LOUISVILLE, Ky. (AP) - A Louisville oil and gas executive has been indicted on 21 fraud charges alleging that he raised millions from investors and misused the funds rather than search for oil and gas reserves.
David G. Rose is also accused in the federal indictment of falsely claiming to investors that his company had partnership agreements with major energy firms like Texaco and Citgo.
An attorney for Rose could not be located Friday morning. An attorney who represented his company in a previous federal case did not return a call.
Rose, 57, is facing a maximum sentence of 440 years and $5.5 million in fines if convicted. Federal prosecutors are asking Rose to forfeit more than $6.6 million.
U.S. Attorney David Huber said in a statement that the indictments on Wednesday focus on two oil and gas well projects promoted by Rose's company, enTerra Energy. Rose told investors their money would be used only for the development of oil and gas wells, but Rose used some to pay bonuses to employees and for "the personal benefit of Rose, his relatives, and friends," Huber said.
The Courier-Journal in 2006 published a series of articles on Rose's former company, Robo Enterprises Inc., and how the firm made huge profits by extracting millions of dollars from investors.
The stories said Robo routinely misrepresented the risks of its investments, overstated its drilling successes and sometimes priced its investments five times above drilling costs, meaning investors had no realistic chance of making a profit.
The newspaper reported that several thousand investors handed over an estimated $100 million or more to Robo, and they lost at least 95 percent of it before any tax write-offs.
Rose was ordered by the Kentucky Division of Securities in 2005 to stop selling oil and gas interests from Kentucky or to anyone in the state.
Huber said Rose was the sixth oil and gas executive indicted since 2005 in the Western District of Kentucky on charges of fraud or tax evasion.
The previous five were convicted and two of them were connected to Rose through his previous company, Robo Enterprises.
David W. Stewart pleaded guilty in April to tax evasion for failing to report $640,000 of taxable income and sentenced to one year in prison. Richard P. Underwood pleaded guilty in June to tax evasion amounting to more than $3 million.
He was sentenced to three years and one month in prison.
Information from: The Courier-Journal,
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