The Family That Scams Together Pleads Together: Nationwide Oil-and-Gas Fraud Yields Guilty Pleas in Federal, State Courts

Jan 26

Four principals of Aspen Exploration Inc., the Dallas-based company that sold interests in fraudulent oil-and-gas programs to investors across the United States, pleaded guilty today in U.S. District Court in Dallas.

William Anthony "Tony"Rand, 69 years old, of Plano, and his two sons, Gregory Keith "Greg"Rand, 46, and William Nicholas "Bill"Rand, 41, both of Dallas, pleaded guilty before U.S. District Judge Jorge A. Solis. Co-defendant Joel William Petersen, 44, of Frisco, also entered his guilty plea today. The other defendant charged in the case, Mark Albert Rand, 45, of Plano, previously entered a plea agreement; he is also a son of Tony Rand.

The pleas were announced today by U.S. Attorney James T. Jacks of the Northern District of Texas. Judge Solis set a sentencing hearing for April 20.

Rhonda Rogers, an enforcement attorney with the Texas State Securities Board, served as a Special Assistant U.S. Attorney in the case. The State Securities Board previously entered an Emergency Cease and Desist Order against Aspen, Bill Rand, Greg Rand, Mark Rand, and Joel Petersen for engaging in fraud, failing to disclose previous lawsuits and court judgments, and making misleading statements likely to deceive the public.

On Monday, Wayne Anthony Rand – another of Tony Rand's sons -- was sentenced to 20 years in state prison for a separate oil-and-gas investment scheme. He pleaded guilty to theft in the 382nd state District Court in Rockwall County. Rand used millions of dollars of investors' money for personal expenses, including the purchase of a house, luxury speedboats, guns, and jewelry. He raised approximately $8 million from dozens of investors who thought they were putting money into energy exploration projects run by Rand's company, Rock Wall Oil Co., also known as Black Lake Energy Inc.

In the federal case, the defendants allegedly attempted to raise $68 million from more than 330 investors. Greg Rand pleaded guilty to one court of conspiracy to commit mail fraud and securities fraud. Each count carries a maximum sentence of five years in prison and a $250,000 fine. Rand's plea agreement with the government, if accepted by the Court, calls for an 18-year sentence.

Bill Rand pleaded guilty to three counts of securities fraud and will serve 14 years in prison if his plea agreement is approved by the Court.

Tony Rand and Joel Petersen each pleaded guilty to one count of conspiracy to commit mail fraud and securities fraud and one count of securities fraud. Their plea agreements would impose a sentence of 6 1/2 years each.

The Rands will be required to forfeit money and property to the federal government, including real estate, luxury speedboats and vehicles, artwork – including a Picasso – furniture, antiques, musical instruments, jade, expensive jewelry and wine.

According to documents filed in the federal case, Aspen, through its officers, employees and salesmen, raised funds from investors who bought securities in the form of joint venture programs created to promote and sell units representing working interests in oil and gas wells in Jim Hogg and Zapata Counties.

The defendants also knowingly lied to investors by telling them their money would be used to drill, test and complete their particular wells and that investors would have managerial rights regarding the operation of their particular joint venture and well. The defendants diverted investor funds for their own benefit, for the benefit of others and for drilling and operating costs related to prior wells.

The defendants provided inaccurate information to investors, touting the performance of earlier wells without disclosing vendor liens and investor litigation related to earlier wells, according to court documents. Salesmen represented to investors that they could receive profits equal to their initial investment within three years and thereafter earn multiples of their investment. Aspen, however, was insolvent and relied upon investor funds to operate. Aspen is currently in involuntary bankruptcy proceedings in the Southern District of Texas.

According to the indictment, Greg Rand, Bill Band, and Mark Rand had significant personal tax liabilities. A final judgment was entered in August 2009 in the Northern District of Texas that ordered Gregory Rand to pay $7.6 million, plus interest and penalties, to the United States for his federal income tax liabilities for 2001-2005.

The defendants failed to disclose that Aspen's bookkeeper, Tony Rand, had been convicted in the Eastern District of Arkansas of bank fraud, money laundering, and interstate transportation of securities by fraud, and had served nearly seven years in federal prison for those convictions.