arizona man pleads guilyt 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 Globe, Ariz., 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, which was purported to be a profitable company with $284 billion in assets.
Brian Langenbach, 43, of Globe, pleaded guilty before U.S. District Judge Brian C. Wimes to the charge contained in a June 15, 2011, federal indictment.
By pleading guilty today, Langenbach admitted that he participated in a conspiracy to commit securities fraud and wire fraud. Contrary to the fraudulent representations Langenbach and others made to victim-investors, Petro America had no oil, no realistic prospects for obtaining, transporting or storing large amounts of oil, no significant assets, no revenue and no employees other than the CEO.
Langenbach was not licensed to sell securities. He was self-employed as a cattle rancher during this time and he has not filed a federal tax return since 2003.
Langenbach admitted that he sold Petro America stock to at least 180 investors, receiving at least $400,000 in proceeds, from Aug. 20, 2009, to March 2, 2010. Although Langenbach became aware of red flags with the company, including the existence of cease and desist orders in Missouri and Kansas, he continued to sell shares anyway. When he sold shares, he relayed inflated expectations, and he did not disclose material negative information to investors, including the existence of the cease and desist orders.
Langenbach received at least $638,568 into a bank account he opened in the name LFV Management, LLC. From that amount, at least $137,127 was withdrawn in cash, $38,200 was transferred to Langenbach’s personal accounts, $115,117 was transferred to a co-defendant and $43,290 was spent on retail items.
Langenbach personally spoke on behalf of Petro during business dealings, and he personally attended at least one investor meeting and one update meeting in Arizona. Langenbach spoke on behalf of the company in negotiating business deals, and on multiple occasions entered into purported deals on behalf of his own company in partnership with Petro. Langenbach frequently spoke for Petro and sought out deals in order to bring purported assets into Petro so as to inflate the value of the stock.
Langenbach attempted to use Petro shares as collateral to fund gold mine deals. Langenbach tried to purchase interests in gold mines to “put assets on the Petro books.” Any ownership interest in or option to purchase and interest in a mine was secured with Petro shares. Since Petro did not go public, those interests ended in late August to November 2010. Several witnesses said that Langenbach owned gold mines and was working in gold mines but none actually saw any gold mines that he purported to have owned or saw any that were producing anything. Langenbach’s bank records report no income from revenue associated with mining.
Langenbach is the seventh defendant to plead guilty in this case. Charles Hooker, 50, and Teresa Hill, 55, both of Kansas City; the Rev. Edward D. Halliburton, 57, of Kansas City, Kan.; Allen Collins, 55, of Raymore, Mo.; 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, Langenbach 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 is scheduled for Nov. 13, 2012. By pleading guilty today, Langenbach must forfeit at least $400,000 to the government.
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.htmlThis 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.