They Said They Were Selling Interests in Oil Wells. Instead, They Were Buying Picassos.

Categories: Crime
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Actually, it was just one Picasso -- along with "real estate, boats and other personal water craft, luxury vehicles, artwork, furniture, antiques, musical instruments, jade, expensive jewelry and wine." Still. That's not how Tony Rand and his boys Greg and Bill were supposed to be spending more than 300 investors' hard-earned $100 million, or close to. Which is why, late yesterday, U.S. District Judge Jorge Solis sentenced 46-year-old Greg to 18 years in federal prison, where he'll be joined by 41-year-old Bill for 14 years and 69-year-old Tony for five and a half years. Also, they have to cough up $99,707,758, not to mention turn over to the feds all the items in the laundry list of goodies mentioned above.

The Dallas residents -- along with 44-year-old Joel William Petersen of Frisco and 45-year-old Mark Rand, another of Tony's boys, which made this quite the family business -- were all principals of Dallas Parkway-based Aspen Exploration, Inc., and all pleaded guilty back in January to running a mammoth scam involving what they said were interests in oil and gas well leases in Jim Hogg and Zapata Counties. But that was all bullshit -- even though Tony's attorney, Ted Steinke Jr., told Forbes back in May 2009, when they were indicted, that all of 'em innocent and planned to "defend themselves vigorously," after which they said, well, not so much. Because, see, they had to buy stuff ... and pay off millions owed to the I.R.S.
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Funds invested in Ranch Blanco #5, Rancho Blanco #6 and Rancho Blanco #7 programs were typically transferred almost immediately to Aspen's corporate bank accounts. No reports detailing the use and status of joint venture funds were provided to investors, and in fact, investors had no ability to control, manage or audit their investments and any attempts they made to audit their joint venture operations were thwarted. The defendants diverted investor funds for their own benefit, for the benefit of others and for drilling and operating costs related to prior wells.

Inaccurate information, touting the performance of earlier wells, was provided to investors, without disclosing vendor liens and investor litigation related to earlier wells. Not disclosing actual production revenues that investors received in prior wells, and the liens and litigation related to the earlier wells, made representations about anticipated and potential investor returns misleading. Salesmen represented to investors that they could receive profits equal to the return of their cash investment within three years with potential production revenues lasting up to 20 years and multi-fold returns on their investment funds.
The U.S. Attorney's Office recap follows. Jump for the whole sordid story.
FAMILY MEMBERS SENTENCED IN ASPEN EXPLORATION, INC. OIL AND GAS INVESTMENT FRAUD SCHEME

Defendants Ordered to Pay Nearly $100 Million in Restitution

DALLAS -- Three family members/principals of Aspen Exploration, Inc., the managing partner of oil and gas well programs offered and sold to investors throughout the U.S. and elsewhere, were sentenced late yesterday by U.S. District Judge Jorge A. Solis for their respective roles in operating a fraudulent investment scheme, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Two other officers convicted in the scheme have pleaded guilty and are scheduled to be sentenced in late August 2011. Aspen operated from offices located at 2901 Dallas Parkway, Suite 380, in Plano, Texas.

Brother Gregory Keith Rand, aka "Greg Rand," 46, and William Nicholas Rand, aka "Bill Rand," 41, both of Dallas, were sentenced to 18 years and 14 years, respectively, in federal prison. Their father, William Anthony Rand, aka "Tony Rand," 69, of Plano, was sentenced to five and one-half years in federal prison. In addition, the defendants were ordered to pay $99,707,758 in restitution and forfeit numerous pieces of personal property to the government, including real estate, boats and other personal water craft, luxury vehicles, artwork, including an original Picasso, furniture, antiques, musical instruments, jade, expensive jewelry and wine. Greg Rand was remanded into custody; the others will be allowed to report to the Bureau of Prisons at a later date. The forfeited property will be sold by the U.S. Marshals Service.

The remaining defendants who have also pleaded guilty, Joel William Petersen, 44, of Frisco, Texas, and Tony Rand's son, Mark Albert Rand, 45, also of Plano, are scheduled to be sentenced on August 31, 2011. Greg, Bill, and Mark Rand were officers, directors and owners of Aspen. Tony Rand was the financial manager for Aspen, and Joel Petersen was a vice president and salesman for Aspen.

Greg Rand pleaded guilty to one count of conspiracy to commit mail fraud and securities fraud and three counts of securities fraud. Bill Rand pleaded guilty to three counts of securities fraud. Tony Rand and Joel Petersen each pleaded guilty to one count of conspiracy to commit mail fraud and securities fraud and one count of securities fraud.

According to documents filed in the case, Aspen, through its officers, employees and salesmen, raised funds from purchasers who invested funds to purchase securities in the form of joint venture programs created to promote and sell, to the public, units representing working interest and net revenue interest in wells #5, #6 and #7, located on the Rancho Blanco Corporation State Gas Unit, a unitized oil and gas lease located in Jim Hogg and Zapata Counties in Texas.

Defendants knowingly made numerous misrepresentations to investors, including: 1) investor funds would be used to drill, test and complete their particular well; 2) Aspen would provide and pay for all services necessary to drill, test and complete their particular well before Aspen determined and received its "turnkey profit" from their program; 3) investor funds wouldn't be commingled except as necessary to pay the costs to drill, test and complete their particular well; and 4) investors would have managerial rights regarding the operation of their particular joint venture and well.

Funds invested in Ranch Blanco #5, Rancho Blanco #6 and Rancho Blanco #7 programs were typically transferred almost immediately to Aspen's corporate bank accounts. No reports detailing the use and status of joint venture funds were provided to investors, and in fact, investors had no ability to control, manage or audit their investments and any attempts they made to audit their joint venture operations were thwarted. The defendants diverted investor funds for their own benefit, for the benefit of others and for drilling and operating costs related to prior wells.

Inaccurate information, touting the performance of earlier wells, was provided to investors, without disclosing vendor liens and investor litigation related to earlier wells. Not disclosing actual production revenues that investors received in prior wells, and the liens and litigation related to the earlier wells, made representations about anticipated and potential investor returns misleading. Salesmen represented to investors that they could receive profits equal to the return of their cash investment within three years with potential production revenues lasting up to 20 years and multi-fold returns on their investment funds.

In fact, Aspen was insolvent and relied upon investor funds to operate. Aspen had also failed to pay similar costs for other wells previously sold to investors. The Ranch Blanco #7 well has yet to be drilled. The Rancho Blanco #5 and #6 wells are the subjects of vendor liens and litigation. Aspen is currently in involuntary bankruptcy in the Southern District of Texas.

According to the indictment, Greg Rand, Bill Rand, and Mark Rand had significant personal tax liabilities. In fact, a final judgment was entered in August 2009, in case number 3:08cv795B, filed in the Northern District of Texas, ordering Greg Rand to pay $7.6 million, plus interest and penalties, to the U.S. for his 2000, 2001, 2002, 2003, 2004 and 2005 federal income tax liability.

In addition, the defendants failed to disclose that Aspen's financial manager Tony Rand, had been convicted in the Eastern District of Arkansas of bank fraud, money laundering, and interstate transportation of securities by fraud, and had served nearly seven years in federal prison for those convictions.

This law enforcement action is part of President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

In acknowledging and praising the efforts of one of the longest running Securities Fraud Task Forces in the United States, U.S. Attorney Jacks recognized the collaborative efforts of the Texas State Securities Board, the U.S. Postal Inspection Service and the FBI.

Assistant U.S. Attorney Christopher Stokes and Special Assistant U.S. Attorney Rhonda K. Rogers prosecuted the case. Assistant U.S. Attorney John de la Garza handled the forfeiture.

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Montemalone
Montemalone

Just a little more of that Texas business success story of which the entire country is soooo jealous.

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