil and gas wells in Texas called the Paul Moore Project, claiming that these wells were drilled and were producing approximately 600 MCF of gas per day when, in fact, only four wells were drilled and they produced a total of 52 MCF of gas.

Retz sold interests in approximately nine oil and gas wells in Texas called the Denis Ranch Project, claiming that these wells were drilled and were producing approximately 235 barrels of oil per day and approximately 576 MCF of gas per day when, in fact, only three wells were drilled. Two of the wells produced a total of 439 barrels of oil and a total of 1,582 MCF of gas. The other well did not produce oil or gas.

Retz sold interests in approximately three oil and gas wells in Texas called the Tom Hall Project, claiming that these wells were drilled and were producing approximately 41-62 barrels of oil per day and approximately 123 MCF of gas per day when, in fact, only one well was drilled and it did not produce oil or gas.

U.S. Attorney Roper praised the investigative efforts of the Federal Bureau of Investigation. Assistant U.S. Attorney Jay Weimer is prosecuting the case.

Source: Department of Justice