Scams targeting oil and gas investors are alive and well. Perpetrators of these fraudulent scams are often charged with a variety of state and/or federal crimes. If the scammer is convicted, the wrongdoer is punished with prison time, fines and sometimes mandatory restitution. But a conviction in criminal court rarely makes the defrauded investors whole again. However, they may be able to pursue a civil lawsuit against the fraudster to recoup some of their losses.
Civil litigation and criminal prosecution often arise over the same conduct. However, in general, a criminal case moves forward first. In a recent example, a federal grand jury indicted Arael Doolittle, owner and operator of Sariel Petroleum LLC and Sariel Enterprises LLC, for allegedly taking more than $1.2 million from 21 investors under false pretenses. He faces eight counts of wire fraud and four counts of engaging in monetary transactions in criminally derived funds. The investors also have a right to pursue civil lawsuits against him.
An oil and gas lawsuit is often deferred while the criminal case plays out. One reason for this is that a criminal defendant has a constitutional privilege against self-incrimination. If a plaintiff in the civil lawsuit wants to take a deposition of a defendant who is charged in a criminal case at the same time, the defendant likely has the right to avoid answering any of the civil deposition questions, because the answers could be used against him or her in the criminal case.
Due to this reason and to tactical concerns, defrauded oil and gas investors often opt to file their civil lawsuits after the criminal case is finished. This negates the Fifth Amendment issue and, if the defendant is convicted of crimes, the conviction can usually be introduced as evidence in the civil case. Additionally, a criminal conviction sometimes encourages the defendant to settle rather than risk going to trial and incurring even more liability.
If an alleged fraudster is acquitted in criminal court, civil litigation can still be pursued. In criminal court, a person can only be convicted if the state can prove their guilt beyond a reasonable doubt. This is a much higher standard of proof than in a civil lawsuit, which requires only a preponderance of the evidence. That means a civil plaintiff need only prove that the defendant more likely than not committed an unlawful act.
If you believe you have been defrauded in an oil and gas investment scam, find out more about your legal rights at the Law Office of Paul R. Clevenger in Dallas. My firm has more than 30 years of business litigation experience, including extensive experience in oil and gas cases. You can reach me at 469-212-9764 or contact me online.
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