State of Colorado indicts alleged oil and gas fraudster accused of bilking investors out of $1.5 million
DENVER (June 25, 2015) – The Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA), and the Colorado Attorney General’s Office announced today the indictment of Adam Edward Hirschfeld, 32, of Centennial for securities fraud.
Hirschfeld, who has ties to as many as six oil and gas companies, is alleged to have improperly solicited and misused around $1.5 million from 35 investors over an 18-month period. The companies include Ohio Energy Group, LLC, AAG Capital, LLC, Western Natural Resources Operating, LLC, Western Natural Resources Working Interest 1, LLC, Dove Energy Development Company, LP, and Dove Energy Development Corporation, LP.
This indictment is the culmination of an investigation by the Colorado Division of Securities and prosecution by Attorney General Cynthia H. Coffman. “Colorado’s booming oil and gas industry is particularly attractive to would-be scammers,” said Coffman. “Our office has zero tolerance for bad actors that prey upon the goodwill and optimism of Coloradans. Such predators are all too willing to lie about the true use of investment funds when it suits them. I am committed to bringing to justice those who victimize Colorado’s citizens.”
Between January of 2010 and July of 2011, Hirschfeld allegedly solicited funds from a number of investors for oil and gas wells in Ohio. The funds, purchased in units for $11,504 each, were to be used for costs related to the drilling, testing and production of oil. The indictment alleges that Hirschfeld failed to disclose a number of important material facts to investors that may have influenced their decision to purchase units with the company Dove Energy Development, LP. These omissions related to his involvement with a number of additional energy companies that were part of the offering, and the degree of risk involved based on his actual use of the investment money.
Hirschfeld also failed to disclose that he was the subject of an ongoing investigation by the Division of Securities, and subsequently that he was arrested on charges of securities fraud in Douglas County in 2010. He pleaded guilty to these charges, and allegedly went so far as to pay his legal fees and courtordered restitution with investor funds intended for use in the Ohio enterprise.
“Investors should be wary of believing that recent headlines of the current oil and gas boom surrounding fracking are indications of potential high returns in oil and gas drilling programs,” stated Securities Commissioner Gerald Rome. “Unfortunately, scam artists and unscrupulous promoters follow the headlines and are quick to capitalize on the increased interest of investors who are frequently unfamiliar with the high degree of risk typically associated with oil and gas ventures.”
According to the indictment, after his incarceration in June of 2011, those who invested with Hirschfeld discovered that many vendors who provided services for the Ohio drilling operation had not been paid and had filed lawsuits and liens. The property owner had terminated the lease and operations had come to a halt. In order to recoup some of the already substantial losses, shareholders were forced to repurchase equipment from the landowner in an auction to pay off the liens, and then renew the lease in order to reacquire an interest in the oil field.
“I applaud Commissioner Rome and the Division of Securities staff, as well as Attorney General Coffman and her staff for their diligent work on behalf of Coloradans to bring these types of fraudulent actions and injustices to light,” noted DORA Executive Director Joe Neguse.
Please note: An arrest or indictment is not evidence that the defendant committed the crime(s) charged. The defendant is presumed innocent until or unless proven guilty.
Division of Securities