Five Months, Twelve Investors and $3.6 Million
Separating the good oil and gas investment opportunities from the bad has never been more difficult. The scams look more realistic than ever and the schemes are endless. Recently Phillip Hudnall and Todd Esh with BirdDog Business Group, Kansas Oil Reserves, LLC, et al presented such a good scheme, they not only bilked 12 investors in five months out of $3.6 million, but they also convinced a bank to loan money to them a second time for more than $550,000.
Investment Scams Look Real
Hudnall and Esh purported to issue promissory notes secured by oil and gas equipment. The 30% investment yield was to be earned in six to nine months. Hudnall and Esh promised to buy popular used oil and gas equipment, have the equipment restored and then sell it. They claimed to never buy equipment without having secured an end purchaser. Furthermore, they touted successfully completed prior equipment transactions that paid off in six months. To investors’ surprise, all of these claims were false. SEC Complaint
Where’s the Money?
By the time the SEC filed charges, BirdDog had only $478 of the $4.5 million received from investors and loans in their bank account. Hudnall bought acreage in Colorado for $1.7 million, made Ponzi type payments of $900,000, and pocketed at least half a million dollars.
How Do You Spot Investment Scammers?
This is a multi-million-dollar question.
- Defendant Todd Esh from Lenexa, Kansas worked as a registered investment advisor for a large broker-dealer for 20 years before hatching this investment scheme with Hudnall.
- It appears that Phillip Hudnall’s brother, Brian, controlled a fellow in Houston named Duc Nguyen. Brian Hudnall previously agreed to a consent judgment with the SEC for an unrelated matter in 2017 wherein he was to repay $12 million for an oil and gas offering.
- Duc Nguyen was the one person who received money from BirdDog as a vendor to supposedly purchase and sell equipment. Duc Nguyen absconded with around $1.2 million, spending more than half in Vegas casinos.
In this case, there might be multiple scams in the works. Did Duc and Brian scam Esh and Phillip (Brian’s brother)? Did the brothers scam everyone else including Esh? It would appear that Phillip Hudnall and Todd Esh scammed the bank and investors.
Professionals Get Duped
Don’t think you will always spot oil and gas fraud. In this case, the same bank loaned money twice within a year to BirdDog. Several six-figure investors were fooled into investing in this oil and gas investment fraud. After all, the investments were short-term, secured by physical assets and one of the key players had been a registered investment advisor for 20 years. Be careful out there. There’s a lot of slime when it comes to oil and gas investments.
Contact an Experienced Oil & Gas Investment Fraud Attorney
We hope all your oil and gas investments are safe and profitable. But if you find yourself searching for an experienced Securities Fraud Attorney or Oil and Gas Lawyer, we are here to help.