Beware of Mineral Royalty Scams

by Elizabeth Alford on November 21, 2016

If you are looking to invest in oil and gas leases, keep your eye out for scammers.

Related: $1.5 Million Royalty Judgment Not Enough

Wherever there is is the opportunity for money to be made, there will be crooks and the booming oil and gas sector is no different. There is indeed money to be made, but there are no sure things. Would-be oil and gas investors need to do their homework and watch out for potential scams.

Even savvy and experienced investors are prone.

In Kentucky, one conman and his team of telemarketers solicited money from investors. The group intentionally made false statements about the success of their oil production business. In February, a federal judge sentenced John G. Westine Jr. to 40 years in federal prison, for orchestrating the fraud that cost investors out of more than $3 million. Two other co-defendants we also sentenced; Henry Irving Ramer, 77 and Michael Hicks, 59.

“This is another great success story of the work being done by our Securities Division to help protect Kentucky residents and investors,” said Department of Financial Institutions (DFI) Commissioner Charles Vice. “The lengthy sentences and large restitution imposed show that white collar crime is taken seriously in Kentucky.

The U.S. Postal Service has cautioned people and given some tips to avoid being scammed:

  • Do your due diligence
  • Check the company on the Internet
  • Check with the Better Business Bureau to see if there are any formal complaints
  • Beware of unrealistic promises like guaranteed royalties

“These guys are charming. They somehow seem to be able to befriend people, talk their way into people’s lives, they are good at getting things for nothing or for cheap,” said US Postal Inspector Roberta Bottoms.

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