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.

Mark Alexander
5080 Spectrum, Suite 850E
Addison, Texas 75001
Ph: 972.544.6968
Fax: 972.421.1500

Photo of Mark Alexander Mark Alexander

Mark Alexander is the principal of the Firm. In 1979, he earned his undergraduate degree at Wayne State University in Detroit, Michigan, and his law degree at Thomas M. Cooley, Lansing, Michigan, in 1985 (Academic Dean’s List).

Mr. Alexander is licensed…

Mark Alexander is the principal of the Firm. In 1979, he earned his undergraduate degree at Wayne State University in Detroit, Michigan, and his law degree at Thomas M. Cooley, Lansing, Michigan, in 1985 (Academic Dean’s List).

Mr. Alexander is licensed to practice law by the Supreme Courts of the States of Texas (1985) and Michigan (1988), and holds licenses before the following courts: Supreme Court of Texas; Supreme Court of Michigan; United States Court of Appeals for the Fifth and Sixth Circuits; United States District Courts for the Northern, Southern, and Western Districts of Texas; and the Eastern and Western Districts of Michigan. In addition he has been admitted in several other Federal and State Courts to represent Texas clients, who have been engaged in significant litigation in those jurisdictions.

Courts have appointed Mr. Alexander to serve as a receiver, and facilitator in complex litigation lawsuits. Additionally he has been a frequent lecturer for organizations on a variety of business law matters.  Mr. Alexander has also served as an Adjunct Professor of Business Law at Henry Ford College in Dearborn, Michigan. Significantly, Mr. Alexander is AV-rated by Martindale-Hubbell, the highest rating an attorney can receive.

Additionally, due to the complex nature of its practice, the Firm has an on-going relationship with a legal group that provides litigation support services. This group is comprised of a team of attorneys, whose combined capabilities allow the group to provide nearly 24-hour coverage at crucial times for any case. This arrangement is but one example of the innovative, cutting-edge approach that the Firm provides to its clients in order to improve representation at reduced legal fees.