The U.S. Securities and Exchange Commission (“SEC”) has charged Alan Todd May, whom it describes as “a felon with a long criminal history of theft and fraud,” with raising more than $6 million in a fraudulent scheme involving sale of unregistered interests in oil and gas properties. According to the SEC, May operated the scheme through Prosper Oil and Gas, Inc. a/k/a Prosper Energy, Inc. According to the SEC’s complaint:
[T]he Defendants attracted investors through classified advertisements in various well-known business publications and postings on at least one auction website. In those advertisements and in correspondence with investors, the SEC alleges, the Defendants claimed that investors would earn between 25 and 38 percent annually from revenues based on oil and gas production. In reality, the SEC alleges, nearly all of the distributions made to investors were Ponzi payments from new investor funds.
Notice that the alleged scheme involved the sale of oil and gas interests. We expect the number of scams involving oil and gas to increase. Every increase in the price of gas at the pump will remind us that oil is an ever-dwindling resource and that the law of supply and demand will make money for those who own oil and gas wells. All a scam artist has to do is convince investors that they are buying those interests. He can create deeds and other records that support the illusion. He can create an website that gives the impression of a well-run enterprise. He can even arrange visits to operating oil and gas wells to give prospective investors the illusion that they have seen what they are investing in.
But no tool is more effective at convincing victims to invest than Ponzi payments. It works this way. The scam artists says ‘Why don’t you try out this investment with just a little bit of money. If it works, you can invest more.” That sounds reasonable. So you give them $5,000. The promised payments arrive right on schedule You believe that you have seen the investment work with your own eyes. Too late you will learn that the payments you received were either a return on your own principal or money invested by later victims. You should not believe your eyes.
To protect yourself from scam tactics that only an expert can detect, get help from someone who has seen them all.
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