DALLAS (CN) - Several principals of Plano-based Aspen Exploration, including four members of the Rand family, pleaded guilty to running a $68 million oil and gas Ponzi scheme, federal prosecutors said.
William Anthony Rand aka Tony Rand, 69, of Plano, pleaded guilty to one count of conspiracy to commit mail fraud and securities fraud and one count of securities fraud. Under his plea agreement, he faces up to 78 months in prison.
His son, Gregory Keith Rand, 46, of Dallas, pleaded guilty to one count of conspiracy to commit mail fraud and securities fraud and three counts of securities fraud. Under his plea agreement, he faces up to 216 months in prison.
Tony Rand's son William Nicholas Rand, 41, of Dallas, pleaded guilty to three counts of securities fraud and faces up to 168 months in prison under his plea agreement.
Joel William Petersen, 54, of Frisco, Texas, pleaded guilty to one count of conspiracy to commit mail fraud and securities fraud and one count of securities fraud. He faces up to 78 months in prison under his plea agreement.
A third son, Mark Albert Rand, 45, of Plano, pleaded guilty in October 2010.
According to court filings, Greg, Bill, and Mark Rand were officers, directors and owners of Aspen. Tony Rand was the financial manager, and Petersen was a vice president and salesman.
Aspen sold working interests and net revenue interests in several wells on the Rancho Blanco Corporation State Gas Unit, an oil and gas lease in Jim Hogg and Zapata Counties.
Prosecutors say the defendants made several false representations to investors, including that their money would be used to drill, test and complete their particular well; that Aspen would provide and pay for all services needed to drill, test and complete their well before Aspen got its "turnkey profit;" the investors money would not be commingled except as necessary to pay to drill, test and complete their particular well; and that investors would have managerial rights on the operation of their joint venture and well.
The money invested was transferred almost immediately to Aspen's corporate bank accounts and the defendants took money for themselves, for others, and drilling and operating costs of older wells.
"Inaccurate information, touting the performance of earlier wells, was provided to investors, without disclosing vendor liens and investor litigation related to earlier wells," prosecutors said in a statement announcing the plea deals.
"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."
Prosecutors say Aspen was insolvent at the time, relied upon investors' money to operate and failed to pay similar costs for other wells previously sold to investors.
The Rands must forfeit substantial money judgments and property to the government, including real estate, boats and other personal watercraft, luxury vehicles, artwork, including a Picasso, furniture, antiques, musical instruments, jade, expensive jewelry and wine.
Sentencing is set for April 20, before U.S. District Judge Jorge A. Solis.
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