Feds Link Woodbury Man to $5M Fraud Scheme
Johnny Heurung, a Woodbury resident and business owner, has been linked to a fraud scheme that defrauded investors of Kansas City, Missouri-based Petro America Corporation of $5 million.
According to an affidavit filed Friday in U.S. District Court in Missouri, Heurung helped Petro America CEO Isreal Owen Hawkins and fellow shareholder Teresa Brown funnel shareholder money for personal use.
The 81-page affidavit, which was filed by IRS criminal investigator Devin Fields, said federal agents have discovered that only a small fraction of the $5 million that investors put into the company was actually invested in Petro America.
Instead, the government alleges that Hawkins and his associates withdrew the money in cash and spent it on houses, luxury cars, a $5,700 fur coat, a $37,000 boat, a $5,200 piece of Louis Vuitton luggage, expensive jewelry, and travel.
“Although investors have sunk millions of dollars into Petro, all those funds seem to have resulted in is a richly-compensated CEO, a professional-looking Web site, a virtual office space at a secretarial service, and some unvested interests in scam gold mines,” the affidavit stated.
Fields said in the affidavit that many investors were initially drawn into the scheme with the promise that $100 would buy 100,000 shares of Petro America stock, which Hawkins and his associates claimed was “book valued” at $2 per share.
Hawkins and his associates stated that only 1,000 people would be allowed to purchase shares at this price. As the scheme progressed, Hawkins and his associates raised the price to invest and claimed an ever-higher “book value” for the shares.
The affidavit said that this modified “pump-and-dump” scheme allowed the Petro stock sellers, especially Brown, to unload shares to new investors at an increasing profit. To date, Petro has never registered an offering of its stock with the U.S. Securities and Exchange Commission.
Another part of Heurung's involvement in the scheme was what Fields calls “a classic gold mine scam or a type of dirt pile swindle.” The affidavit said that Hawkins and Heurung, along with other associates, began publicizing obscure Petro America “acquisitions” in gold and rock mines as valuable holdings worth hundreds of billions of dollars. In reality, the affidavit said, Petro's so-called “interests” in the gold and rock mines are essentially worthless.
Heurung told investigators that $130,000 and Petro America stock he received from the company was for work that he did for Petro America. He claims that he has never seen Petro's financials even though he has asked Hawkins for them a dozen times. He said Hawkins told him that he will not provide financial records until they are “put together and are right.”
As of Tuesday, no criminal charges had been filed in the case.