The Texas oil and gas boom is bringing in the money, but it’s also bringing in the scammers. KUHF News reported the person running the company gathering investors might be a felon, and that's okay with the State of Texas.
The United States Securities and Exchange Commission (SEC) issued an “investor alert” when the number of fraud cases in this area significantly increased.
“They are substantial cases involving hundreds of investors and millions of dollars. And that’s per each enforcement case,” said Lori Schock, director investor education at the SEC.
“I think the hopes and dreams of hitting that black gold is just really enticing to people,” Schock told StateImpact. “I think especially in this period of low interest rates we’ve been in for quite a while now, people are trying to look for some kind of return on their money. “
An example of the fox guarding the henhouse is Richard M. Plato. Plato founded Momentum Production Corp. located in Baytown. Records from the Railroad Commission of Texas which regulates the oil & gas industry show that Momentum initially registered with the commission in September 2002. That date is important because of where Plato was earlier that year: federal prison.
According to the U.S. Attorney’s Office in Houston, after Plato served time in prison, he was released in 2002 and “began acquiring various oil and gas interests in South Texas” and later “Plato formed Momentum” and began raising investment money from “vulnerable people”.
At the time, Plato “was on supervised release and owed almost $30 million in restitution” according to prosecutors. But as alleged in the 2011 indictment for the oil & gas scam, Plato didn’t share that news with those “vulnerable people.”
Had they checked, they would have found that Plato’s Momentum Production Corp. was indeed a real company duly registered with the Railroad Commission of Texas to operate oil & gas wells and pipelines. The company’s application lists Richard M. Plato as the “resident agent” and “president”.
StateImpact asked the commission if it was aware of Plato’s past when Momentum registered as an operator.
In an emailed response, a Railroad Commission public relations person, Gaye Greever McElwain, wrote, “The Commission does not conduct criminal background checks on potential operators.”
You can read the entire article and hear the audio at KUHF News.