Former Energy Company Exec Sentenced To Prison For Gas Royalty Fraud

PITTSBURGH - A Beaver County resident has been sentenced in federal court to 30 months incarceration, a $5,000 fine, and a $200 special assessment on his conviction of mail fraud, United States Attorney David J. Hickton announced today.

United States District Judge Davis S. Cercone imposed the sentence on Scott D. Hamilton, aka Art Follage, aka Michael Lewis, 38, of Baden, Pa.

According to the information presented to the court, Hamilton was the Manager for Land Records in the CNX Land Department. One of his responsibilities was to oversee CNX gas and oil lease interests properties that would pay royalties to CNX. CNX owned lease interests in a parcel of land in Christian County, Illinois and lease interests in a land parcel in Fayette County, West Virginia. Using his knowledge of these types of gas and oil lease transfers, and of how CNX functioned internally, Hamilton was able to acquire the royalty payments that should have been paid to CNX for these two parcels. He did this by creating a bogus, shell company named PRH LLC, opening a post office box and a bank account in its name, and filing forged and fabricated assignments that included names of imaginary individuals. The assignments transferred CNX’s rights to the royalties to Hamilton’s shell company. Later in the scheme, Hamilton changed the name of the recipient of the monies from PRH LLC to his wife, Kelly Hamilton. The scheme continued undetected for 30 months until a drilling company that was paying royalties inquired with CNX about contact information for Kelly Hamilton, who appeared of record to be the current owner of the lease interests instead of CNX. After discovery of the fraud, Hamilton attempted to avoid prosecution by offering to re-pay the stolen monies so long as the matter wasn’t reported to authorities. After the matter was investigated and Hamilton pled guilty he did make full restitution of $440,216.35.

Judge Cercone stated that in deciding what sentence to impose he gave Hamilton credit for having repaid all of the stolen money. However, the large sum of money stolen and the need to deter others from similar conduct required a sentence of incarceration, and that a sentence of 30 months was sufficient to reflect the seriousness of the offense, to promote respect for the law and to provide just punishment for the offense.

Assistant United States Attorney Nelson P. Cohen prosecuted this case on behalf of the government.

U.S. Attorney Hickton commended the U.S. Postal Inspection Service for the investigation leading to the successful prosecution of Scott D. Hamilton.