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Banking & Finance

Aug. 16 -Two Defendants Plead Guilty, 2 More Arrested In $15 Million Oil Investment Fraud Scheme

Category: Banking & Finance

Savannah Business Journal Staff Report

August 16, 2017 - A federal indictment late last week, charged Richard Paul Underwood, 65, of Fort Lauderdale, Florida, and Colin P. Purcell, 56, of Simpsonville, Kentucky, with conspiracy to commit wire fraud and mail fraud in connection with a $15 million oil investment Ponzi scheme that was operating in the Southern District which includes Savannah and Augusta.  Both Defendants were arrested by Special Agents of the United States Secret Service.

The arrests of Defendants Underwood and Purcell follow the guilty pleas of David R. Greenlee, 41, of Seguin, Texas, and David A. Stewart, 46, of Portland, Kentucky.  Greenlee and Stewart pled guilty earlier this month in Savannah before United States District Court Judge Lisa Godbey Wood for their roles in the Ponzi scheme. Greenlee and Stewart will be sentenced after the United States Probation Office completes a presentence investigation.

The federal Indictment unsealed yesterday alleges the following:

From 2012 to 2016, Underwood, Purcell, Greenlee, Stewart and others claimed to investors nationwide that they operated companies selling supposed investments in oil and natural gas projects in Texas, Oklahoma, and Kansas. The Defendants assumed false identities during contacts with investors; they provided false information about the experience and background of the management of the companies; they failed to reveal that the individuals truly responsible for the management of the companies were convicted felons who had perpetrated other investment scams; and they repeatedly made other false statements in order to fraudulently obtain over $15 million from investors. Underwood, Purcell, Greenlee, Stewart and others then used the monies defrauded from investors for their own benefit.

Acting United States Attorney James D. Durham stated, “While this U. S. Attorney’s Office works hard with our federal and state law enforcement partners to shutter investment fraud schemes and to hold fraudsters accountable, our work often follows the disappearance of an unsuspecting victims’ life savings. Investment ideas sounding too good to be true usually are. Be vigilant when investing your money. And when you see a scam, let law enforcement know.”

"There are two points in common with most investment schemes – an exceptionally attractive rate of return and a great backstory on why the company or the return is so great,” said Glen Kessler, Savannah Resident-Agent-in-Charge of the United States Secret Service. “Use caution when approaching any investment. A company’s use of national advertising or glossy brochures should not serve as proof that they are offering legitimate investments. If the subject or company pushing the investment is promising consistently high returns with little or no losses and you are being told overly complicated methods of how the investment works, that should raise a red flag for any investor,” Kessler added.

"Unfortunately, investment fraud is pervasive and entrenched in our society as it promises the golden ticket to instant wealth. While we may not be able to make all the victims whole we can and will hold the perpetrators accountable,” said James Dorsey, Acting Special Agent in Charge, IRS Criminal Investigation. “IRS Criminal Investigation is proud to work with our law enforcement partners providing its financial expertise to bring criminals to justice."

Underwood and Purcell are both charged with conspiracy to commit wire fraud and mail fraud, which carries a maximum sentence of 20 years’ imprisonment and a fine of up to $250,000. Greenlee and Stewart face up to five years in prison and a $250,000 fine for conspiring to commit securities fraud, wire fraud, mail fraud and money laundering. Upon conviction, the Defendants would also be required to forfeit the proceeds of their crimes and pay restitution to their victims for the losses they caused.

Acting U. S. Attorney Durham emphasized that the indictment filed against Underwood and Purcell is only an accusation and is not evidence of guilt. Underwood and Purcell are entitled a fair trial at which it will be the Government’s burden to prove guilt beyond a reasonable doubt.

The investigation that led to the arrests was the result of a multi-agency team of federal, state, and local agents working together to combat investment fraud. The team was led by the United States Secret Service, the Internal Revenue Service’s Criminal Investigation Division, and the United States Securities and Exchange Commission. Acting U. S. Attorney Durham also expressed appreciation for assistance provided by the Indiana Securities Division, the Office of the Floyd County (Indiana) Prosecutor, the Texas State Securities Board, the Tennessee Securities Division, the Texas Railroad Commission and the Florida Office of Financial Regulation.

Assistant United States Attorneys Brian T. Rafferty and Theodore S. Hertzberg are prosecuting the case on behalf of the United States. For additional information, please contact the United States Attorney’s Office at (912) 201-2522.

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