A former Bowling Green businessmen was indicted by a federal grand jury Wednesday in Louisville on 15 counts of mail fraud, six counts of wire fraud and one count of forfeiture.
David G. Rose, 57, of Louisville, formerly of Bowling Green, is accused of defrauding investors of millions.
The U.S. Attorney’s Office in Louisville also is seeking the forfeiture of $6,631,255 from Rose.
The indictment alleges that Rose defrauded investors in two oil and gas well projects promoted by enTerra Energy LLC by falsely telling investors their money would be applied only toward the development of oil and gas wells. The investments were not to be used as profit or to pay expenses incurred by the company, according to the report.
The investors’ money was used to pay salaries to employees, bonuses, cash withdrawals and for personal expenses benefiting Rose, his relatives and his friends, according to the report.
“(Rose and his companies were) involved for many years in soliciting tens of millions of dollars from investors in its oil and gas partnerships. According to published reports, the top executives lived lavish lifestyles, but the company rarely made money for its investors,” according to a U.S. attorney report.
Rose is also accused of falsely telling investors that his company had entered into joint venture and partnership agreements with other companies, such as Citgo Petroleum, Samson International, Hunt Oil and Texaco, in developing the oil and gas wells, according to the report. No such agreements ever existed.
The fraud is alleged to have occurred between May 1, 2004, and April 1, 2005, according to the indictment. The two oil and gas projects were named the Great Oklahoma Oil Deal and the L-O-T (Louisiana-Oklahoma-Texas) oil and gas well development projects.
The indictment includes 15 specific investor amounts that ranged from $12,500 to $71,000.
If convicted, Rose could face up to 440 years in prison, a fine of up to $5.5 million in addition to the forfeiture and supervised release for up to three years, according to the report.
The FBI investigated the case.
An attorney for Rose is not listed in the court documents. Rose is scheduled to appear for arraignment at 9 a.m. Feb. 19 in U.S. District Court in Louisville.
This is not the first time Rose or one of his companies has been accused of illegal activities. On July 29, 2005, Rose and enTerra agreed to an order of permanent injunction from selling oil and gas securities in Kentucky.
The state had started legal proceedings against the company in 2004 for violating securities laws in Kentucky, according to the agreed injunction order. Another of Rose’s companies, Robo Enterprises, was ordered by the state to stop selling securities in the late 1990s.
Rose in the latest injunction agreed not to be part of any other entity that sold securities in Kentucky.
Several other states have also taken action against Rose and his other companies for reportedly violating securities laws, according to Kentucky court documents. One of those states is Michigan, which issued a cease and desist order against Rose and enTerra Energy LLC in December 2006.
Rose was allegedly using unregistered agents and not making full, truthful disclosures about offers and sales, according to court documents.
Rose’s children have also become involved in the oil and gas business and have had legal troubles. The Kentucky Office of Financial Institutions obtained a temporary restraining order in 2006 against Jupiter Energy based in Tulsa, Okla., and Brian C. Rose and Jason T. Rose, David Rose’s sons, for selling oil and gas securities in Kentucky.
The company and the Rose brothers were banned from doing business in Kentucky unless they disclose their negative legal history in writing to prospective customers, according a release from the state office of financial institutions. The injunction became permanent in August.
Other Bowling Green area oil and gas executives tied to Rose who have been convicted over the last few years include Dean Knight, 41, of Bowling Green, president of Universal Developments International, who was sentenced in June 2006 to 2 1/2 years in prison after pleading guilty to three counts of wire fraud and one count of mail fraud.
Jason Uhles, 32, of Bowling Green, vice president of development of UDI, was sentenced to one year and one day in prison for one count each of mail fraud, wire fraud and money laundering in June 2006.
David Stewart, 35, of Bowling Green was sentenced Sept. 13 to one year in prison for four counts of tax evasion. He pleaded guilty to not reporting $640,000 in taxable income earned at Robo Enterprises and Sunclear Energy, both companies owned by Rose.
Richard Underwood, 53, of Bowling Green was sentenced Sept. 21 to three years, one month in prison for tax evasion. The evasion occurred between 1998 and 2002 when Underwood was a sales manager with Robo Enterprises/Sunclear Energy.
Uhles and Knight also worked for Rose during his operation of Robo Enterprises and Sunclear Energy.
Another executive, Gregory P. Rogers, 59, 1287 Underwood Court, who does not have any known connection to Rose, was sentenced July 19 to one year one day in prison for tax evasion. Rogers owned and operated several oil and gas exploration businesses in the Hart County area including Rogpex Inc., Innervision Communication Inc. and Adam Paul and Co. Inc.
Uhles in an April 2006 interview with the Daily News claimed Bowling Green-based oil and gas companies would raise several times what it would cost to drill a well and then pocketed the difference.
He also claimed that the companies would look for people with criminal records or who only cared about money because they wouldn’t question the companies’ methods.
Uhles also worked for OTR Media and Allied Energy, companies once owned and controlled by Underwood. Part of Uhles’ plea agreement was that he would testify in other cases involving similar schemes to the one he was involved with.
The U.S. Attorney’s Office would not confirm if Uhles will testify in the Rose trial, said Sandy Focken, spokesman for the department. He also declined to comment about the length of the investigation.
Rose is also involved in one federal civil lawsuit involving Robo Enterprises.