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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of Oklahoma

FOR IMMEDIATE RELEASE
Friday, June 21, 2019

Former Sandridge Employee Sentenced to 21 Months in Federal Prison for Fraud and Kickbacks

Also Ordered to Pay $493,707.59 in Restitution to SandRidge

OKLAHOMA CITY – JOEL MATTHEW EILERTS, 40, of San Diego, California, has been sentenced to 21 months in federal prison for defrauding his former employer, SandRidge Energy, Inc., announced Timothy J. Downing, U.S. Attorney for the Western District of Oklahoma.

On October 25, 2017, Eilerts pleaded guilty to a two-count information that charged conspiracy to commit wire fraud and honest services wire fraud.  According to the information, Eilerts worked in SandRidge’s land department from 2009 to 2014.  He held the positions of Senior Landman and Land Supervisor before eventually being promoted to Land Manager, a position that made him the highest-ranking employee in SandRidge’s land department overseeing its Oklahoma operations.  His position at SandRidge gave him access to confidential information regarding areas where SandRidge hoped to obtain oil and gas leases, including information regarding how much SandRidge was willing to pay in lease bonuses and royalties.  He also had authority to hire third-party land brokers to acquire oil and gas leases on behalf of the company.

The information explains Eilerts hired Robert S. Kerr IV of R.S.K. Land and Energy Resources, LLC, and Brian Eischeid of Keystone Land & Minerals, LLC, as third-party brokers to obtain leases on behalf of SandRidge.  Rather than paying Kerr and Eischeid a day rate for their services, Eilerts told them the maximum amount SandRidge would pay for a particular mineral interest, and tasked Kerr and Eischeid with securing the lease for less.  If Kerr and Eischeid were able to secure a lease for less than SandRidge was willing to pay, they were able to keep the difference as profit.  However, Eilerts required Kerr and Eischeid to pay him 1/3 of their profit as a kickback.  In total, Eilerts was paid at least $345,000 in kickbacks as part of this scheme.

In addition, the information explains two instances in which Eilerts directed Kerr and Eischeid to obtain leases—one in Alfalfa County and one in Garfield County—in which the purported lessor turned out not to own the leased minerals.  Nevertheless, SandRidge issued checks to Eischeid’s company, Keystone Land & Minerals, in the amount of $208,000 to fund the lease bonuses to the lessors.  When Eilerts, Kerr, and Eischeid ultimately discovered that the purported lessors did not own title to the leased minerals, they did not return the $208,000 to SandRidge.  Instead, at Eilerts’s direction, and without SandRidge’s authorization, they decided to keep the money and split it among themselves.  Eilerts himself retained $148,000 in this scheme.

On June 20, 2019, U.S. District Judge Robin J. Cauthron sentenced Eilerts to 21 months in prison.  He was also ordered to pay $493,707.59 in restitution to SandRidge.  After release from prison, he will serve two years on supervised release.  During the first year of supervised release, he is required to complete 104 hours of community service.  Eilerts is required to report to the Federal Bureau of Prisons to begin his term of imprisonment by September 3, 2019.

In related cases, Kerr pleaded guilty on November 9, 2017, to a one-count information that charged conspiracy to commit wire fraud.  Kerr will be sentenced on July 22, 2019.  Eischeid pleaded guilty on April 8, 2019, to one count of misprision of a felony.  Eischeid is scheduled to be sentenced on July 9, 2019. 

These cases are the result of an investigation by the FBI Oklahoma City Division.  They were prosecuted by Assistant U.S. Attorneys Jessica L. Perry and Kerry A. Kelly. 

Reference is made to public filings for further information.

Updated June 24, 2019