raymore man pleads guilty to $7.2 million
securities fraud conspiracy
scheme targeted thousands of investors nationwide
KANSAS CITY, Mo. – David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that a Raymore, Mo., man pleaded guilty in federal court today to his role in a $7.2 million securities fraud conspiracy that victimized thousands of investors across the United States and Canada who bought shares in Petro America Corporation.
Allen Collins, 55, of Raymore pleaded guilty before U.S. District Judge Ortrie D. Smith to the charge contained in a June 15, 2011, federal indictment.
By pleading guilty today, Collins admitted that he participated in a conspiracy to commit securities fraud and wire fraud that began Sept. 1, 2008. Collins promoted Petro America and sold shares to investors, despite cease and desist orders from both Missouri and Kansas, although he was never licensed to sell securities. From September 2009 through October 2010, Collins made at least $172,774 from the sale of Petro stock to at least 57 investors throughout the United States, in addition to $13,300 that he received from Petro for consulting fees and other payments.
Collins, a retired welder, was a leader of the Minister’s Alliance. The Minister’s Alliance was a group of about 15 ministers (most of whom resided in the Kansas City area) who supported and promoted Petro America. Members of the Ministers Alliance sold Petro shares to their congregants and others. The Ministers Alliance frequently held meetings, including a weekly meeting at a Denny=s restaurant, and participated in regular Thursday night conference calls with hundreds of investors in dozens of states.
Both Missouri and Kansas issued cease and desist orders that barred the sale of unregistered Petro stock. Collins and others devised a plan to obtain money by “gifting” shares to parties not listed in the cease and desist order, and selling the unregistered Petro stock to investors, including by willfully making material misrepresentations and omissions. Collins represented that he was selling his own shares, when in reality most of the shares had been gifted to him for that purpose as an attempt to work around the cease and desist orders.
When he sold the stock, Collins never stated that the shares had been “gifted” to him for free. He did not mention any of the risks of buying Petro. He did not mention the cease and desist orders or that the stock was not registered with authorities or if he was taking a commission. Collins never disclosed that he was not a registered broker-dealer, or that he had no license to sell securities. Collins did not mention that he would send kick-backs to a co-conspirator.
Frequently, Collins would pass along information about Petro that he got from a co-conspirator, including that Petro had oil assets and added 30 to 40 gold mines. He would claim that Petro bought and sold oil, and that it had a packaging plant. While much of the time Collins simply repeated information to investors that he had heard from others, he knew that it was incomplete and potentially misleading.
Collins is the fourth defendant to plead guilty in this case. The Rev. Edward D. Halliburton, 57, of Kansas City, Kan., president of the Minister’s Alliance; Joseph Harrell, 50, of Waco, Texas, who acted as the CFO of Petro America; and Russell Hopkins, 48, of Tuscaloosa, Ala., have also pleaded guilty to participating in the conspiracy.
Under federal statutes, Collins is subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
Web Site Support For Fraud Victims
Two Web sites have been established to collect information from the victims of the alleged securities fraud scheme and to provide updated information about the status of the case. Investors of Petro America are encouraged to provide information via an online form at www.postalinspectorsurvey.com/PetroAmerica. Due to the volume of expected responses, this process has been automated and placed online; all communication from potential victims regarding the case should be made via this Web site. Updates about the status of the case will be posted at www.justice.gov/usao/mow/divisions/petro.html
This case is being prosecuted by Assistant U.S. Attorneys Daniel M. Nelson and Kathleen D. Mahoney. It was investigated by IRS-Criminal Investigation, the U.S. Postal Inspection Service and the Office of the Missouri Securities Commissioner.
United States Attorney for the Western District of Missouri is pleased to bring you
The Briefing Room
The Briefing Room highlights the work of U.S. Attorneys' offices across the country.
Priority In Focus: