Released by the Eastern District of Texas U.S. Attorney's Office:
MARSHALL, Texas – U.S. Attorney John M. Bales announced today that a 47-year-old Uncertain, Texas man has pleaded guilty for his role in a multi-million dollar oil and gas scheme in the Eastern District of Texas.
RICHARD W. MCFARLAND, Jr., pleaded guilty to mail fraud on Mar. 26, 2010, before U.S. Magistrate Judge Chad Everingham.
According to information presented in court, McFarland was founder and President of Delta Interest, Inc., a company based in Marshall, Texas, which purportedly obtained working interests in oil and gas wells located within Texas and then offered portions of those interests for sale to the public. From 2003 to 2009, McFarland devised a scheme in which he falsely represented to investors that they were purchasing interests held by Delta Interest in wells located on various leases, when in fact, no such wells or leases existed. To further facilitate the scheme, McFarland sent investors fraudulent monthly production statements which contained fictional production and sales figures as well as supposed investor revenue amounts related to the non-existent wells. McFarland used a significant portion of the investor funds to make purported revenue payments on a regular basis to earlier-in-time investors. This funneling of proceeds received from new investors to previous investors induced new investors to participate and, in some instances, existing investors to contribute additional sums. He expended the remainder of investor monies for his own business and personal use. As a result of this scheme, McFarland fraudulently obtained in excess of $30 million from more than 350 investors who were residing in approximately 25 different states.
At sentencing, McFarland faces up to 20 years in federal prison. A sentencing date has not been set.
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