Texas Oil Executive Indicted On Scheme To Commit Wire And Mail Fraud
SAN JOSE – A federal grand jury in San Jose returned a sixteen count superseding indictment charging a Texas-based oil executive with undertaking a scheme to commit wire and mail fraud, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
According to the indictment, which was unsealed earlier today, Dwayne Kent Singleton, 51, a resident of Texas, is named as the sole defendant in eight counts of mail fraud and eight counts of wire fraud between approximately 2008 and 2009.
According to the superseding indictment, Singleton was one of the founders and senior executives of a business known Santana Energy Services, LLC (“Santana”), which has its administrative offices in Santa Clara, California, and whose primary focus was re-entry drilling of existing oil wells that had been abandoned by larger oil concerns but had potential oil reserves. Singleton resided in Texas and assumed the role of site operations manager for the oil drilling sites. Among his duties, Singleton also submitted Santana's contractor and vendor payment requests via telephone or e-mail to Santana’s offices in California. Relying on these requests, Santana’s executives in California signed the checks drawn on its business account in Santa Clara. The signed vendor checks were then sent via Federal Express to Singleton in Texas.
Beginning in early 2008, according to the superseding indictment, Singleton began requesting payments from Santana for work purportedly performed or equipment/infrastructure furnished by vendors at Santana’s drill sites in Texas. Singleton, either directly or through his assistant in Texas, emailed Santana’s offices in Santa Clara, requesting that payments be made payable to certain entities. Typically, the e-mails were cryptic and appeared to be requesting payments to be made payable to vendors. Based on Santana’s understanding that the payments were being made to third-party vendors for work performed on Santana’s drilling sites, Santana’s employees in Santa Clara would prepare and execute checks drawn on a Santana-controlled business account at a bank in Santa Clara. Santana then transmitted those checks via Federal Express mailings to Singleton’s offices in Texas.
According to the allegations, Singleton did not, in fact, use the checks provided by Santana to pay the third-party vendors that he had identified in e-mails to Santana’s Santa Clara offices. Instead, the checks were made payable to companies that Singleton himself had created and controlled, and the checks were deposited into bank accounts Singleton alone controlled.
According to the superseding indictment, many of these accounts were in the name of shell companies with names similar to – and only slightly different from – genuine contractors and vendors who had actually been retained to perform services for the benefit of Santana. These shell companies had no employees, vouchers, credit or expenses associated with Santana. The money deposited into these accounts was not used for Santana expenses, as Singleton had represented in his e-mails and other communications with Santana. Instead, it was transferred or spent by Singleton for unauthorized, personal matters.
As a result of this scheme, Singleton eventually diverted well over $1,000,000 in corporate funds for purposes unauthorized by and unrelated to Santana, including his mortgage, a private jet, and his hunting ranch in North Texas.
After first appearing in federal court in Texas earlier this month and ordered to travel to San Jose, the defendant made his initial appearance in federal court in San Jose earlier today before the Honorable Howard R. Lloyd, United States Magistrate Court Judge, who unsealed the indictment. Singleton is currently out on bond. His next scheduled appearance is on March 11, 2014, at 1:30 p.m., in San Jose before the Honorable Howard R. Lloyd for review of terms of bond and for status and further setting on April 2, 2014, at 9:30 a.m., before the Honorable Lucy H. Koh, United States District Court Judge in San Jose.
The maximum statutory penalty for each count of the indictment is twenty years imprisonment, a fine of $250,000 or twice the amount of gain or loss, whichever is greater, and restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Timothy J. Lucey is the Assistant United States Attorney who is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Please note, an Indictment contains only allegations against an individual and, as with all defendants, Dwayne Kent Singleton must be presumed innocent unless and until proven guilty.