WICHITA, KS—Federal prosecutors in
Kansas have filed a 42-page indictment alleging that a group of men swindled
investors out of $132 million with false promises and fraudulent reports, U.S.
Attorney Barry Grissom said today.
The 67-count indictment alleges that
from 2004 to 2008 a team of seven men executed a scheme in which they
distributed false and fraudulent brochures, joint venture agreements,
application agreements, reports, updates, profit and loss statements, and other
documents designed to entice investors with false promises of high returns on
investments in companies that leased drilling rigs and related businesses.
Charged in the indictment are:
■Michael J. McNaul, 58, formerly of
Hutchinson, Kansas;
■Dale C. Lucas, 62, Wichita;
■Russell W. Kilgariff, 63, Preston,
Kansas;
■Lloyd F. Nunns, 68, Hutchinson;
■Greggory A. Krause, 62, Hutchinson;
■Steven L. Tallman, 58, Owasso,
Oklahoma; and
■Fredie J. Hembree, 57, Hutchinson.
All seven defendants are charged in the
first count of the indictment with conspiracy to commit mail fraud. McNaul is
charged in every count in the indictment, which also includes 20 counts of mail
fraud, 38 counts of wire fraud, seven counts of money laundering, and one count
of bank fraud.
The indictment alleges the scheme began
with the creation of two companies: Mid Continent Manufacturing, LLC, and
Tr-State Production. Tri-State Production was in the business of purchasing,
refurbishing, and leasing oil and natural gas drilling rigs and associated
equipment. Mid Continent served as the management company for Tri-State. As the
scheme grew, new businesses were created including Consolidated Leasing Joint
Ventures, Consolidated Management, Alliance Leasing Joint Ventures, Garner
Management LLC, and others.
The indictment alleges:
■The conspirators worked together to
execute the scheme by mailing prospective investors documents that contained
false and fraudulent representations and promises, and after the defendants had
obtained money from investors they sent investors false and fraudulent reports,
updates and profit and loss statements.
■The conspirators used investor funds to
pay a $300,000 settlement with the Colorado Securities Commission, which they
fraudulently failed to disclose to investors.
■The conspirators made false claims to
potential investors, telling them they would be paid every quarter, they would
receive a 25 to 40 percent annual return and that the companies were already
seeing returns in the 15 to 40 percent range.
Upon conviction, the alleged crimes
carry the following penalties:
■Conspiracy to commit mail fraud: A
maximum penalty of 20 years in federal prison and a fine up to $250,000.
■Mail fraud: A maximum penalty of 20
years and a fine up to $250,000 on each count.
■Wire fraud: A maximum penalty of 20
years and a fine up to $250,000 on each count.
■Money laundering: A maximum penalty of
10 years and a fine up $250,000 on each count.
■Bank fraud: A maximum penalty of 30
years and a fine up to $250,000.
The FBI investigated. Assistant U.S.
Attorney Alan Metzger is prosecuting.
OTHER
INDICTMENTS
Costel Neicu, 32, a citizen of Romania,
is charged with one count of using a forged passport and one count of
aggravated identity theft. The crimes are alleged to have occurred March 1,
2012, in Ellis County, Kansas.
If convicted, he faces a maximum penalty
of 10 years in federal prison and a fine up to $250,000 on the passport charge
and a mandatory two years to run consecutive to the underlying sentence and a
fine up to $250,000 on the identity theft charge.
The Kansas Highway Patrol and
Immigration and Customs Enforcement’s Homeland Security Investigations (HSI)
investigated. Assistant U.S. Attorney Lanny Welch is prosecuting.
Leonardo Velasquez-Villa, 32, is charged
with one count of money laundering and one count of possession with intent to
distribute 120 pounds of marijuana. The crimes are alleged to have occurred
June 16, 2012, in Sedgwick County, Kansas.
If convicted, he faces a maximum penalty
of 20 years and a fine up to $250,000 on each count. The Wichita Police
Department investigated. Assistant U.S. Attorney Debra Barnett is prosecuting.
Caldee Jordan, Jr., 60, Wichita, Kansas,
is charged with one count of possession with intent to distribute heroin. The
crime is alleged to have occurred July 27, 2012, in Sedgwick County.
If convicted, he faces a maximum penalty
of 20 years and a fine up to $1 million. The Wichita Police Department
investigated. Assistant U.S. Attorney David Lind is prosecuting.
Adan Villezacas Palacios, 28, Phoneix,
Arizona, is charged with one count of possession with intent to distribute
methamphetamine. The crime is alleged to have occurred Aug. 28, 2012, in Ellis
County, Kansas.
If convicted, he faces a penalty of not
less than 10 years and not more than life in federal prison and a fine up to
$10 million. The Kansas Highway Patrol investigated. Assistant U.S. Attorney
David Lind is prosecuting.
Christopher J. Grover, 42, Garden City,
Kansas, is charged with one count of possession with intent to distribute crack
cocaine. The crime is alleged to have occurred June 2, 2012, in Finney County,
Kansas.
If convicted, he faces a maximum penalty
20 years and a fine up to $1 million. The Drug Enforcement Administration, the
Garden City Police Department and the Finney County Sheriff’s Office
investigated. Assistant U.S. Attorney Mona Furst is prosecuting.
Donald James Smith, 43, Wichita, Kansas,
and Lisa Diane Boylen, 33, Wichita, Kansas, are charged with one count of
conspiracy to commit credit card fraud. In addition, Robert Lowell Killough,
42, Wichita, Kansas, is charged with aiding and abetting credit card fraud.
Smith also is charged with two counts of credit card fraud, two counts of
identity theft, and two counts of aggravated identity theft. The crimes are
alleged to have occurred at various times from May to July 2012 in Sedgwick
County, Kansas.
Upon conviction, the crimes carry the
following penalties:
■Conspiracy: A maximum penalty of 15
years and a fine up to $250,000.
■Credit card fraud: A maximum penalty of
15 years and a fine up to $250,000 on each count.
■Identity theft: A maximum penalty of
five years and a fine up to $250,000.
■Aggravated identity theft: A mandatory
two years to be served consecutively to the underlying sentence and a fine up
to $250,000 on each count.
The U.S. Secret Service investigated.
Assistant U.S. Attorney David Lind is prosecuting.
Brian J. Anderson., 35, Colwich, Kansas,
is charged with one count of impersonating a U.S. Marshal. The crime is alleged
to have occurred June 9, 2012, in Wichita, Kansas.
If convicted, he faces a maximum penalty
of three years in federal prison and a fine up to $250,000. The U.S. Marshals
Service investigated. Assistant U.S. Attorney Alan Metzger is prosecuting.
In all cases, defendants are presumed
innocent until and unless proven guilty. The indictments merely contain
allegations of criminal conduct.
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