Three others also sentenced to prison in $3 million scheme
FRANKFORT, Ky. (Feb. 29, 2016) — John G. Westine Jr., of California, was convicted last week of orchestrating a fraudulent oil and gas investment scheme based in Kentucky that took more than $3 million from more than 240 investors nationwide.
U.S. District Judge Gregory Van Tatenhove sentenced Westine, 69, to 40 years in federal prison for mail fraud, conspiracy to launder funds and securities fraud.
Westine’s co-defendant Mark Cornell, 57, was sentenced to 114 months in prison for deception in the purchase and sale of a security. Two other co-defendants in the case—Henry Irving Ramer, 77, and Michael Hicks, 59— were previously sentenced to 13 years and three years respectively.
In total, the four are ordered to pay more than $3 million in restitution to the investors they defrauded.
“This is another great success story of the work being done by our Securities Division to help protect Kentucky residents and investors,” said Department of Financial Institutions (DFI) Commissioner Charles Vice. “The lengthy sentences and large restitution imposed show that white collar crime is taken seriously in Kentucky.”
DFI began investigating the case after its Division of Securities received investor complaints in late 2012 and early 2013. The U.S. Postal Inspection Service assisted with the investigation, and the U.S. Attorney, Eastern District of Kentucky, prosecuted.
According to the testimony and evidence at trial, the defendants raised money from investors by making misrepresentations and failing to disclose material facts about oil well investments in Barren, Monroe and Cumberland counties. They misled investors to believe that oil was being produced, when in fact it was not, and also misled investors to believe that the oil companies Westine operated had been in the oil production business for decades.
Additionally, Westine concealed from investors that he had served more than 20 years in prison for running a similar fraud scheme in Ohio. Westine was still on parole from his 1992 conviction when he orchestrated the fraud scheme in Kentucky.
Additional facts about the four co-defendants in this case:
- On Wednesday, Westine was sentenced to 40 years followed by 3 years of supervised release. He was the control person behind the scheme.
- In September 2015, Ramer was sentenced to 13 years in federal prison on counts of mail fraud, securities fraud and conspiracy to launder money. Ramer worked as a salesman and manager of two Los Angeles-based telemarketing sales operations. He also created false offering memorandums and a promotional video.
- On Wednesday, Cornell was sentenced to 9.5 years followed by 3 years of supervised release. The Kentucky oil well operator assisted the conspiracy by exaggerating his oil production numbers.
- In July 2015, Hicks, Westine’s half-brother, was sentenced to three years in prison for mail fraud. He admitted that he opened bank accounts and operated mailing addresses in various names and also cashed or deposited investor checks and then withdrew and mailed the victims’ money to his co-defendants in California.
Westine and his associates used false identities and repeatedly changed the company’s name and address to conceal their true identities from both investors and authorities. Consumer complaints and tips helped DFI’s investigative team stay on top of the changing scheme.
Because of tips and complaints, DFI was able to freeze a portion of funds in the defendant’s accounts during the investigation, and that money—more than $106,000— was already returned to investors.
To report investment fraud, call 800-223-2579. Investors can check out investment products and the person selling them by calling toll-free or visiting http://kfi.ky.gov/public/Pages/invest.aspx.