A Texas man has been charged with running a fraudulent oil and gas investment scheme that, along with a second firm, he allegedly used to defraud investors out of nearly $1 million.
In a statement, the U.S. Department of Justice said that Stanley Jonathan Fortenberry, 50 of San Angelo, was charged with three counts of mail fraud, two counts of wire fraud and one count of obstructing an official proceeding.
According to the indictment, Fortenberry ran Wattenberg Energy Partners, a firm that raised funds for oil and gas drilling projects in northern Colorado, from 2013 to 2014.
The indictment alleges that Fortenberry used a network of salespeople to call and solicit individuals to invest in drilling projects.
The DOJ alleges that Fortenberry “spent the vast majority of the funds on himself and the company’s fundraising operation,” rather than use the funds for drilling projects.
The indictment also alleges that, in an effort to make his company more attractive to investors, Fortenberry misled investors to believe that Wattenberg had “substantive control over the drilling projects.”
However, the DOJ said that Wattenberg was only a fundraising operation that passed money along to other companies that controlled projects.
The DOJ added that Fortenberry allegedly set up Wattenberg Energy Partners in his son’s name because Texas and Pennsylvania state securities regulators had previously barred Fortenberry from selling unregistered securities in oil drilling projects.
Fortenberry also allegedly ran a separate fraudulent scheme conducted through Premier Investment Fund from 2010 to 2012.
According to the indictment, Fortenberry raised funds from investors through Premier for social media projects run by an unnamed company connected to the country music industry.
The indictment alleges that Fortenberry misrepresented the profitability of the company and his compensation to investors.
The DOJ added that Premier earned no profits and the agency alleges that Fortenberry spent half of the funds raised through the company on his own expenses.
Fortenberry also allegedly gave “false and misleading testimony” during an October 2014 administrative proceeding before the U.S. Securities and Exchange Commission.
The SEC was investigating Fortenberry at the time for misusing funds that investors had given to Premier.
In total, the indictment alleges that Fortenberry defrauded investors out of $900,000 through both companies.
Fortenberry was arrested last Thursday and made his initial appearance in court that afternoon.