Two brothers serving prison sentences for defrauding thousands of investors in a phony oil and gas drilling scheme lost an appeal Tuesday to overturn their convictions.
The U.S. 6th Circuit Court of Appeals said Christopher Cello Smith, 53, of Prestonsburg, Kentucky and Michael D. Smith, 58, of Cookeville, Tennessee were properly convicted of fraud based on evidence presented at trial.
The Smiths ran Target Oil and Gas.
The company used fraudulent marketing and false geological surveys to promote drilling projects in Kentucky, Texas, West Virginia, and Tennessee.
Michael Smith, Target’s president, is serving 10 years in federal prison and was ordered to pay $5.5 million in restitution.
Christopher Smith, the firm’s vice president, is serving a five-year sentence and was ordered to pay $1.6 million in restitution.
Target Oil raised $15 million from investors between 2003 and 2008 but only paid out about $1.19 million in royalties, prosecutors said.
The Smiths and four other defendants were convicted in the case and sentenced to prison.
Another judge had earlier ordered the six to repay $13 million to investors.
Two defendants were sentenced to prison for 30 months — Shaun Michael Smith and Mark Irwin.
Joshua Scott Harris received a year in prison.
And Ray Garton was placed on five-years probation.