CEO of bankrupt oil company sentenced to nearly 3 years in prison; scammed investors
The CEO of a bankrupt southern Kentucky oil company was sentenced Tuesday to nearly three years in prison for scamming investors into giving him money for three oil partnerships in Kentucky and Tennessee.
Young Oil executive Anthony L. Young of Knob Lick did not speak during the 30-minute hearing in U.S. District Court in Louisville. He pleaded guilty in March to defrauding investors in both states.
Young acknowledged that from November 2007 through December 2008, he fraudulently solicited investments through his company, Young Oil Corp., and took the majority of the money for personal and other uses. Young also pleaded guilty to failing to file income taxes in 2005 and 2006 and having someone make a false statement on a federal form to purchase a pistol for him in 2010.
"Throughout these proceedings, Mr. Young has expressed to us his contriteness and remorsefulness," said his attorney, Fred Partin.
As part of the plea agreement with prosecutors, Young agreed to pay $1 million in restitution to more than 50 investors, pay $493,000 in back taxes to the Internal Revenue Service and assist prosecutors in locating any property worth more than $5,000 he transferred to third parties while running the investment scam.
The charges in three separate cases say Young coerced investors in several states to send him money to help offset the cost of drilling wells. Prosecutors say the money went for other items, but not wells.
Prosecutors say Young fraudulently told investors that $650,000 of the money covered the cost of drilling and the other $100,000 took care of organizational costs for the three wells at each of the prospects. Young also told investors he would cover any costs above $750,000, prosecutors said.
The drilling and organizational costs were "substantially less" than $750,000 and Young did not invest the majority of the money in the prospects, according to the indictment.
The indictment did not state where the proposed oil wells were located.
Partin said Young had a drug problem while bilking the investors.
"A lot of this was done ... at a time when he was using and abusing illegal drugs," Partin said.
Partin asked U.S. District Judge Thomas B. Russell to recommend to the federal Bureau of Prisons that Young be placed in a treatment program while in prison. Russell agreed to the request and recommended that Young be placed in a federal prison near his family. Russell, who sentenced Young to 33 months, also ordered the businessman to surrender to the U.S. Marshal's Service immediately after the hearing.
Young ran Young Oil Corp. as it collapsed into bankruptcy in 2009, two months before Franklin Circuit Court Judge Thomas Wingate concluded that the CEO and his company committed fraud and violated the Kentucky Securities Act.
The Kentucky Department of Financial Institutions sued Young Oil and froze its assets in 2008 after receiving investor complaints. Young Oil raised nearly $20 million from investors through the sale of 57 partnerships from 1997 through 2008. The federal bankruptcy case is pending.
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