DOJ SealDepartment of Justice

United States Attorney John L. Ratcliffe
Eastern District of Texas

WWW.USDOJ.GOV/USAO/txe                                        PHONE: (409) 839-2538
                                                                                                 CELL: (409) 553-9881



TYLER, TX --            United States Attorney John L. Ratcliffe announced today that a Comfort, Texas couple has been sentenced for their roles in a wire fraud scheme in the Eastern District of Texas. 

            DONALD DOUGLAS, 69, received 46 months in federal prison, while CHERYL DOUGLAS, 69, received 5 years probation today before United States District Judge Michael H. Schneider.  They were also ordered to pay $1,142,178.00 in restitution to their victims. 

            According to information provided in court, Donald Douglas would approach potential investors and represent that he owned oil and gas leases, or interests in oil and gas leases in the Eastern District of Texas and elsewhere.  Douglas would represent to these investors that he had extensive experience in oil and gas exploration and production.  Douglas would represent that these leases were in fields that had previously been in production but production had ceased due to the high costs of extracting oil and gas and the relatively low price of the minerals produced.  Douglas would further represent to the investors that higher oil and gas prices, coupled with new and improved technology for recovering the oil and gas, had now made production on these leases extremely attractive and a potentially profitable investment.  To support these representations, Douglas would provide investors with numerous documents, including deeds for leases, contracts, prospectuses, and financial statements.  Douglas would solicit the investors to invest monies in both the oil and gas leases and the acquisition of oil field equipment with which to produce oil and gas on said leases.  Douglas did not, in fact, own the interests in the leases and equipment as he represented to investors, nor did he use investors' monies to acquire the leases and equipment.  In addition, the documents that he provided to investors included a mixture of legitimate documents where Douglas had forged his name in place of the legitimate owner and other documents that were complete works of fiction.

            Throughout the course of the scheme and artifice to defraud, Douglas convinced investors to invest approximately $1,129,418 in the purported drilling ventures.  Douglas did not use the investors' monies for the represented purposes.  Instead, he diverted and spent the funds for personal expenses of himself and his family members.  Douglas made extensive use of interstate wire communications to defraud investors.  Douglas utilized facsimile transmissions, electronic mail sent via the Internet, wire transfers of monies, and telephone calls both as a means of inducing investors to invest in the purported oil and gas transactions and to "lull" investors when they made inquiries and demands for the returns Douglas had promised on their investments.
            On April 30, 2007, Donald Douglas pled guilty to an Information alleging Wire Fraud.  On the same date, his wife, Cheryl, pled guilty to Misprison of a Felony - that is having knowledge of her husband's fraudulent scheme, affirmatively concealing it, and failing to report it to federal authorities.  According to the information, from 1999 through 2004, Donald Douglas engaged in a scheme to defraud persons of money by means of false and fraudulent misrepresentations.  Douglas operated a business named Caddo Creek Productions, Inc. that was purportedly in the business of oil and gas exploration and development.     

            The case was investigated by the Federal Bureau of Investigation and prosecuted by the late Wes Rivers, Assistant United States Attorney, and Assistant United States Attorneys Arnold Spencer and Jim Noble.


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