Investment Scams Using Precious Metals and Oil & Gas Exploration
Looks Good - Sounds Good
S & H Oil and Gas Exploration took $130 million from 700 investors with an investment in oil wells that didn't even exist.
The owner didn't advertise or distribute prospectuses, but word got around that it was an exclusive club that produced 60% returns.
Soon he couldn't keep people away.
Using lingo he picked up during a summer job he would show detailed maps of geological formations to explain the assets and potential for growth. His local bank loaned millions of dollars to investors for their participation.
When the bank or investors needed reassurances, he would simply produce boxes of documents "proving" the reserves.
He bribed workers at actual drilling sites, belonging to other companies, to greet him as the owner on investigative visits.
He would make over-flights of oil field operations by helicopter with mapped diversions to different areas pointing out "his" wells to those aboard.
He eventually brought in so much money that he could buy a few active drilling facilities, but they never produced oil in the record amounts he boasted.
When it finally caught up to him he swore his innocence and promised reimbursement, to 'his good and trusting friends", once the misunderstanding was cleared up.
A "Toto" Loss
In search of investments for working capital, an oil company sends you surveys of a property that suggests their land is oil-rich so, as to get you to invest in oil wells in western Kansas — the OZ and Dorothy Projects.
The company's sales rep tells you that top oil experts project the fields will yield thousands of barrels of oil a day and a tidy return to investors within a year.
They state an investment in the Kansas venture is risk-free because you will receive all of your principal investment plus 50 percent even if the wells do not produce oil because of an agreement they have with the Threadneedle Trust Company, a British firm.
The oil surveys are fake. The land owned by the company has not been drilled for oil, and in a legitimate deal, much more capital is required to determine if oil could be produced from the land at all.
The shell company Threadneedle does not have sufficient assets to support such a cash-back guarantee and is therefore just an empty promise of security.