Texas Securities News: Round Rock Man Goes to Jail Over $4.5M Ponzi Scam, Linn Energy Files for Bankruptcy, Judge Says Wyly Brothers Committed Tax Fraud

Texas Oil and Gas Ponzi Scam Leads to 13-Year Prison Term
The owner of RHM Exploration has been sentenced to over 13 years months behind bars for a Texas oil and gas Ponzi scam that raised about $4.5M from investors. William Risinger must pay more than $3.7M to those whom he bilked.

Risinger pleaded guilty to criminal charges of money laundering and wire fraud. From 11/10 to 6/14 he stole funds from investors for three gas, oil, and mineral ventures that were scams. Court documents state that he used proceeds from his fraud for his own spending and for ‘lulling” payments to make it appear to investors as if the joint venture they put their money into was running promised.

As part of his sentence, Risinger will spend 160 months in prison and serve three years of supervised release.

Linn Energy Seeks Chapter 11 Bankruptcy Protection
In other oil and gas news, Linn Energy LLC (LINE) has filed for Chapter 11 bankruptcy. The Houston-based company cited weak energy prices as a reason for having to seek protection.

Linn Energy had been set up as a high-yield energy investment vehicle. Its structure compelled it to take on quite a chunk of debt in order to grow via acquisitions. The oil and gas company now holds about $10B in debt.

Linn Energy arrived at a deal with lenders that will allow it to receive $2.2B in financing and restructure $8.3B of debt. Linn will spin off Berry Petroleum LLC for $1.3B.

Also filing for bankruptcy is LinnCo LLC, which is a publicly traded affiliated of Linn Energy. LinnCo was set up to help Linn Energy generate more equity capital.

Linn Energy is not the only company of its kind to seek bankruptcy protection in the wake of weak oil prices. Energy XXI Ltd and Samson Resources Corp. are two others that have filed.

SandRidge Energy (SD) may also file for Chapter 11 soon. That company is in trouble with investors who are claiming that they were told that its stock would make a safe, conservative bet. Share prices have plunged to the point that for some investors, their losses have been catastrophic.

Texas Brothers Sam Wyly and Charles Wyly Committed Tax Fraud, Says Judge
U.S. Bankruptcy Judge Barbara Houser has ruled that former billionaire Sam Wyly and his deceased bother Charles committed tax fraud. The allegations are related to transactions in the ‘90’s that involved moving money offshore.

The brothers have said that the transactions were part of doing business. Houser, however, said that they were executed to prevent the government from taxing $1B

In 2010, the Securities and Exchange Commission charged the Wylys with securities fraud, accusing them of using offshore entities in the Cayman Islands and the Isle of man to conceal the sales of companies for years so that they wouldn’t have to submit disclosures to the SEC.

Two years ago, a jury found the two men guilty of fraud related to these allegations. As a result of Houser’s decision, Sam Wyly could be forced to pay the Internal Revenue Service nearly $1B.

Shepherd Smith Edwards and Kantas, LTD LLP is a Texas securities fraud law firm.

Round Rock Man Sentenced To Federal Prison For Ponzi Scheme, Patch, May 6, 2016

Linn Energy Files for Bankruptcy, The Wall Street Journal, May 11, 2016

Judge: Dallas’ billionaire Wyly brothers committed tax fraud, The Dallas Morning News, May 10, 2016