OIL AND GAS FRAUD

White-Collar Criminal Defense Attorney For  Federal Oil And Gas Fraud

Unfortunately, often investigators and prosecutors do not appreciate the many difficulties in effectively organizing oil and gas investment ventures. The reality is, as with any investment, oil and gas transactions involve risk. Even the best-run operations can suffer loss because of unforeseen and unavoidable circumstances. Once the money runs low, people start looking around for someone to blame. Sometimes this leads to reporting to regulatory and investigative bodies, and sometimes these reports turn into criminal investigations. Before the situation spins out of control, consult a white-collar federal defense attorney.

Federal Oil and Gas Fraud allegations can arise throughout all sections of the oil and gas industry.

Up-stream problems arise during exploration and production. Investigators are looking for any indications of:

1. Deception or misstatements in exploration licenses
2. Unrealistic assumptions and improper assessment of projected returns on gas and oil investments
3. Inappropriate calculation of royalty payments by manipulation of unclear requirements
4. Misuses of funds intended for expenditure and construction of production facilities
5. Misuse of EPCM companies to manage construction and operations of production facilities
6. Manipulation of expenditure of fly-in, fly-out workforce
7. Manipulation of production cut-off amounts to meet performance targets
8. ”Creative” compliance with environmental regulations by manipulating vague reclamation and rehabilitation provisions

Mid-Stream problems usually involve theft of or overcommitting inventory.

Down-stream investigations primarily focus on:

1. Misrepresenting the quality of product being refined and processed
2. Improper pricing, market allocation, or bid rigging
3. Misrepresentation of inventory valuations as a result of fluctuating commodity prices and exchange rates and the need to reconcile production, shipping and sales volumes

Federal Criminal Charges

Any area of business, including oil and gas, creates the potential for fraud accusations. Federal oil and gas Fraud investigations in this context may lead to a variety of federal criminal charges. Some of the most common for oil and gas fraud prosecutions include violations of the Securities Exchange Act of 1934:

• Fraudulent interstate transactions 15 U.S.C.A. § 77q
• Manipulative and deceptive devices 15 U.S.C.A. § 78j
• Manipulation of security prices 15 U.S.C.A. § 78i

People may not think of mineral interests as constituting a “security.” Commonly, the term is used for “stock” or “bonds.” However, in Federal and Texas law, the term “security” includes interest in oil and gas or other mineral rights. See 15 U.S.C.A. § 77b and Tex. Rev. Civ. Stat. Ann. art. 581-4.

In some oil and gas cases, the prosecutors may not rely on the more specialized securities statutes. The Government may decide it is easier to prosecute under more general fraud or deception statutes or, in some cases, tax laws. You might even find the Government abandons the oil and gas charge all-together, and instead chooses to simply pursue charges for making a false statement to a federal agent. (18 U.S.C. § 100). The point is, no list of charges is exhaustive. You should not engage in the useless exercise of doing your own “research” to determine if you can be charged criminally. Practically, the limits of what a prosecutor can charge you with is only limited by their imagination. This is not time to engage in guesswork or drown in semantics.

Facing an Investigation

You may feel torn as to whether you should contact a white-collar criminal defense attorney about the issues arising in your oil and gas venture. You are thinking, “The last thing I want to do is make it look like I have something to hide.” You are wrong. The last thing you want to do is spend time in prison.

Consulting with a criminal lawyer about Federal oil and gas fraud allegations does not mean you are guilty of anything. On the contrary, often others in an organization or business venture will take action to shift any blame away. This could result in a manufactured trail of evidence leading directly to you. If you want your best chance to avoid being stuck holding the bag, contact us as soon as you or someone else thinks something is wrong.

We work with the area’s best mineral interest, business, and tax lawyers. As a team, we can put together a plan of action focused on getting you through this treacherous situation.