CORPORATION SENTENCED FOR CONSPIRACY TO
ENGAGE IN FRAUDULENT ACTIVITIES

HUGHES ENERGY, INC., based in Wayne County, Illinois, was sentenced on Monday, May 5, 2009, as a result of its conviction for Conspiracy to Engage in Fraudulent Interstate Transactions and in the Sale of Unregistered Securities. HUGHES ENERGY, INC. was sentenced to five years probation and was ordered to pay restitution totaling $4,261,211.23. The Court appointed a Special Master who is handling the liquidation of the assets of the corporation. All corporate assets will be sold to pay corporate liabilities and restitution and then the corporation will be dissolved.

Two corporate officers were previously sentenced for their participation in a Conspiracy to Engage in Fraudulent Interstate Transactions and in the Sale of Unregistered Securities. The officers were previously sentenced to five years imprisonment, and eighteen months imprisonment each, followed by three years supervised release.

The conviction is the result of HUGHES ENERGY, INC. conduct through corporate officers from approximately July 2003, and continuing until June of 2007, that fraudulently offered and sold oil and gas investments in the form of undivided fractional working interests in well projects to the general public nationwide, which offerings were facilitated by an internet web site and a limited number of sales representatives. Although the defendant represented that the investors’ funds were being used to develop oil properties, the defendant operated a Ponzi scheme, using new investor funds to pay off earlier investors. New investor funds were used to make payoffs to complaining investors and were used to make what was represented to oil investors to be oil production payments.

The successful prosecutions are the result of an investigation conducted by the Postal Inspection Service and the Illinois Securities Department. The case was prosecuted by Norman Smith and Steven Weinhoeft, Assistant United States Attorneys for the Southern District of Illinois.