Investors might lose $65 million in Oil & Gas alleged sc

[Dennis Ng]

as I have mentioned many times, before we invest our money, we need to do our own due diligence before risking our hardearned savings.

Published in "TODAY" on 29 Aug 2008:

http://www.todayonline.com/art...73587.asp#


It is an oil nightmare
Investors may lose $65 million from alleged pyramid scheme


ESTHER FUNG

esther@mediacorp.com.sg

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INVESTING in oil and gas seems to be the in thing these days, but a group of South-east Asian investors risk losing about US$46 million ($65 million) after investing in scheme offered by a United States firm which is alleged to have engaged in fraud.
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Over 2,000 investors from Singapore, Malaysia and Indonesia have fallen victim to this alleged US pyramid scheme, said OilPods Singapore, which claims it innocently marketed the scheme here. The bulk of the investors come from Singapore.
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The investors bought working interests in oil and gas leases offered by a US company called Powder River Petroleum International and were expecting to receive high yields from its operations.
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But earlier this month, an initial US official receivers’ report showed Powder River had misled OilPods and others by making monthly payments to investors using fresh funds received from new investors — not profits generated from oil and gas as expected.
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OilPods, which marketed the leases in Singapore, is suing the Oklahoma firm for investments made in the last four years. The petition, lodged in the US, alleges that Powder River’s “‘programme’ ... is nothing more than an illegal pyramid scheme utterly dependent on an ever increasing number of new investors to pay existing ones,” and that “the defendants have employed schemes, artifices and practices of business which have operated as a fraud and deceit”.
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OilPods told Today that it did not lodge a police report in Singapore because it had been advised by the authorities here that there were jurisdictional issues that would be better addressed is in the US.
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Powder River is currently under investigation by the Oklahoma Department of Securities and the receiver’s report dated Aug 7 claimed that the firm’s chief executive Brian Fox had acted in a fraudulent manner: “During 2007, a total of US$4.4 million in interest payments were made to those investors, of which US$3.3 million came from funds received from subsequent investors, not profits generated by the company from oil and gas production.”
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Such investment practices are called Ponzi schemes — a term used last year to describe the alleged operations of the controversial multi-level marketing firm Sunshine Empire here. The firm is under police investigation and is on the Monetary Authority of Singapore’s investor watchlist. Ponzi are dependent on an ever-increasing flow of new money from investors in order to keep going.
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OilPods chief executive Mark Chang alleges in his firm’s petition that the Powder River made false and misleading statements about its securities in oil and gas leases since 2003, which convinced the Singapore firm to market these securities to investors here. When asked what it is doing to assure investors, OilPods said, “The investors had entered into contract with Powder River directly to purchase working interest from Powder River. OilPods is in no position to assure investors of Powder River’s obligation to (them).”
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Mr Thong Chee Kun, a lawyer from Rajah and Tann not involved in the case, said, “Such cases of alleged fraud of an overseas firm (either directly or through an agent) is not unheard of, but this is one of the larger scale ones.”