Douglas Allen Pierce and Ricky Dean Wolla Plead Guilty in U.S. Federal Cour
The United States Attorney's Office announced that during a federal court session in Billings, on August 17, 2010, before Chief U.S. District Judge Richard F. Cebull, DOUGLAS ALLEN PIERCE, a 47-year-old resident of Sidney, and RICKY DEAN WOLLA, a 49-year-old resident of Minot, North Dakota, pled guilty to mail fraud. Sentencing has been set for November 18, 2010 for PIERCE and December 1, 2010 for WOLLA. They are currently released on special conditions.
In an Offer of Proof filed by Assistant U.S. Attorney Ryan M. Archer, the government stated it would have proved at trial the following:
Basic Energy Services (Basic) is a company that provides a comprehensive range of oil well site services that are fundamental to establishing and maintaining the flow of oil and gas throughout the life of an oil and gas well. The company services over 2,000 oil and gas wells that are managed regionally and located in Texas, New Mexico, Arkansas, Louisiana and the Rocky Mountain west. The company is publicly traded on the New York Stock Exchange (NYSE). Basic has operating yards in Sidney and Williston, North Dakota. Basic's main office is located in Midland, Texas.
WOLLA began working for Basic when it bought out First Energy Services and began operations in Williston, North Dakota. In 2006, WOLLA was promoted to Casper, Wyoming, as Regional Vice President.
PIERCE worked for Basic for years and was the "Area Manager" for Basic's operation in Sidney through 2008.
L.R.S. started working for Basic in August 2004. By 2008, L.R.S. was a supervisor in Sidney. He had previously worked as a relief supervisor in Williston, North Dakota, and Sidney. WOLLA, PIERCE and L.R.S. each had check signing authority in order to purchase goods, services and equipment on behalf of Basic.
From at least August 2005 through December 2, 2008, WOLLA, PIERCE, L.R.S. and others orchestrated an embezzlement scheme to obtain personal goods and services that were billed to Basic as business expenses. During this time period, the defendants unlawfully obtained over $500,000 in goods and services that were illegally billed to the company.
The scheme was essentially a false invoicing fraud that was accomplished in conjunction with local small businesses and suppliers in Williston, North Dakota and Sidney. WOLLA stated that it all began with the local NAPA store in Williston, North Dakota, when he was purchasing a personal "ATV pack" at the store for $125. He and the store owner's son agreed to bill the ATV pack as "hydraulic oil" and bill it to Basic. The business vendor gave WOLLA the false invoice and he (WOLLA) prepared a false internal purchase order and mailed it from Williston to Basic at Midland, Texas. Basic then mailed a payment check from Texas to the Williston NAPA store.
PIERCE stated that WOLLA told him that the false invoicing was fine as long as the business vendors agreed to do it. In addition to the Williston NAPA store, WOLLA, PIERCE and L.R.S. developed contacts at several other local businesses that would prepare false invoices for them. Through this false invoicing scheme, the three Basic employees received snowmobiles, guns, enclosed trailers, ATVs, vehicle grill guards, furnaces, vehicle restorations, tractors, bobcats, tires, diesel fuel, boats, and numerous other items.
Several businesses falsely billed Basic for goods/services used personally by the Basic employees. Companies falsely billing over $20,000 in purchases include: (1) Tri-County Implement in Sidney, approximately $100,000 in 34 false invoices; (2) Dehner's Welding in Sidney, approximately $30,000 in several false invoices; (3) Kalberer's Heating in Sidney, approximately $24,000 in 10 false invoices; (4) Williston NAPA, approximately $28,000 in 30 false invoices; (5) Yellowstone Welding in Sidney, approximately $56,000 in 25 false invoices; and (6) Lee's Tire in Sidney, approximately $80,000 in false invoicing. Other businesses falsely billed Basic for thousands of dollars in goods and services that were never in fact purchased. These include PATH Appliance Store, 4-5 false invoices for two 60 inch plasma screen TV's, two play stations and a shop washing machine (around $10,000 total); and 1st Choice Collision, 4 false invoices for about $17,000 in personal work for WOLLA and PIERCE.
As a result of their role and respective knowledge of the scheme, two business owners have been charged with misprision of a felony. The other business owners have all entered into non-prosecution agreements with the U.S. Attorney's Office and have agreed to pay set amounts for fines and restitution. These include (1) Tami Christensen from Tri-County Implement; (2) Todd Dehner from Dehner's Welding; (3) Rodney Kalberer from Kalberer's Heating; (4) Paul Tjelde from Lee's Tire; (5) Terry Knaff from PATH Appliance; and (6) Jacolyn Washechek from 1st Choice Collision.
While these business vendors knew they were signing off on falsely billed goods, they either: (1) thought the goods would ultimately be used for Basic operations and this was just how PIERCE explained that they needed to be billed; or (2) thought that PIERCE owned Basic and this is just how he wanted things written up. But they have all admitted to preparing false invoices and have identified specific false invoices that were prepared at the defendants' request.
PIERCE admitted that in most instances he instructed the business vendors what to write on their false invoices and how to structure the bills. He then took the invoice, wrote up a false purchase order and sent both to Midland, Texas for payment. Basic then wrote checks to the individual vendors and mailed them back to Sidney and Williston. In many instances, PIERCE instructed vendors to create fairly elaborate false invoices, and the vendors simply agreed to the false representations. For instance, an invoice for repair to WOLLA's 1964 pickup was split into 3 invoices in order to be below PIERCE's signatory authority, and were written up as work on a hot oil truck and a freight liner. Purchases of riding lawn mowers were falsely billed as "repair to frac tank." Some of the invoices even included false labor fees on repairs that never occurred. Lee's Tire falsely invoiced numerous tires to Basic on multiple occasions. Lee's Tire then kept a rolling tab of the value of the falsely billed tires, and when enough of a "tab" accumulated, PIERCE and others would select enclosed trailers for thousands of dollars. Tri-County Implement also ran a similar "tab" by submitting false invoices to Basic and collecting money until Peirce accumulated enough to purchase a $27,000 tractor.
In all, WOLLA obtained at least $165,000 in embezzled goods and services; PIERCE profited by at least $278,000; and L.R.S. obtained at least $44,000.
Basic finally became aware of this scheme in December 2008. Basic began an audit of the activities at Williston NAPA and the owner admitted his role in the scheme. An anonymous tip also spurred a corporate audit that uncovered the fraud. PIERCE, WOLLA and L.R.S. were terminated in December 2008 for stealing from the company.
They each face possible penalties of 20 years in prison, a $250,000 fine and at least 3 years supervised release. .
The investigation was a cooperative effort between Federal Bureau of Investigation and the Criminal Investigation Division of the Internal Revenue Service.
A copy of the Offer of Proof can be obtained by contacting Sally Frank at (406) 247-4638.