Posted 3:38 am Saturday, December 08, 2007
East Texas Couple Sentenced For Defrauding Investors
By CASEY KNAUPP
Staff Writer
A man and wife who defrauded oil and gas investors out of more than $1 million in their fraudulent Palestine business were sentenced in federal court on Friday.
Donald and Cheryl Douglas, who owned Caddo Creek Productions Inc., a business of exploring and developing oil and gas interests, were sentenced by U.S. District Judge Michael Schneider after they pleaded guilty on April 30.
Douglas was the president of Caddo Creek, which he founded in 1998 in Palestine. Douglas' wife, daughter and son-in-law served as officers and directors of the business. From 1999 through December 2004, Douglas devised a scheme to defraud investors who purchased interests in projects that Caddo Creek did not own or control.
Douglas, 69, pleaded guilty to committing wire fraud on Aug. 22, 2002, and faced up to 20 years in prison. U.S. District Judge Michael Schneider sentenced him to more than three years.
Mrs. Douglas, 69, pleaded guilty to misprision of a felony - knowing that a felony offense had been committed and instead of reporting it to authorities or investors, helped conceal the crime. She faced up to three years in prison but was sentenced to five years of probation.
The couple was ordered to pay $1.142 million in restitution to the victims.
Three victims addressed the court during the hearings.
John Clark said that from 1998 to 2003, the defendants defrauded him of his money and have reduced him to poverty. He said he lives on Social Security and can no longer afford heating or air conditioning. He said they were criminals of the worst kind and if justice was done, they'd spend the rest of their lives in prison.
Jack Campbell said he was one of many victims violated by the Douglas couple. He has been forced to cash in his life insurance and sell real estate and other property. He said the defendants came into his home and sat at his table, all with the intent to steal what took him a lifetime to acquire.
Campbell said the defendants helped their criminally involved children avoid prosecution and he wanted them to be forced to repay what they took. He also asked that they be ordered to never contact him and his wife again. "Liars and thieves are what they are," he said.
Campbell's wife Ann testified that nearly $800,000 was stolen from them in 2003 and 2004. Even after he was indicted in Anderson County, Douglas asked them for bail money and attorneys fees, threatening that if they didn't, they would never see any of their investments. She said she and her husband almost got a divorce because of the scheme.
The judge said he received 29 letters of support from Douglas' family, friends and business acquaintances and Assistant U.S. Attorney Jim Noble said other victims had written letters.
Douglas' defense attorney, Van Hilley, of San Antonio, asked the judge to look at all of Douglas' life when sentencing him and said the former military man, teacher and coach accepted responsibility from the beginning.
Douglas apologized to the court and to his victims, who he said were dear friends of his. He said greed consumed him for three or four years and he betrayed them.
"I'm guilty as sin," he said. "I'll be here, your honor, when it's all over, doing the right thing."
Noble said the qualities Douglas showed in his statement are the same that made him such an effective thief; his charisma allowed him to steal the money.
Douglas, who lives in Comfort with his wife of 49 years, was allowed to voluntarily surrender to prison by April 7, after his wife's chemotherapy is expected to be completed.
Defense attorney Daniel Scarbrough, of Palestine, said Mrs. Douglas, who has breast cancer, was a housewife for many years before she started helping out her husband in his business. He said she never denied her involvement and has shown remorse.
Mrs. Douglas apologized to the court, the victims and her family and the government agreed to a sentence of probation in her case.
THE SCHEME
Douglas approached potential investors and told them he owned oil and gas leases in East Texas. He represented to them that the leases were in oil fields that had ceased production due to high costs of extracting oil and gas and the relatively low price of minerals produced. Douglas told them that higher oil and gas prices, along with new and improved technology, made the production on the leases attractive and profitable.
Douglas also claimed he owned or could acquire interests in equipment to produce the oil and gas, but he neither owned the equipment or the leases. Douglas forged his name on legitimate documents and produced fictional paperwork to show investors, court documents show.
Douglas convinced investors to give more than $1 million in the drilling ventures, but used the funds on personal expenses for himself and his family.
During the scheme, Douglas used facsimile transmissions and e-mail via the Internet, wire transfers of money and telephone calls to induce investors and lull investors when they made inquiries and demands for the returns he had promised.
Mrs. Douglas admitted to knowing about the scheme her husband was perpetrating from 1999 through 2004. Mrs. Douglas had numerous conversations with investors and made misleading statements to lull them and prevent them from notifying law enforcement authorities.
Staff Writer
A man and wife who defrauded oil and gas investors out of more than $1 million in their fraudulent Palestine business were sentenced in federal court on Friday.
Donald and Cheryl Douglas, who owned Caddo Creek Productions Inc., a business of exploring and developing oil and gas interests, were sentenced by U.S. District Judge Michael Schneider after they pleaded guilty on April 30.
Douglas was the president of Caddo Creek, which he founded in 1998 in Palestine. Douglas' wife, daughter and son-in-law served as officers and directors of the business. From 1999 through December 2004, Douglas devised a scheme to defraud investors who purchased interests in projects that Caddo Creek did not own or control.
Douglas, 69, pleaded guilty to committing wire fraud on Aug. 22, 2002, and faced up to 20 years in prison. U.S. District Judge Michael Schneider sentenced him to more than three years.
Mrs. Douglas, 69, pleaded guilty to misprision of a felony - knowing that a felony offense had been committed and instead of reporting it to authorities or investors, helped conceal the crime. She faced up to three years in prison but was sentenced to five years of probation.
The couple was ordered to pay $1.142 million in restitution to the victims.
Three victims addressed the court during the hearings.
John Clark said that from 1998 to 2003, the defendants defrauded him of his money and have reduced him to poverty. He said he lives on Social Security and can no longer afford heating or air conditioning. He said they were criminals of the worst kind and if justice was done, they'd spend the rest of their lives in prison.
Jack Campbell said he was one of many victims violated by the Douglas couple. He has been forced to cash in his life insurance and sell real estate and other property. He said the defendants came into his home and sat at his table, all with the intent to steal what took him a lifetime to acquire.
Campbell said the defendants helped their criminally involved children avoid prosecution and he wanted them to be forced to repay what they took. He also asked that they be ordered to never contact him and his wife again. "Liars and thieves are what they are," he said.
Campbell's wife Ann testified that nearly $800,000 was stolen from them in 2003 and 2004. Even after he was indicted in Anderson County, Douglas asked them for bail money and attorneys fees, threatening that if they didn't, they would never see any of their investments. She said she and her husband almost got a divorce because of the scheme.
The judge said he received 29 letters of support from Douglas' family, friends and business acquaintances and Assistant U.S. Attorney Jim Noble said other victims had written letters.
Douglas' defense attorney, Van Hilley, of San Antonio, asked the judge to look at all of Douglas' life when sentencing him and said the former military man, teacher and coach accepted responsibility from the beginning.
Douglas apologized to the court and to his victims, who he said were dear friends of his. He said greed consumed him for three or four years and he betrayed them.
"I'm guilty as sin," he said. "I'll be here, your honor, when it's all over, doing the right thing."
Noble said the qualities Douglas showed in his statement are the same that made him such an effective thief; his charisma allowed him to steal the money.
Douglas, who lives in Comfort with his wife of 49 years, was allowed to voluntarily surrender to prison by April 7, after his wife's chemotherapy is expected to be completed.
Defense attorney Daniel Scarbrough, of Palestine, said Mrs. Douglas, who has breast cancer, was a housewife for many years before she started helping out her husband in his business. He said she never denied her involvement and has shown remorse.
Mrs. Douglas apologized to the court, the victims and her family and the government agreed to a sentence of probation in her case.
THE SCHEME
Douglas approached potential investors and told them he owned oil and gas leases in East Texas. He represented to them that the leases were in oil fields that had ceased production due to high costs of extracting oil and gas and the relatively low price of minerals produced. Douglas told them that higher oil and gas prices, along with new and improved technology, made the production on the leases attractive and profitable.
Douglas also claimed he owned or could acquire interests in equipment to produce the oil and gas, but he neither owned the equipment or the leases. Douglas forged his name on legitimate documents and produced fictional paperwork to show investors, court documents show.
Douglas convinced investors to give more than $1 million in the drilling ventures, but used the funds on personal expenses for himself and his family.
During the scheme, Douglas used facsimile transmissions and e-mail via the Internet, wire transfers of money and telephone calls to induce investors and lull investors when they made inquiries and demands for the returns he had promised.
Mrs. Douglas admitted to knowing about the scheme her husband was perpetrating from 1999 through 2004. Mrs. Douglas had numerous conversations with investors and made misleading statements to lull them and prevent them from notifying law enforcement authorities.
