Oil and Gas Ventures
Although oil prices have fallen from their all-time high last summer, fraudulent oil and gas deals have remained a favorite ploy of con artists nationwide. We've already seen a handful of these cases in Indiana.
It is important to know that there are legitimate oil and gas ventures out there that can be wise investments for those who understand and can afford the risk. But, there are also doubtful and even outright fraudulent energy deals promoted to the public, which underscores the importance of investigating before investing.
The Securities and Exchange Commission has an unfortunate example of someone who was victim to oil and gas fraud:
Henry was a successful business man, was married for 30 years, raised a family, and pretty much had a good life. After his wife's death, Henry received an unsolicited overnight package of materials with offering an oil and gas investment. He ignored the package. The next day, a salesman called him and used high-pressure sales tactics to persuade him to invest $40,000.00 of his own money.
The phone conversation went something like this: “These gas wells are guaranteed to produce $6,800 a month in income… Some of the most successful investors in the country are interested in these wells…There are only two units left in this project…We drilled a well in Texas that had these same early gas readings, and the investors all made millions.”
Over a three year period, Henry was recontacted 12 times and invested, essentially, his life savings in 4 different gas wells, each time thinking he had to invest or loose his original investment.
Henry ultimately lost over $500,000.00 to this oil and gas scam investing in wells that always seemed promising at first.
Like Henry, most fraud victims don't realize they have been conned until it is too late, and the money is gone. There are ways to help safeguard yourself if you have been approached to invest in oil and gas ventures.
As with any investment, investors should independently research the background of the promoters, get a clear explanation of the deal in writing, and carefully read all the fine print. Scam artists usually tell prospective victims that they are licensed and their investment is registered - and they can be quite convincing.
The Securities Division within our office can tell potential investors whether an individual and his or her company are licensed to sell securities in Indiana and whether they have a history of disciplinary action. Investors can find this information by visiting our website http://www.indianainvestmentwatch.com/or by calling 1.800.223.8791.
Always remember to do your homework first, and if it sounds too good to be true, it probably is!
If you believe you have been a victim of an Oil and Gas scam, or any other investment scam, please contact the Securities Division in my office at 1.800.223.8791.