A Collin County grand jury on Dec. 10 indicted seven individuals who sold interests in oil and gas well projects in Sabine Parish, La. The indictments collectively charge the defendants with multiple counts of securities fraud, theft, money laundering, and engaging in organized criminal activity.
All told, the indictments allege a multi-million-dollar fraud in which wells were not drilled as promised, key facts were withhold from investors, and a portion of investors’ money was diverted to pay for the personal expenses of the investment promoters.
The defendants primarily sold the investments through Insignia Energy Group Inc. and Benchmark Operating Co. LLC, both based in Addison.
The indictments allege that some of the investment promoters used investor funds that were dedicated to drilling two of the wells to pay for personal expenses and those of other officers and employees of Insignia and Benchmark. Certain defendants also allegedly shuffled investor funds to cover expenses for unrelated oil and gas projects.
The indictments further allege that investors were not told of a report by a Louisiana geologist who said it was his opinion there were no recoverable oil or gas reserves in the Fort Jessup Field in Louisiana, the site of the purported wells.
The Texas Securities Commissioner had issued emergency cease and desist orders against two of the people indicted. In 2011 the Commissioner entered an emergency order against Insignia and Lewis, which found they committed fraud in the offer for sale of securities in oil and gas projects.
In 2010, the Commissioner entered an emergency order against Arthur P. Wilson and two of his companies, finding that they engaged in fraud in connection with the sale of interests in oil and gas exploration in Sabine Parish.
Neither order was disclosed to investors.
The individuals indicted are:
Martin Delaine Lewis, Frisco, securities fraud, theft, engaging in organized criminal activity, money laundering.
Linville C. Lewis, Springfield, Mo., securities fraud, theft, engaging in organized criminal activity, money laundering.
Arthur P. Wilson, address unknown, engaging in organized criminal activity, money laundering, theft, securities fraud.
Malaina N. Frederick, Dallas, securities fraud, theft, engaging in organized criminal activity, money laundering.
David A. Santos, McKinney, money laundering, securities fraud, theft.
Charles M. Frase, Allen, securities fraud, theft, money laundering.
Eli B. Carrasquillo Jr., Dallas, theft, money laundering, engaging in organized criminal activity.