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Justice News

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

Tuesday, August 20, 2013

Energy Company Employee Charged With Stealing Mineral Rights, Profiting From Fraudulent Lease Or Sale To Others

PITTSBURGH, Pa. - A Jeannette man has been indicted by a federal grand jury in Pittsburgh on charges of mail fraud and wire fraud, United States Attorney David J. Hickton announced today.

The six-count indictment named Derek A. Candelore, aka Dan Kun, aka Kevin Kelly, 33, as the sole defendant.

According to indictment, Candelore was employed by Penn-Star Energy, LLC of Butler County ( Penn-Star), as a landman. Candelore worked at Penn-Star with another landman identified in the indictment as WJR. A landman contacts mineral rights owners on behalf of natural gas production companies to arrange for leases of mineral interests for oil and gas production. Penn-Star acquired mineral rights on behalf of Range Resources Corporation. The mineral rights for four separate blocks of land in Washington County, consisting of 100 or more acres, were stolen by Candelore using forged signatures, fake companies and forged notary signatures and stamps. These frauds began in February 2010 and ended in June 2012. During the scheme Candelore set up several post office boxes and bank accounts in the names of companies he created. He filed deeds and other documents at the Washington County Recorder of Deeds Offices to make it appear that the true mineral rights owners had transferred their mineral rights to Candelore's fake companies. These deeds had forged signatures of several true owners and forged notary signatures and stamps. Candelore's companies thereafter leased and/or sold the mineral rights to others. The indictment seeks the forfeiture of $1,177,735.27 of proceeds from the scheme. Candelore received the proceeds from each of the four blocks of mineral rights, while WJR received proceeds from two of the four. The victims include Range Resources Corporation, several mineral rights owners, Pecos Bend Royalties, LP, of Midland Texas, and Buffalo Royalties business entities in Texas.

The law provides for a maximum total sentence of 120 years in prison, a fine of $1,500,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed will be based upon the seriousness of the offense and the prior criminal history, if any, of the defendant.

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

The U.S. Postal Inspection Service conducted the investigation leading to the indictment in this case.

An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.

Updated July 14, 2015