Kentucky Oil Tycoon Pleads Guilty to Ponzi Scheme Charges

David Rose agrees to serve 52 months in prison, compensate victims.

ByABC News
July 9, 2009, 1:35 PM

July 9, 2009— -- Less than two weeks after fraudster Bernie Madoff was sentenced to 150 years in prison, Kentucky oil-and-gas tycoon David G. Rose pleaded guilty on Wednesday in the U.S. District Court of Western Kentucky to Ponzi scheme charges of tax evasion and defrauding hundreds of investors across the world out of tens of millions of dollars through oil and gas reserve development projects.

Acting U.S. Attorney Candace G. Hill, announced that the former head of enTerra Energy, LLC and the oil and gas exploration firm Robo Enterprises, Inc. pleaded guilty to 21 counts of defrauding investors and one count of willfully evading more than $200,000 in taxes on an income of $3.5 million in 2000 and 2001.

As part of the plea agreement, Rose will pay more than $2.9 million in restitution to 60 victims. He paid the first $1 million in court as he entered his plea and agreed to a 52-month prison sentence for the two separate charges that were combined for this trial.

In his plea, Rose admitted that he instructed company salespeople to give false statements to investors, so as to encourage them to invest in the two oil and gas well projects promoted by enTerra Energy. With the tempting allure of black gold and claims of 50 percent returns, Rose convinced hundreds of potential investors to transfer tens-of-millions of dollars to his companies.

Under the fraud scheme, enTerra Energy falsely claimed it had entered into partnerships with major oil companies such as Citgo Petroleum Company, Samson International, Hunt Oil and Texaco, in developing the oil and gas wells which comprised the two projects.

Last month, one fraud victim told reporter Adam Walser from local ABC affiliate WHAS-TV that his father invested almost $300,000 with 33 units in three different projects that showed no returns.

"This well was dry. This well was pulling salt water. We had to cap it," said Rick Wimp, whose family owns the Corydon Service Station in Louisville, Ky. "I could go out here, dig 33 holes and probably find more oil and gas than they did."

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Last month, one fraud victim told reporter Adam Walser from local ABC affiliate WHAS-TV that his father invested almost $300,000 with 33 units in three different projects that showed no returns.

\"This well was dry. This well was pulling salt water. We had to cap it,\" said Rick Wimp, whose family owns the Corydon Service Station in Louisville, Ky. \"I could go out here, dig 33 holes and probably find more oil and gas than they did.\"

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