kC woman 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 Kansas City, Mo., woman pleaded guilty in federal court today to her 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.
Teresa Hill, 55, of Kansas City, 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, Hill admitted that she participated in a conspiracy to commit securities fraud and wire fraud. Hill was a team leader who began recruiting investors for Petro America in 2008, although she has never been licensed to sell securities.
Initially, team leaders like Hill would hold their own small meetings with the shareholders they brought in. In September 2008, conspirators began holding weekly meetings for all shareholders. Hill encouraged her shareholders to attend the meetings, where they could buy additional shares. When shareholders gave Hill cash – up to $2,500 in collections – she put the money in an envelope and gave it to a co-conspirator later that night.
Many shareholders were regular churchgoers, and word about Petro spread through Kansas City-area churches. Conspirators used religious language to promote Petro and the Minister’s Alliance was formed to help promote the scheme.
In November 2008, Hill learned that the state of Missouri had issued a cease and desist order that barred the sale of unregistered Petro stock. Hill nevertheless continued to be involved with Petro, despite what the plea agreement describes as several other “red flags.”
When Missouri and Kansas issued cease and desist orders, conspirators devised a plan to obtain money by “gifting” shares to parties not listed in the cease and desist order. They sold their “gifted” Petro stock to investors, including by willfully making material misrepresentations and omissions. Hill did not purchase any shares for herself, but was “gifted” 80 to 90 million shares.
Hill is the fifth defendant to plead guilty in this case. Allen Collins, 55, of Raymore, Mo.; 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, Hill 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.