DECLARATION IN SUPPORT OF COMPLAINT
I, Devin Fields, state as follows under penalty of perjury pursuant to 28 U.S.C. § 1746:
1. I have been a Special Agent with the United States Department of the Treasury
since June 2005. I am assigned to the IRS-CI, St. Louis Field Office, and my post of duty is
Kansas City, Missouri. I investigate criminal violations of the Internal Revenue Code (Title 26,
United States Code), the Money Laundering Control Act (Title 18), the Bank Secrecy Act (Title
31), and related offenses. I completed training at the National Criminal Investigation Training
Academy at the Federal Law Enforcement Training Center in Glynco, Georgia. I completed the
eleven-week Criminal Investigator Training Program and the sixteen week Special Agent Basic
Training Program conducted by IRS’s National Criminal Investigation Training Academy. I
have received extensive training in conducting financial investigations that involve analyzing
financial and business records of individuals and businesses, including emails, electronic records,
journals, ledgers, bank accounts, invoices, receipts, and other records evidencing violations of
Summary and Overview
2. Isreal Owen Hawkins is the president and CEO of Petro America Corporation,
which he started in 2007. The U.S. Attorney in Western Missouri is investigating Hawkins, his
associates, and Petro America for securities fraud. Petro America states it has around 9000
shareholders and 12 billion outstanding shares. But the offering by which the 12 billion shares
were distributed was not registered as is required by federal statute. For the last 8 months, Petro
has told investors that its holdings are worth $284 billion.1 Since 2008, investors have pumped
If this valuation were accurate, Petro America would be the second largest company in the
United States by market capitalization, larger than Wal-Mart ($194.5b), Apple ($256.2b) or
Microsoft ($220.3b). America’s largest company is Exxon Mobil, which has a market
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 1 of 81
over $5 million into the company. But federal agents have discovered that only a small fraction
was actually invested in Petro America. Instead, Hawkins and his associates withdrew the
money in cash and spent it on houses, luxury cars, a $5700 fur coat, a $37,000 boat, a $5200
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 website, a virtual office space at a secretarial service, and some
unvested interests in scam gold mines. To date, Petro has no significant revenue and no realistic
plan for obtaining revenue. Its accounting records are woefully incomplete and its chances for
ever trading publicly are non-existent. But Petro’s officers and other associates continue to
conduct an unregistered distribution of stock to investors.
3. Title 15 U.S.C. §§ 77e(a) and 77e(c) prohibit the offer or sale of a security
through the use of an interstate means unless the transaction is registered or is exempt from
registration. Title 15 U.S.C. § 78(j) explicitly imports the SEC’s regulations into the criminal
statutes including Rule 10b-5, which provides in part: It shall be unlawful for any person,
directly or indirectly, by the use of any means or instrumentality of interstate commerce … (a) to
employ any device, scheme or artifice to defraud; (b) to make any untrue statement of a material
fact or to omit to state a material fact necessary in order to make the statements made, in the light
of the circumstances under which they were made, not misleading; or (c) to engage in any act,
practice, or course of business which operates or would operate as a fraud or deceit upon any
person, in connection with the purchase or sale of any security.
4. The sale of Petro America stock is part affinity scam, part get-rich-quick scheme.
Billing Petro America as “The People’s Company,” Hawkins, Teresa Brown, Johnny Heurung,
capitalization of $312.28 billion.
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Martin Roper, George Verhulst, Larry Contier, Regina Kelly, Brian Langenbach and others
recruit investors through word of mouth, mass e-mails, misleading press releases, a website, and
weekly investor conference calls. 2 Investors are frequently told that they will be rich when the
company “goes public.” Hawkins encourages investors to attend company-sponsored wealth
planning seminars in anticipation of their imminent riches. Going public, Hawkins and his
associates have said for over two years, is just weeks away. In reality, the company has no
significant assets or revenue stream (other than investor proceeds).
5. Initially, many investors were 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 $2.00 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.
This modified “pump and dump” scheme allowed the Petro stock sellers, especially Teresa
Brown, to unload shares to new investors at an increasing profit. To date, Petro has never
registered an offering of its stock with the SEC. Owen Hawkins, Teresa Brown, Johnny
Heurung, Larry Contier, George Verhulst, Gina Kelly, and Brian Langenbach have all, directly
or indirectly, offered and sold Petro securities when no registration statement was in effect.
6. Petro America began selling stock around August 2008. In the first four months,
Petro raised about $1 million through its unregistered and non-exempt public common stock
offering. On October 8, 2008, Hawkins filed a Form D with the SEC, claiming that Petro
Hawkins told the SEC that the shareholders began holding weekly Thursday conference calls in
July 2009. Shareholders call into a number and Hawkins gives updates about Petro America. As
of October 2010, the calls are still occurring. Most recently, according to investors who listened
to conference calls in the last two weeks, he has stated that he would like to see Petro’s stock
trading before Thanksgiving.
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America intended to raise $1 million from the sale of equity in $100 increments, purportedly
under the Rule 504(b)(1)(ii) offering exemption. This rule exempts transactions from
registration if the securities have been registered in at least one state that provides for
registration. It also requires the delivery of a disclosure document to all purchasers. Petro
America did not prepare or register any disclosure document, and therefore could not have
given it to purchasers prior to sale. Further, Petro America engaged in a general solicitation –
through its website and presentations to church congregations – which precludes the Rule
7. As the scheme progressed, more money flooded in each month, up to $400,000 to
nearly $700,000 per month at the height of the scheme in fall 2009 and early 2010. 3 Most of it
was not reinvested in the company. Instead, Hawkins and his associates withdrew cash,
laundered money, and bought houses, cars, boats, vacations and luxury goods.
8. Hawkins and his associates use aggressive public relations to promote Petro
America and to distract people from the fact that Petro has no revenue. In August 2009,
Hawkins told the SEC “You know, we are the first African American oil company to ever go
public in the United States.” On investor calls, Hawkins has blamed Petro’s woes on racist
government agencies that he claims do not wish for minority-owned businesses to succeed. As
detailed below, Hawkins has used the prospect of job creation to create positive public will for
Petro. Investigators have found no basis in fact that Petro has created more than one or two jobs
(Hawkins admitted to federal investigators in June 2010 that he remains Petro’s only full time
employee). According to an investor who listened, in March 2010 Hawkins has recently
referenced a “march on Washington” he plans for Petro to hold in November 2010.
As described below, in Fall 2009, Teresa Brown and her associates, including Larry Contier,
began selling her “Windsong” shares.
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Owen Hawkins and the Origins of Petro America
9. Hawkins presents himself as a local Kansas City businessman. 4 He is 55 years
old. He claims 30 years of experience helping launch small businesses, although when pressed
for specific businesses he helped, he is evasive. He says he is the former president of the
Kansas City, Kansas Black Chamber of Commerce. He claims that he also formed the U.S.
Black Chamber of Commerce and that he has been invited to the White House where he met
with the President’s staff. Hawkins earned a degree in business administration from St. Mary’s
college in Leavenworth, Kansas, which included accounting and finance courses.
10. Prior to 2007, Hawkins claims he “really didn’t have an income. I was – I don’t
know if it was a vow to poverty, or what you would want to call it. But I was assisting small
businesses and trying to develop relationships and looking forward to starting my own.” Prior
to starting Petro America, Hawkins lived in subsidized housing. He admits that he has not filed
personal income tax returns since 1995 or 1996. He claims he does not have a personal bank
11. Before Petro America, Hawkins was involved with an internet radio program
called “The Owen Hawkins Show,” at www.owenhawkins.com. He was also connected with
Hawkins Maintenance Company, or HMC, a janitorial services company run by his late brother
and his sister. HMC was and is located at 1333 Meadowlark Lane, Suite 203, Kansas City,
Kansas. It was established in 1993 and its phone number is .
On June 18, 2010, Hawkins participated in a voluntary, non-custodial interview with federal
investigators at the U.S. Attorney’s Office. The information in this section is taken from a
transcript of that interview, and from transcripts of Hawkins’ previous interviews with the
Missouri Securities Commissioner (April 2009) and with the SEC (August 2009).
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12. Hawkins says he first had the idea to form Petro America in 2006. He registered
Petro as a corporation with the Kansas Secretary of State in April 2007. 5 To start the business,
Hawkins explains that he first pursued a couple of contracts to purchase crude oil from the
Middle East and from Africa, but they fell through. He was unable to secure capital funding
from banks, which he says do not give enough loans to minority-owned businesses. In 2008,
Hawkins decided to hold a “private offering,” and he began selling shares of unregistered stock
to investors. Hawkins explains that at first, he personally typed up stock certificates for the
shareholders. Later, he says he employed Minuteman Printers to make stock certificates. 6
Hawkins admits that as the sole officer of Petro, he approved the sale of the shares. He admits
he did not obtain an offering exemption, he did not complete a private placement memorandum,
and he did not send a private placement memorandum to investors. At the time, Petro America
had no oil, no realistic prospects for obtaining, transporting or storing large amounts of oil, no
other significant assets, no revenue, and no other employees.
13. Nonetheless, Hawkins and others he recruited touted excellent prospects for
Petro’s rapid growth in the oil industry. Hawkins explains that in the summer of 2008, word of
the opportunity to invest in his new oil company spread around Kansas City, and then across the
country. Within a span of a few weeks, Hawkins says the sale of shares “exploded,” causing
“growth” that was “even faster than Microsoft.” In the first three weeks of the offering, in the
late summer of 2008, Hawkins estimates that Petro received checks from investors totaling
The address Hawkins listed for Petro is 1333 Meadowlark Lane, Suite 203, Kansas City,
Kansas, which is the same address as HMC. He has continued to claim this office space as
“Petro’s Kansas offices.”
Despite repeated requests, many stockholders say they still have not received stock certificates.
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more than $500,000 but less than $1.5 million. He states that Petro initially sold five or six
million shares, most of them at $100 for 100,000 shares. 7
14. Hawkins stated that during the “explosive” three week period, family and friends
of Petro held meetings to discuss the stock. Hawkins said that neither he nor the Petro board
members attended or participated in any of these meetings, but he heard about them later. “The
thing I know mostly that we knew was people liked the fact that they could get the stock at a
tenth of a penny, and they felt that there was a lot of upside.”
15. On November 12, 2008, The Missouri Securities Division issued a cease-and-
desist order finding that Petro America shares were unregistered securities and that Hawkins,
Martin Roper, and Petro America committed multiple violations by omitting material facts in
connection with the sale of a security. 8 Hawkins and Petro America are prohibited from
offering the unregistered securities in Missouri. The way Petro has attempted to get around this
order is by saying that shareholders – who they claim are not formally connected to Petro
America, as they point out frequently in emails – sell the shares, not the company itself.
16. On December 3, 2008, the Missouri Securities Division spoke to Hawkins
regarding the cease and desist order issued against Petro, Hawkins and Roper. During the
interview, Hawkins claimed that Petro had barrels of oil stored in Hallmark Cards’ facilities.
Hallmark’s General Counsel issued a letter dated January 9, 2009 to the Missouri Securities
The SEC asked Hawkins “how was this .001 offering price determined?” He responded, “It
was determined because I believed that if I allowed people to get a large enough block of shares
and if they came in at a tenth of a penny, after you had 100,000 shares or whatever, that I
believed that we could trade at above a penny and they would get a nice return where they would
On February 18, 2010, the Office of the Kansas Securities Commissioner determined that
Hawkins and Petro America had offered unregistered securities for sale in Kansas. In April
2010, Hawkins entered into an agreement with the Kansas Securities Commissioner that neither
he nor Petro America will sell securities in Kansas.
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Division stating that “Hallmark is not leasing any facilities to Messrs. Hawkins or Roper or
Petro America Corporation.”
17. On October 9, 2008, Tommy Chen, an investigator with the Missouri Securities
Division, listened to a Petro America weekly investor conference call. The call was hosted by a
woman named Teresa Hill. She said Petro America “is a blessing that has been given to us,”
and “we want to be able to share this with you and to share the blessing.” She explained that
Owen Hawkins was the president and the owner of Petro America and he was on the call too.
Hawkins stated that “God has really opened up a lot of opportunities for this business.”
Hawkins claimed that the stock has a book value of $2.00 per share. He stated that his goals
are to receive the Nobel Peace Prize for doing good work, and “to create as many billionaires in
this as I, as I possibly can, shareholders, people that have taken the risk and chance with us they
deserve the rewards.” He also stated that “we want to bless others and change others’ lives.”
18. From 2008 forward, Petro America also has claimed to investors that it conducted
“reverse mergers” with two companies that had, at some point, been traded: World Transport
Authority (WTAI) and American Southwest Music Distribution, Inc. (ASWD). A reverse
merger occurs when a private company acquires and combines with a public company to bypass
the lengthy and complex process of going public. The transaction typically requires
reorganization of capitalization of the acquiring company. The purpose of Petro America’s two
attempted (but not concluded) reverse mergers was to make it appear that Petro America had
value. In truth, the companies Petro announced it had acquired possessed marginal or negative
worth. In announcing most “acquisitions,” Hawkins and his associates misrepresented facts
orally and in written releases to investors, such as over-hyping the value of the acquisitions
(especially Petro’s mining interests) and what Petro’s true interest was, including whether that
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interest was even vested. Other times, they failed to disclose material facts to investors such as
deal terms limiting the sharing of revenue between Petro and the entities (including
Performance Packaging and multiple mine acquisitions).
19. To confuse investors, Hawkins, Brown and others attempted to blur the lines
between the acquired entities, none of which are related to Petro America. For example,
Hawkins changed ASWD’s name to “Petro America Delaware,” because ASWD had previously
traded on the Pink Sheets under the symbol ASWD. Hawkins then changed the ASWD symbol
to PTRZ on June 12, 2009. Petro America’s website might easily lead a reader to conclude that
Petro Delaware is a true successor to Petro America. In fact, while Hawkins is the largest
shareholder of Petro Delaware, (due to $22,500 worth of shares Hawkins purchased in his own
name with Petro investor funds) Petro America is not a holder of record of any Petro Delaware
shares. 9 Moreover, there was no exchange of shares that would make the shareholders in Petro
America holders of publicly-traded stock.
20. Michelle Smith is Owen Hawkins’ sister. She works for Hawkins Maintenance
Company, or HMC, out of office space that HMC shares with Petro America. On October 24,
2008, Petro announced on its website (in the “Resent Press Releases” section [sic]) that it has
entered into a negotiation to acquire a construction company, HMC Enterprises, for its
“exploration division.” Hawkins was asked about this press release during his deposition with
the Missouri Securities Commissioner on April 7, 2009: “And who are you negotiating with
individually [to acquire HMC Enterprises]?” Hawkins replied, “Michelle Smith.” Hawkins
did not disclose his relationship with Smith in the press release.
21. In March 2009, The United States Securities and Exchange Commission (SEC)
Hawkins admits that this $22,500 was in addition to the $140,000 Petro purportedly paid to
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began investigating Petro America for violations of the registration, anti-fraud, and broker-
dealer provisions of the Securities Exchange Act.
22. Hawkins and his associates cultivate loyalty, gain credibility, and buy time from
their shareholders through a variety of calculated means. For example, Hawkins and his
associates use religious language and make frequent references to the “Petro America Family.”
Hawkins and his associates often recruit through churches and use religious language in their
pitches, including promoting Petro America as a once-in-a-lifetime opportunity to “share the
23. Hawkins explains that “from day one,” Petro’s policy is that any shareholder who
asks can receive their money back. As of August 5, 2009, Hawkins told the SEC that no
shareholders had ever asked for their money back. By June 2010, Hawkins estimated that
approximately 12 billion shares had been sold and gifted, and he was aware of only one
shareholder, Aaron LNU, who had requested his money back.
Purchases by Hawkins
24. During Hawkins’ June 2010 interview at the U.S. Attorney’s Office, he admitted
that he used investor money from Petro’s accounts to purchase a Chrysler 300, a Hummer H3,
and a 2004 Mercedes S430. Hawkins claimed in the same interview that Petro has been his
only source of income since 1995.
25. On January 30, 2010, Hawkins purchased a Natural Cat Lynx Coat with Fox Trim
from Alaskan Fur Company for $5,700.
26. On March 4, 2010, Hawkins purchased a 2004 Mercedes S430 from Car Gallery,
Inc. Hawkins paid $17,995 for the car, putting down $9,000 in cash, which was in a Mazuma
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 10 of 81
Credit Union envelope. 10 Hawkins paid off the car on May 25, 2010 with an $8,644 check.
Hawkins asked the dealership to put the car under the name American Legacy Trust at 4741
Central #267, Kansas City, Missouri (which is a UPS Store mailbox).
27. On March 29, 2010, Hawkins wrote a check from the Petro Mazuma Credit Union
account to State Line Nissan to purchase a 2006 Chrysler 300C for $19,952.45. The vehicle
invoice is signed by Isreal Owen Hawkins. Hawkins stated during the purchase that he wanted
the “car titled to his trust.” He requested that the sales document list American Transportation
Services as the buyer, at 4147 Central, Suite 267, Kansas City, Missouri (the UPS Store address
is actually 4741 Central; it appears the number is transposed on the invoice).
28. In October 2009, Hawkins attempted to purchase a house by a lake located at
3405 N. 128th Terrace, Kansas City, Kansas for over $300,000. Federal agents interviewed the
real estate agents who represented the seller and the buyer. They said Hawkins initially wanted
to purchase the house with cash using Petro Realty Corp. funds. 11 Hawkins said he was the
CEO of the company and the house was a corporate purchase. He also provided the realtor with
a stock certificate from American Southwest Music Distribution (ASWD) that showed Hawkins
owned 16,907,432 shares of ASWD stock, stating that he was going to sell some of the ASWD
stock to purchase the house.
29. Hawkins’ realtor said that Hawkins did not qualify to purchase the house on his
own credit, so he settled on doing a purchase agreement for pre-occupancy with a contract to
purchase the house by December 2009. The contract required him to pay a monthly pre-
occupancy fee. The buyer and seller signed a second contract when the December 2009
An employee of Car Gallery recalled that Hawkins drove to the dealership in a black Mercedes
S430 on the date he purchased the 2004 Mercedes, which suggests Hawkins may own two
Hawkins describes Petro Realty as one of Petro’s many “divisions.”
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deadline passed. The second contract also expired. Despite this, Hawkins continues to make
$3,025 monthly house payments. From October 2009 through October 2010, these payments
totaled $42,815. The payments were made by cashier’s checks and money orders. The
commercial lender told agents that Hawkins has never provided the financial statements.
Hawkins’ and Parker’s Cash Withdrawals
30. From September 2008 through April 10, 2010, Hawkins received at least
$1,980,425.95 from Petro investors into accounts he controlled. Bank records gathered by the
affiant reveal that money coming into the Petro America accounts was derived entirely or
almost entirely from investors. Investors sent some money directly to Hawkins, and other
money came from Hawkins’ associates, including Teresa Brown. For example, from September
3, 2008 through January 26, 2009, Hawkins does not dispute that Petro raised at least
$1,102,516 through selling at least 1.2 billion shares. He admits that during the same five-
month period, he personally withdrew at least $465,000 in cash from Petro’s accounts. When
asked, he explained that some of this cash went towards “IT expenses,” but he was unable to
identify other Petro expenses this investor money might have paid. He admitted that some of
the cash withdrawals went to him pursuant to his employment contract, although he says that
Petro did not issue a W-2 for him in 2008.
31. During an interview in September 2010, Johnny Heurung told agents he has
witnessed Brown giving Hawkins envelopes full of cash. Heurung did not know why this was
happening. Heurung volunteered that he always wired his funds to Brown so there would be a
32. In June 2010, Owen Hawkins admitted that he remains Petro’s only full-time
employee. He pays himself a yearly salary of $595,000, ostensibly pursuant to an “Executive
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Employment Agreement” dated July 24, 2007. The contract also purportedly grants Hawkins a
guaranteed bonus of $175,000; 500 million shares that are immediately exercisable; “all
expenses necessarily and reasonably incurred;” a company car; a company apartment in
Missouri (even though he lives close by in Kansas City, Kansas); and a “Gold Management
Dining Card,” which he is also allowed to retain and use for meal expenses for the five years
following his termination. Hawkins explained to investigators that this contract was approved
by Petro’s Board. But it has not been disclosed to investors. He said this compensation
package was reasonable given “the price of oil at that time” and the fact that Petro was trying to
enter into some oil contracts. Hawkins was asked in June 2010 how many shareholders know
how much he is paid. Terry Seals and Charles Hooker were the only people he named.
Hawkins says they were on Petro’s board in 2007 and he claims they approved the contract.
Hooker is listed as a co-signer on the contract. But Hawkins claims he is not hiding his salary;
he says that he would be willing to share this information with other shareholders if they asked.
In addition to his employment contract, Hawkins also possesses a purported “loan agreement,”
whereby, he explains, the company can make personal loans to Hawkins.
33. Hawkins draws his salary in cash, in random amounts at inconsistent times, “from
operations,” although he explains that he has never drawn the full amount of salary authorized.
He states that the company does not withhold taxes or issue paychecks, but instead has operated
“on a cash basis” since October 2008 when he claims Petro’s bank accounts were frozen by the
bank for 10 days. 12 He explains that Petro America was “under so much attack from the state of
Hawkins opened the initial Petro account at U.S. Bank on 3/18/08 with a $100 deposit. He
only made two more deposits from 3/19/08 to 6/20/08, at which time Hawkins overdrew the
account. The account was continuously overdrawn by Hawkins from 6/20/08 to 8/5/08 and was
closed by U.S. Bank on 8/5/08 for apparent overdraft activity. Hawkins paid off the balance
owed and reopened the account with the $55,000.00 deposit on 9/30/08 consisting of Petro stock
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Missouri, and I felt it was a lot of racism because Missouri was the last state in the union to free
the slaves.” Despite operating on a cash basis, Hawkins claims that he is “quite sure” he can
track every dollar of shareholder money raised since 2007.
34. Petro America had a bank account at Mazuma Credit Union. Tellers describe
Hawkins and Petro secretary Marcia Parker coming into the bank multiple times per week.
Sometimes they made big deposits of multiple checks. On most visits, they withdrew $7500 to
$9800, often on consecutive days. The cash was given in $100 bills, and Hawkins put the cash
into his jacket pocket. Sometimes Hawkins was accompanied by other parties to whom he
handed cash after withdrawing it. In this manner, Hawkins and Parker have obtained at least
$542,315 in cash from Mazuma’s Petro America account from July 2, 2009 to May 12, 2010.
In June 2010, Hawkins explained to investigators that these frequent cash withdrawals were
made to “pay bills and pay people,” including Petro’s light bill, which he said he pays
personally in cash.
35. Tellers have gotten to know Hawkins from his frequent visits. They describe him
as “generous.” One day around Christmas 2009, tellers recall Hawkins, standing in Mazuma’s
lobby, handing out $100 and $200 checks written on Petro’s account to random customers.
36. Title 31, United States Code, Section 5313, and 31 C. F. R. Part 103 of the Bank
Secrecy Act (BSA), require any financial institution that engages with a customer in a currency
transaction (i.e., a deposit or withdrawal) in excess of $10,000 to report the transaction to the
FinCEN, using FinCEN Form 104, Currency Transaction Report (“CTR”). These regulations
also require that multiple transactions be treated as a single transaction if the financial
institution has knowledge that they are conducted by, or on behalf of, the same person, and they
purchase checks. Hawkins closed the account on 11/26/08.
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result in either currency received or disbursed by the financial institution totaling more than
$10,000 during any one business day. CTRs are often used by law enforcement to uncover a
wide variety of illegal activities including narcotics trafficking and money laundering. Many
individuals involved in these illegal activities are aware of such reporting requirements and take
active steps to cause financial institutions to fail to file CTRs. These active steps are often
referred to as “smurfing” or “structuring” and involve making multiple cash deposits, in
amounts less than $10,000.01, to multiple banks and/or branches of the same bank on the same
day or consecutive days or within a few days of each other. Structuring is prohibited by Title
31, United States Code, Section 5324(a)(1) and (3). Structuring is in and of itself is a five-year
felony offense pursuant to 18 United States Code Section 5324(d)(1), and does not require proof
of any other offense (as, for example, money laundering requires proof of a specified unlawful
37. Title 31, United States Code, Section 5324(a)(1) prohibits a person from causing
or attempting to cause a financial institution to fail to file a report required by section 5313(a) or
5325. This offense is closely related to structuring, with the same criminal punishment and
asset forfeiture ramifications. Whether an offense arises under section 5324(a)(1) or (a)(3) turns
upon whether a financial institution had a duty to file a CTR or other report. Generally, a
financial institution has a legal duty to aggregate cash transactions made by or on behalf of a
single customer in a business day. Consequently, smurfing in cash deposits at the same
institution on a single business day will give rise to an (a)(1) violation. Structuring cash
deposits into multiple financial institutions on a single business day or into one or more
financial institutions on different business days will give rise to an (a)(3) violation.
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38. Hawkins and Parker frequently committed the offense of “structuring,” in
violation of 31 U.S.C. § 5324, by making multiple cash withdrawals in amounts less than
$10,000.01 to avoid generating Currency Transaction Reports (CTRs). One Mazuma teller
recalled clearly the first time she dealt with Hawkins. On December 18, 2009, Hawkins
approached her with a large check written to cash, drawn on “Petro America Financial
Services.” The teller stated Hawkins became confrontational when he was told she had to file a
CTR. He told the teller that it was his money, and he could take it all out of the bank, and it was
nobody’s business. She explained to Hawkins that bank policy required her to file a CTR for
large cash withdrawals. She called her supervisor to help handle the situation. She recalls that
Hawkins lowered the amount of his withdrawal, and then returned a few days later to withdraw
39. On March 5, 2010, Hawkins attempted to withdraw $9,800 cash from the Petro
account. The Mazuma teller asked Hawkins what his job title was. Hawkins questioned why
that information was needed. The teller notified Hawkins that the $9,800 transaction put the
Petro account over $10,000 in currency withdrawals for the day. This was because cash of
more than $1,000 had already been withdrawn on the account earlier in the day by Marcia
Parker. The teller explained to Hawkins that when you exceed $10,000 currency in one day, the
bank is required to file a CTR. Hawkins told the teller he did not want a CTR filed, so he
changed the withdrawal amount to $8,500 by writing another check in front of the teller. The
teller voided the $9,800 transaction and no CTR was filed.
40. On April 2, 2010, a Mazuma teller filed a CTR on Hawkins after he wrote a Petro
check for $8,500 to obtain cash. The teller notified Hawkins that, by law, any currency taken in
one day over $10,000 required her to file a CTR. Hawkins asked why a CTR was filed on this
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transaction. The teller told Hawkins that Marcia Parker had withdrawn $8,000 cash from the
Petro account earlier in the day. Hawkins was surprised by this news and said “oh, she did?”
The teller stated Hawkins was not happy a CTR was being filed, but he did not change the
amount of the withdrawal. Later, the teller told law enforcement this instance was unusual
because Hawkins and Parker usually tried to keep the withdrawals under $10,000. Usually only
Hawkins or Parker would make a withdrawal on a single day.
41. In addition to Mazuma, Hawkins also structured currency withdrawals out of
Petro accounts at U.S. Bank and Bank of America. On several dates, Hawkins tried to make
currency withdrawals from Bank of America exceeding $10,000. When notified by the teller
that a CTR would be generated, Hawkins changed the withdrawal amount to avoid the CTR.
42. Months later, in June 2010, a federal agent asked Hawkins “Do you know what
the reporting requirements are that the bank has when you make cash withdrawals? Do you
know what the limit is on that?” Hawkins responded, “No, what is it?” The agent asked, “You
have never heard of it? Have you ever had a currency transaction report?” Hawkins responded,
“No.” When the agent explained what CTRs are, Hawkins said “well, you know, I wasn’t
worried about that, because, you know, the SEC had got our bank records; everybody was in
our bank records, so it was nothing to hide.”
43. A Bank of America branch manager recalled noting on one occasion that Hawkins
was acting suspicious in the bank and appeared to be trying to “fly under the radar.” He
initiated a conversation with Hawkins regarding the amounts of his withdrawals, and he asked
Hawkins what was going on. Hawkins responded by asking why an African-American (bank
manager) was giving another African-American (Hawkins) a hard time with his bank accounts.
The bank manager advised Hawkins that bank policy had nothing to do with race.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 17 of 81
44. A Bank of America teller recalls that Hawkins once asked if Hawkins could send
wire transfers without listing his name. Hawkins said he only wanted “Petro” listed as the
sender. The bank teller said no. Hawkins explained that the money wires were to pay people
for selling Petro stock. Hawkins decided to alternate his first name, sometimes listing “Owen,”
and on other wires listing “Isreal” as his first name.
Petro’s “Gifting Program”
45. In addition to selling shares, Hawkins explains that Petro had a longstanding
policy of “gifting” shares to anyone who asks. 13 He claims this policy was widely known and
was supported by the shareholders. Information explaining this gifting program, he says, “was
distributed out through our shareholder base; that information was out there to all our
shareholders.” Hawkins was not able to explain why some shareholders would choose to pay
money for stock when corporate policy is that they could have received shares for free if they
asked. For example, Hawkins admits that he gifted Martin Roper 50 million shares because “he
is trying to bless a lot of people, so we give shares out.” When asked how Petro decides who
should receive shares, and how many shares to award, Hawkins replied, “It is just
discretionary.” Hawkins explained that gifting billions of shares to certain shareholders he
selected did not dilute the value of the purchased shares because Petro “gifted equitably … to
make sure people didn’t do that.” As of June 2010, he explained that the gifting program is still
available, but it has been modified, and now a requesting party must show Hawkins a
“humanitarian need” in order to receive gifted shares.
In August 2009, Hawkins explained PAC’s gifting policy to the SEC: “No, we have an open
policy. We gift shares to anyone that asks. If someone asks for gifted shares, we give it to
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 18 of 81
46. In addition to gifting shares of stock, Hawkins admits that he has distributed at
least $303,200 of investor money to at least thirty-six friends and shareholders of his choosing.
He describes some of the distributions as payments to persons who brought “opportunities” to
Petro America. Others he describes as humanitarian payments to stockholders in need to help
them pay their mortgages or for other charitable reasons. Hawkins admits that he decides who
is worthy of receiving such payments and he simply makes the payments without further
47. In addition to the charitable cash payments to certain shareholders, Hawkins also
made cash payments totaling $217,859 to twenty-one “vendors and consultants.”
Petro America’s Bank Accounts
48. Subpoenaed bank records show highly unusual activity in and between each of
Petro America’s bank accounts. Hawkins and others make large cash withdraws structured to
avoid bank reporting laws. Many checks to cash bear notations such as “consulting,” “IT
services,” and “legal.” Investors are told the money is being invested in the company to grow
its oil trading and “gold mine” businesses, and to pay fees to take Petro public. In reality,
Hawkins is taking cash for himself and giving cash to others who promote the sale of shares.
U.S. Bank Account 4487
49. U.S. Bank records reveal that Petro held account 4487 from March 18,
2008 through November 26, 2008. Hawkins opened it on March 18, 2008 with an initial
deposit of $100. From September 30, 2008 through October 24, 2008, $767,170 in deposits
were received. Deposits ranged from $14,300 to $180,000. They all consisted of checks
written in even $100 increments, many with “stock” or “shares” written on the memo lines.
50. In October 2008 alone, 15 cash withdrawals from account 04487 appear
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 19 of 81
to have been structured under $10,000 to avoid bank currency reporting requirements.
Date Time Amount Type Note
10/09/2008 4:37 PM $5,000.00 cash
10/11/2008 12:23 PM $8,000.00 cash
10/14/2008 12:23 PM $8,000.00 cash
10/14/2008 12:24 PM $8,000.00 cash
10/14/2008 5:06 PM $8,000.00 cash
10/14/2008 5:09 PM $8,000.00 cash
10/14/2008 5:14 PM $9,000.00 cash
10/15/2008 5:16 PM $9,000.00 cash
10/17/2008 5:06 PM $9,500.00 cash
10/20/2008 2:45 PM $9,500.00 cash
10/20/2008 12:01 PM $9,500.00 cash
10/21/2008 $9,500.00 check cash
10/23/2008 $9,000.00 check cash
10/24/2008 $8,000.00 check cash
10/24/2008 5:16 PM $8,000.00 cash
51. Other notable withdrawals from Petro’s U.S. Bank account include a $400,000
outgoing wire transfer on November 6, 2008 to CitiGroup Global Markets Inc. It was deposited
into Petro America money market fund account 376-45098. Hawkins is the sole signer on the
account, having signed the signature card on June 18, 2007.
Citi Smith Barney Account 5098
52. On February 27, 2009, Citi Smith Barney records show $250,650.40 was wired to
Petro America account 0301 at Brotherhood Bank & Trust in Kansas City, Kansas.
Brotherhood Bank & Trust Account 0301
53. On February 26, 2009, Hawkins opened Petro America business checking account
0301 at Brotherhood Bank & Trust. After the initial $250,650.40 wire transfer on
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 20 of 81
February 27, 2009, no other deposit was made until May 21, 2009. From February 27, 2009
through March 31, 2010, $81,500 in checks were written for cash. Many referenced in the
memo line as “For consulting,” “Legal support,” and “Public relations.” In addition to the
checks to cash, $54,250 in checks were written out of the account for “Consulting,” “For IT
support,” and “For marketing.” Hawkins made numerous additional withdrawals for airline
tickets, hotel fees, and personal purchases for meals and at department stores across the United
States. The account has been nearly dormant since June 12, 2009.
Bank of America Account 4186
54. On November 6, 2008, a $158,796.02 cashier’s check was made payable to Petro
America from Petro’s U.S. Bank account to Bank of America account 4186. This
account was opened on March 21, 2008 with Hawkins as the only signer. He is listed as
CEO/Secretary on the signature card.
55. From September 24, 2008 to January 26, 2009, Hawkins made numerous deposits
to this account, including 798 checks and money orders totaling $192,506. All appear to be
from Petro America investors. The checks are in $100 increments, and memo lines include
“stocks,” “shares,” “Petro America shares,” “Investment,” “1,000,000 shares,” “100,000
shares,” “Stock offering,” “Petro-Investment,” “per Johnny Heurung,” and “200,000 sh. Petro.”
56. Cash withdrawals on this account appear structured to avoid bank reporting laws.
From November 7, 2008 through January 26, 2009, $223,306.23 in cash was withdrawn. Bank
officials stated that Hawkins often comes into different Bank of America branches to withdraw
$9,500 in cash, always requesting large bills. Hawkins told bank officials that his large deposits
are from investors in his company. His cash withdrawals include:
Date Amount Date Amount
11/07/2008 $4,500.00 12/15/2008 $4,000.00
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 21 of 81
Date Amount Date Amount
11/12/2008 $1,000.00 12/18/2008 $5,000.00
11/18/2008 $ 400.00 12/19/2008 $9,500.00
11/19/2008 $4,856.23 12/22/2008 $5,000.00
11/20/2008 $9,500.00 12/22/2008 $650.00
11/21/2008 $5,000.00 12/22/2008 $5,000.00
11/21/2008 $3,000.00 12/24/2008 $8,000.00
11/25/2008 $9,500.00 12/24/2008 $8,000.00
11/26/2008 $5,000.00 12/29/2008 $8,000.00
11/28/2008 $2,500.00 12/30/2008 $9,500.00
11/28/2008 $2,500.00 01/05/2009 $5,000.00
12/01/2008 $5,000.00 01/07/2009 $8,000.00
12/02/2008 $4,900.00 01/08/2009 $8,000.00
12/05/2008 $2,000.00 01/08/2009 $9,500.00
12/08/2008 $6,000.00 01/12/2009 $8,000.00
12/08/2008 $3,500.00 01/14/2009 $8,000.00
12/09/2008 $9,500.00 01/15/2009 $6,500.00
12/10/2008 $5,000.00 01/16/2009 $7,000.00
12/12/2008 $2,500.00 01/26/2009 $5,000.00
57. In addition, a total of $51,700 was transferred from November 10, 2008 to
January 20, 2009 to the bank accounts of Dale McDaniel, Marcel Yanez, Tion Moreland and
Mazuma Credit Union Account 193566
58. Mazuma account 193566, in the name of Petro America Financial Services, was
established on May 9, 2009. Owen Hawkins incorporated Petro America Financial Services
Inc. in Kansas on February 9, 2009. HMC Enterprise Corporation is listed as the resident agent
at the same address as Petro America Financial Services. The original signature card lists John
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 22 of 81
Hammond of Kansas City, Missouri as CEO of Petro America Financial Services. Chairman of
the Board Israel O. Hawkins is an authorized signer. Secretary Marcia P. Parker of Raytown,
Missouri is an additional signer. An updated signature card signed on December 16, 2009 lists
only Hawkins and Parker as signers.
59. Seventy checks and money orders totaling $13,615 from Petro investors were
deposited into this account from May 9, 2009 through January 22, 2010. They were in round
$100 increments, mostly in money orders, with memo sections stating “shares,” “Petro,” “gifted
shares” and “2M shares.” Seventy-one additional investor checks in $25 increments totaling
$4,824.95 were deposited in the spring and summer 2009. Many bear the notation “Petro
60. In addition to the investor proceeds, $830,000 in checks from Windsong
Ventures 14 were deposited from July 16, 2009 to March 27, 2010. Another $172,310 was wired
in from David J. Plasters, an attorney from Greeley, Colorado. These deposits are discussed
later in this declaration.
61. From July 2, 2009 to May 12, 2010, Hawkins wrote 65 checks to cash out of the
Mazuma account totaling $425,700. For the same dates, Marcia Parker wrote 47 checks to cash
totaling $116,615. The memo sections contained notations including “for consulting,”
“conference call,” “office support,” and “speaker.”
Date Amount Signature Date Amount Signature
7/2/09 $3,000.00 Hawkins 1/16/10 $7,500.00 Hawkins
7/24/09 $4,000.00 Hawkins 1/19/10 $800.00 Parker
7/29/09 $1,500.00 Hawkins 1/22/10 $6,500.00 Hawkins
7/31/09 $4,000.00 Hawkins 1/27/10 $7,500.00 Hawkins
8/7/09 $2,500.00 Hawkins 1/28/10 $1,600.00 Parker
8/13/09 $2,300.00 Hawkins 1/29/10 $6,800.00 Hawkins
Teresa Brown has a registered shell company known as Windsong Ventures LLC.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 23 of 81
Date Amount Signature Date Amount Signature
8/24/09 $2,500.00 Hawkins 1/30/10 $5,500.00 Hawkins
8/25/09 $1,000.00 Parker 2/4/10 $7,500.00 Hawkins
8/31/09 $3,000.00 Hawkins 2/5/10 $1,500.00 Parker
9/1/09 $3,000.00 Hawkins 2/10/10 $7,500.00 Hawkins
9/8/09 $1,000.00 Parker 2/12/10 $1,500.00 Parker
9/9/09 $1,000.00 Parker 2/16/10 $8,500.00 Hawkins
9/9/09 $1,000.00 Parker 2/19/10 $1,500.00 Parker
9/11/09 $2,500.00 Parker 2/20/10 $6,500.00 Hawkins
9/16/09 $3,500.00 Hawkins 2/25/10 $8,500.00 Hawkins
9/18/09 $500.00 Parker 2/25/10 $1,500.00 Parker
9/23/09 $3,800.00 Hawkins 2/26/10 $9,500.00 Hawkins
9/25/09 $4,500.00 Parker 3/2/10 $9,500.00 Hawkins
9/30/09 $3,100.00 Parker 3/3/10 $9,500.00 Hawkins
10/9/09 $1,500.00 Parker 3/4/10 $9,800.00 Hawkins
10/16/09 $500.00 Parker 3/5/10 $1,500.00 Parker
10/16/09 $6,515.00 Parker 3/5/10 $8,500.00 Hawkins
10/21/09 $7,000.00 Hawkins 3/6/10 $7,500.00 Hawkins
10/22/09 $1,500.00 Parker 3/10/10 $8,500.00 Hawkins
10/23/09 $7,500.00 Hawkins 3/12/10 $1,600.00 Parker
10/26/09 $5,000.00 Parker 3/12/10 $4,500.00 Hawkins
10/28/09 $1,500.00 Parker 3/17/10 $1,700.00 Parker
10/29/09 $8,500.00 Hawkins 3/17/10 $9,500.00 Hawkins
11/2/09 $8,500.00 Hawkins 3/19/10 $5,000.00 Hawkins
11/7/09 $5,500.00 Hawkins 3/19/10 $8,000.00 Parker
11/7/09 $500.00 Parker 3/20/10 $7,500.00 Hawkins
11/9/09 $5,000.00 Hawkins 3/22/10 $8,000.00 Parker
11/12/09 $500.00 Parker 3/23/10 $8,500.00 Hawkins
11/14/09 $5,000.00 Hawkins 3/26/10 $8,500.00 Hawkins
11/14/09 $1,000.00 Parker 3/27/10 $1,600.00 Parker
11/17/09 $3,500.00 Hawkins 3/31/10 $8,500.00 Hawkins
11/20/09 $500.00 Parker 4/1/10 $8,500.00 Parker
11/23/09 $2,500.00 Hawkins 4/2/10 $8,500.00 Hawkins
12/2/09 $5,000.00 Hawkins 4/2/10 $8,000.00 Parker
12/4/09 $1,500.00 Parker 4/3/10 $9,000.00 Parker
12/11/09 $3,500.00 Hawkins 4/7/10 $5,500.00 Hawkins
12/14/09 $500.00 Parker 4/7/10 $2,000.00 Parker
12/17/09 $1,500.00 Parker 4/10/10 $8,500.00 Hawkins
12/18/09 $3,500.00 Hawkins 4/15/10 $8,000.00 Hawkins
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 24 of 81
Date Amount Signature Date Amount Signature
12/21/09 $9,500.00 Hawkins 4/15/10 $2,000.00 Parker
12/22/09 $8,500.00 Hawkins 4/16/10 $8,500.00 Hawkins
12/23/09 $1,000.00 Parker 4/17/10 $9,500.00 Hawkins
12/24/09 $9,500.00 Hawkins 4/19/10 $8,500.00 Hawkins
12/28/09 $7,500.00 Hawkins 4/21/10 $8,500.00 Hawkins
12/30/09 $3,000.00 Parker 4/22/10 $1,500.00 Parker
12/31/09 $7,500.00 Hawkins 4/29/10 $1,700.00 Parker
1/5/10 $4,500.00 Hawkins 4/30/10 $9,500.00 Hawkins
1/11/10 $4,300.00 Parker 5/1/10 $5,500.00 Hawkins
1/12/10 $4,000.00 Parker 5/4/10 $1,700.00 Parker
1/14/10 $7,500.00 Hawkins 5/8/10 $5,500.00 Hawkins
1/15/10 $500.00 Parker 5/12/10 $1,500.00 Parker
Misrepresentations by Hawkins and Petro America
62. Petroamericacorp.com went online around October 2008. 15 It states that the
company seeks to be the “premier global crude oil marketer and energy arbitrageur,” and its
mission is to acquire oil fields and leases in emerging markets in developing companies such as
Chad, Equatorial Guinea, Sao Tome Principe, and Cameroon. These statements appear to have
no factual basis. There is no evidence that Petro America seriously pursued any such
opportunities, at least in a realistic fashion. But the website pledges that “Profitable growth in a
visionary atmosphere will allow the Company to achieve its Corporate objectives. The
company seeks optimum returns on invested capital for meteoric returns that maintain and
ensure shareholder value.”
63. Petro America’s website includes a prominent photograph of the luxury office
building at Two Pershing Square, an imposing glass tower in downtown Kansas City.
Hawkins says that a friend of his for 25 years, Dale McDaniel, designed Petro’s website. Petro
records appear to indicate that McDaniel was paid $45,000. Hawkins explained that McDaniel
was also going to be the CEO of a Petro “division,” Petro Tech.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 25 of 81
However, this supposed “world corporate headquarters” is a façade. Beginning July 15, 2008,
Hawkins contracted with Regus Management Group LLC located at Two Pershing Square,
2300 Main Street, Suite 900, Kansas City, Missouri. 16 According to the initial contract, Regus
agreed to provide Petro America with a “Virtual Office: Telephone answering in your
company’s name, fax and mail handling, use of our prestigious address and 16 hours of office
usage” in exchange for a monthly fee of $225. Mail and calls to Petro America are received by
Regus, who forwards them to Hawkins or his associates. On multiple occasions, Hawkins and
his associates did not disclose to investors that their “headquarters” was actually a secretarial
64. Petro America’s website also includes links to news releases published via Group
WebMedia emails. Hawkins admits that he approves all Petro America news releases.
Investigators have determined that most or all of the releases are materially misleading and fail
to disclose material facts related to investing in Petro America. Some of the press releases
• Petro America receives irrevocable corporate purchase order for 2 million
barrels of crude oil from a firm in Dubai (May 2008);
• Petro America receives $40 million in assets in exchange for stock
• Petro America receives $28 million in assets in exchange for stock
• Petro America acquires underground storage facility…. Petro America
Corp acquires seven year-old underground multi-million dollar
outsourcing firm for an undisclosed amount. This strategically allows
Petro America the opportunity to offer storage facility services for
commercial, state and federal agencies that have needs and requirements
to store barrels of crude oil in a secured environmental climate-controlled
environment. (November 2008).
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 26 of 81
The SEC investigation revealed that Petro America failed to substantiate any of these claims.
For instance, while Petro America could produce a copy of the purchase order, it produced no
documents verifying that it had oil to sell, that it could purchase oil to meet the contract
requirements, or that it even conducted oil trading operations. The assets of $28 million and $40
million involved credits supposedly held by Petro America to use or sell media advertising time
and space in those amounts. American Marketing Complex cancelled the credits on November
10, 2008, after Petro America and Hawkins failed to produce verification that the 34 million
shares issued for the credits had a $2 per share value. 17 Petro America never used or sold the
credits. While Petro America did make a $30,000 down payment for the purchase of
Performance Packaging, which apparently has some underground storage capacity, no
documents produced show the facility is suited for substantial quantities of oil. The landlord
advised the SEC that such a use would not be allowed. City officials stated that zoning and
building code requirements do not allow oil storage in quantity.
65. Petro America has issued further press releases related to so-called gold mine
“acquisitions.” Each contains materially misleading statements and fails to disclose material
facts related to investing in Petro America, including by misrepresenting the supposed
“geologist reports” that Hawkins and Brown provided to the U.S. Attorney in an attempt to
prove the mines have value.
• Petro America issued a press release claiming PTRZ (which is Petro America
Delaware) had acquired a 24% interest in an unnamed Arizona gold mine
(later determined to be the Alvarado Mine in Congress, Arizona). According
to the release, Petro America “hopes” its interest is worth more than $300
million. (June 2009). Michael Payne, the principle scientist for a company
In his interview at the U.S. Attorney’s office in June 2010, Hawkins denied ever knowing
these media credits were cancelled. He said he never received the cancellation letter Norman
King from AMC sent addressed to Hawkins dated November 10, 2008 (see below).
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 27 of 81
called WM Engineering, purportedly determined the value. Matt Shumaker,
the Chief Mineral Examiner with the U.S. Department of Interior, Bureau of
Land Management, determined that Payne was not licensed or registered to
practice geology or mining in Arizona. Shumaker determined that Payne’s
report misuses terminology and is missing appendices. Shumaker does not
believe Payne has the qualifications to make determinations regarding the
mine’s value. According to Shumaker, the report filed by Payne is of
insufficient quality and content to establish reserves or resources and does not
even qualify as exploration information.
• “Petro America Corp acquires 49% of Nevada Granite Mine…. Petro
America Corp (PTRZ) announced today that it has acquired 49% interest in a
Nevada granite mine for an undisclosed amount, which could be substantial.
The Company hopes its 49% interest should represent tremendous valuation
for its shareholders. Management is excited about its granite mine acquisition
that could propel the company as a major player in the construction and
building industry and the company will also seek other mining opportunities.”
(August 2009). This press release is misleading because it states PTRZ
acquired interest in a mine. The so-called granite mine is actually rhyolite, a
decorative rock. See further analysis on the Bunee mine by Matt Shumaker
66. In June 2008 and August 2008, Petro America entered into stock agreements with
American Marketing Complex (AMC). Petro sold a total of 34 million shares of its common
stock, with a purported value of $2 per share, for $68 million AMC cash equivalent media
credits (that is, each media credit was worth $1, so that a total of $68 million in media credits
could be used as payment for future media). In the stock agreements, which Hawkins signed,
Hawkins listed unaffiliated accounting firms (Ernest & Young and KPMG) and law firms
(Skadden Arps) as if they represented Petro America.
67. On May 14, 2009, counsel for Ernst & Young issued a letter to Hawkins stating:
It has come to my attention that in a purported stock agreement between
Petro America Corporation (“Petro America”) and American Marketing
Complex, Inc., there is reference to “Ernst & Young” and “Randy
Buseman” as “Accountants” for Petro America Corporation. Petro
America has never been a client of Ernst & Young and Mr. Buseman and,
accordingly, Ernst & Young and Mr. Buseman have never served as the
accountants for Petro America. Any statement to the contrary is a
misrepresentation. Please cease and desist from making any such
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 28 of 81
reference to Ernst & Young and/or Mr. Buseman. In addition, please
inform me forthwith of any other such references that have been made to
Ernst & Young and/or Mr. Buseman being affiliated with Petro America.
68. On June 17, 2009, counsel for KPMG issued a letter to Hawkins:
We have recently become aware of two stock agreements Petro America
Corp. (“Petro America”) entered or attempted to enter into with an entity
called American Marketing Complex, wherein you represented that
“KPMG International” is the auditor of Petro America Corp, and listed
your contact as KPMG International as Joe Verga, 345 Park Avenue, New
York, NY 10154. There is no record of KPMG LLP, the firm with which
Mr. Varga is a partner, or any other member firm of KPMG International
providing audit or any other professional services to Petro America. Your
misrepresentations to the contrary are a misuse of the trade name and
reputation of KPMG for apparently fraudulent purposes. Accordingly, we
therefore order you and all other individuals affiliated with Petro America
to cease and desist from making any additional misrepresentations to any
third parties that KPMG is providing audit or any other professional
services to Petro America. Any continued misrepresentations to this effect
will require us to pursue formal legal action against Petro America and the
69. On or about June 25, 2009, Norman King, the chairman and CEO of AMC gave a
letter of declaration to the SEC.
a. King executed the June 30th and August 20th 2008 stock agreements with Petro
America on information received from AMC’s independent sales associate, John
Schiavo. He said that Petro America had major Arab oil contracts, plus the
company counsel was Skadden Arps, and the accountants and auditors were Ernst
& Young and KPMG, respectively. “The contract signed by Petro America
includes Skadden, Ernst and KPMG, which is the only reason we accepted the
stock price requested, and the only reason we, AMC, entered into the
b. AMC reserved the right to request a copy of Petro America’s most recent audited
or unaudited financial statements or annual report, and did so. But Petro America
never provided such documents. This failure constituted a “material breach that
automatically voids this Agreement in its entirety. The Agreement is then null
and void and unenforceable and ceases to exist.”
c. On November 10, 2008, Norman King, the chairman and CEO of AMC sent a
letter to Hawkins advising him that the breach made the agreement null and void.
70. On March 23, 2010, Petro America entered into a subscription agreement with
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 29 of 81
World Transport Authority (WTAI). On April 23, 2010, the SEC filed a motion for an order of
summary disposition against World Transport. The motion seeks to revoke the registration of
each class of WTAI’s securities registered with the SEC and would prohibit it from public
trading. The reason for the revocation is that WTAI has failed to make its periodic SEC filings
in over five years. Instead it sought to solve its delinquent status through possible reverse
mergers or other business deals. The SEC motion states that the subscription agreement
between WTAI and Petro America would require Petro to disclose its beneficial ownership of
WTAI’s equity securities by April 2, 2010, which it failed to do. This omission violated the
same reporting requirements as WTAI. The merger of the two companies would not enable
WTAI to maintain its public trading status. The SEC observed that WTAI’s reaction to the
proceeding was to pass off its woes to another company, Petro America.
71. In March 2010, an attorney and CPA who represents several Petro shareholders
traveled to Kansas City, Missouri to meet with Hawkins and Parker at Petro’s Offices at Two
Pershing Square. He was impressed at first when he saw the building and when he saw the
office suite. Parker said that Petro only had an executive suite and did not have the whole floor.
The office they went into was small and Hawkins could not have worked out of there. When
asked, Hawkins was vague about where he worked. He claimed to have multiple offices at
Petro’s construction company, at the packaging company, and at another location: Hawkins
said that he moved around. The attorney asked Hawkins how Petro generates income. Hawkins
mentioned Performance Packaging, which he calls a “division” of Petro, opining that it could
make $2 million profit. 18 The attorney was concerned and advised Hawkins that $2 million was
While Hawkins claims PAC has a 51% interest in Performance Packaging, he reluctantly
admitted to the SEC in August 2009 that by contract, Performance Packaging has to reach a
certain level of revenue before it must make any monetary distribution to Petro. Hawkins was
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 30 of 81
not enough to start up the gold mines and without any income the stock is not going to
skyrocket. He also told Hawkins that the book value was no good because Petro had no income
- Petro was not a Google or Yahoo (a dot.com). The only value Petro had would be to a
corporate “raider” because of the gold mines.
Johnny Heurung, Money Investment Inc., &
Petro America’s Promotion of Mining Scams
72. In addition to selling shares of stock issued pursuant to an unregistered offering,
federal investigators have determined that Hawkins, Heurung and the mine owners appear to be
involved in a classic gold mine scam or a type of dirt pile swindle. 19 Hawkins contacted a
company called White Oak Holdings in Florida concerning how to take Petro public. Hawkins
stated that an investment banker named Richard Greene explained that if Hawkins wanted to
say that a billion Petro America shares were worth $1 each, then he had to show $1 billion in
73. Johnny Heurung assumed responsibility for identifying suitable gold mines for
Petro. Heurung worked with owners of remote properties to negotiate deals for mining
interests. Typically, the mine owner would keep 51% of the mine interest. Johnny’s company,
Money Investment Inc., would get 24.5% and Petro would receive 24.5%. 20 Heurung soon
evasive regarding whether the distribution benchmark had been reached, although he clarified, “I
think it will.” When the SEC asked whether Petro has had any actual revenue from any of its
other businesses since Petro’s initial offering, other than prospects, he stated “No.” Hawkins
failed to disclose this benchmark to the attorney at the March 2010 meeting.
At the heart of a dirt pile swindle is the promise of gold at bargain basement prices. The catch
is that gold or other minerals -- if there are any minerals at all -- is not economically recoverable.
In addition to his involvement in gold mines, Heurung also sells various products, including a
magic wand that purportedly heals the body and makes food taste better. At an interview with
federal agents in September 2010 in Arlington, Virginia, Heurung instructed a Treasury agent to
pass one of the wands over his coffee, clockwise, 28 times, and it would improve the taste.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 31 of 81
began holding an additional weekly investor call after Hawkins’ call. 21 Through press releases,
emails, the internet, and investor calls, Hawkins, Teresa Brown, Johnny Heurung and others
soon began touting obscure Petro America “acquisitions” in gold and rock mines as valuable
holdings worth hundreds of billions of dollars.
74. In reality, Petro’s so-called “interests” in the gold and rock mines are essentially
worthless. First, Petro adopts wildly high valuations for the mining interests, most or all of
which are not producing anything. In some cases, the documents provided to support the sky-
high purported valuations are, on their face, clearly ridiculous. But Petro conducts little or no
due diligence to determine the legitimacy of the report writer. And Petro does not undertake
any serious efforts to independently assess the mine interests’ actual values prior to touting
them to investors as being worth hundreds of millions, or hundreds of billions, of dollars.
Second, many or all of the mines are not mines at all. They are mining claims. Matt Shumaker,
Chief Mineral Examiner with the U.S. Department of Interior, Bureau of Land Management
(BLM), noted that it is important for investors to understand that a mining claim is not
necessarily a mine. A mining claim is merely a plot of government-owned land upon which a
person or a corporate person has filed a claim of rights to a mineral deposit, which may or may
not actually exist. “With the possible exception of one property, all of Petro’s mines I reviewed
were mining claims – not producing mines – or they were old, exhausted mines that had not
produced since the 1940s,” Shumaker said. 22 Third, according to Shumaker, many of the
After over $100,000 of his money was confiscated on May 12, 2010 pursuant to a seizure
warrant, Heurung called federal investigators to protest. After a while, Heurung claimed he had
to go, but he said he wanted to continue the call the next day. But he did not answer his phone at
the appointed time or return the investigators’ call. After several months, he eventually agreed to
an interview in September 2010.
The possible exception is a property in Brazil, where the report did not contain enough
information to draw conclusions.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 32 of 81
properties have long been associated with various schemes and fraudster owners. Fourth, most
or all of Petro’s mine interests are not even vested. 23 Petro acquires most of its interests not by
using investor proceeds, but by issuing additional Petro stock to the mine owners (which, like
the stock sold to investors, is not backed by actual assets. 24 In exchange, Petro typically
receives unvested future interests in the mines based upon conditions precedent (such as Petro
going public within a certain number of days at a certain price). The conditions specified have
little or no chance of ever occurring, making Petro’s “interests” worthless. 25
75. Petro is using the mine interest “investments” to try to validate its claimed value
to shareholders. Hawkins, Heurung and others frequently claim that Petro’s assets are worth
over $284 billion. 26 They promise investors that the acquisitions will pay off when the
company goes public.
76. The highest-valued mining interest that Petro claims to own is known as the
Bunee Mine in Lincoln County, Nevada. Petro claims to own 49% of the mine interest, which it
values it at $346 billion. Matt Shumaker has analyzed the Bunee Mine report provided by
Hawkins, Brown and Alvin Sykes to the U.S. Attorney. Shumaker issued a sworn affidavit
stating that the Bunee Mines are made up primarily of rhyolite, which is a common volcanic
rock. Shumaker said “ryholite is to Nevada what limestone is to Ohio.” Shumaker determined
that on the date of the report Petro produced, the mining claim did not legally exist. In addition,
The term “vested” refers to a right that has become a completed, consummated right for
present or future enjoyment, and that right is not contingent upon any future conditions.
In addition, this gifting of billions of shares of stock would greatly dilute any value the
shareholders’ stock could conceivably have.
Under basic accounting principles, such speculative future unvested interests cannot be
counted as on-the-books assets. This would be true even if the mine interests were valuable,
which, as Matt Shumaker found, they are not.
In June, 2010, Hawkins continued to insist that Petro America is worth over $284 billion. He
admitted that he has provided this valuation to shareholders, including on his weekly investor
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 33 of 81
the values per ton Petro claimed are greatly exaggerated because, Shumaker explains, “The
demand for decorative rock is at or near an all-time low. It is doubtful that much if any rock
evaluated in the WME Report could now be sold at any price, nor at the date of the report, let
alone the prices suggested in the report.”
77. Shumaker was critical of the estimated tonnage listed in the report to support the
Bunee Mine’s valuation. “That is enough [rhyolite] to cover two square miles nearly 621 feet
deep in crushed rock. Put another way, that is enough to cover all of Las Vegas nine feet deep
in crushed gravel, or the incorporated area of Blue Springs, Missouri 67 feet deep in crushed
gravel. Rock in this available volume would appear to be of widespread occurrence and not
particularly valuable. If the WME Report had been handed to me for technical review by a
mineral examiner or a contractor, I would have rejected it.”
78. On June 25, 2009, Petro entered into a stock purchase agreement with Bunee
Materials Corporation to obtain a 49% interest in the company. This would allow Petro to
obtain interest in any assets held by Rhyax Industries, LLC, which included the Bunee Mine.
Petro issued 40,000,000 shares of common stock to Bunee Materials Corporation and 5,000,000
shares of common stock to Red Hawk Mining, LLC to enter into this agreement. No money
was paid by Petro to acquire the interest. The contract was signed by George Hoegmann,
President and CEO of Bunee Materials Corporation and a Managing Member of Rhyax
Industries. It was also signed by Brian Langenbach, a Managing Member of Red Hawk Mining,
and Hawkins. 27
79. In an addendum to the stock purchase agreement for the Bunee Mine, a stipulation
states “In the event that Petro America Corp, Kansas is not public within three months of signed
More about Brian Langenbach’s involvement with Petro is detailed subsequently herein.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 34 of 81
contract, all interest in any and all assets of Rhyax Industries LLC revert back to Bunee
Materials Corp. Bunee Materials Corp will maintain ownership of all shares of Petro America
Corp, without penalty, fees, or encumbrances of any type, and in such event have no further
obligation to Petro America Corp.” As of October 22, 2010, Petro is still not public, therefore
the contract on the Bunee Mine, according to the contract’s terms, is null and void.
80. Petro’s second largest claimed asset is made up of purported interests in four gold
mines located in Pinal County, Arizona. Hawkins, Brown and Alvin Sykes provided a signed
declaration to the U.S. Attorneys Office showing that Petro has pledged shares to Paul Levine,
the managing member of Grand Financial Solutions, LLC, to acquire 49% ownership. The
declaration claims the four mining interests are worth a total of $174 billion. Matt Shumaker
analyzed these mining claims and issued a second declaration. He determined that two of the
claims have been declared null and void by the BLM because the locations of the mining claims
took in too much acreage. Thus, they have been cancelled by BLM and do not legally exist.
Further, Shumaker was highly critical of the methods used to reach the $174 billion valuation,
ironically observing that:
“Unfortunately, gross value of minerals in the ground is almost completely meaningless.
It assumes that someone could walk over the surface with a magic wand, wave it over the
surface, mumble the appropriate words, and as if by magic, have certified ingots of the
metals in the assay report appear next to them on the ground, ready to be sold. Mining is
a business, and just like any business, there are many costs to be paid before any metal is
produced, and never is a profit guaranteed. The “GENERAL AFFIDAVIT” signed by
Paul Levine has made this common error.”
81. Shumaker also has conducted preliminary reviews of the following geologist
reports and affidavits that were provided to the U.S. Attorney’s Office by Hawkins, Brown and
• Cavala Greek Gold Mine, Luis Domingues, Brazil. According to the report
completed by Jarbas De Souza, it has a present value of $3 billion. Shumaker
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 35 of 81
determined that “The author of the report appears to have established a mineral
reserve on the basis of one sample. That does not meet the SME standards 28 that are
in use in most Commonwealth countries, but not Brazil.” He also was critical of
drilling methods used to obtain the sample, observing that “Placer gold deposits tend
to be most concentrated at bedrock. The one sample drill hole that I could find
reported as reaching bedrock reported no gold.” Shumaker continued: “This does not
appear to be a mining proposal, really. This appears to be an extremely interesting
placer gold prospect that warrants further exploration. It does not appear to be ready
to mine. Placer gold deposits are not homogeneous and delineation, usually by
trenching, is needed before committing a large investment.”
• Pine Tree Josephine Gold Property, Mariposa County, California. According to
the valuation report completed by Kenneth Shonk, the potential value of the mine is
$29.75 to $63.75 million. Shumaker observed that “This appears to be an old gold
mine that is not now producing, but may have been a producer from the 1850s to
about 1942. There may have been sporadic production since then.” He continued:
“California is a difficult state in which to obtain permits to mine. That’s mentioned in
passing in some of the documents, but the mentions do not even begin to explain the
magnitude of the difficulty. Obtaining permits for the safest and least expensive
means of getting the gold out of the rock, via cyanide leaching, take a long time and
public opposition will be severe.” Shumaker goes on to write “The third paragraph of
Mr. Shonk’s report sort of stumbles into what may stop any mining proposal before it
begins. The paragraph states that the Merced River ‘would provide all necessary
water for processing and environmental purposes.’ That is extraordinarily unlikely.
Like most western states, water rights in California are mostly appropriative, not
riparian. Unless someone hoping to reopen the Pine Tree Mine already owns a right
to Merced River water, it is most unlikely that they can obtain one. Rights to most or
all of the water in the Merced River are already owned by multiple parties, including
San Francisco Bay Area cities. Many entities that owned water rights in the past may
have sold them, or had them terminated through litigation due to inactivity. Mr.
Shonk’s failure to deal with this is serious.”
• Mena Claims, Goldstone Placer Mines, Sedona, Arizona. According to the report
completed by Goldstone Management, the mines have an estimated $5.4 billion in
commercially extractable gold. Shumaker determined that “The documents fall into
the common trap of establishing so-called reserves by taking some sort of precious
metal concentration, determining the spatial area of a mining claim, figuring some
arbitrary depth in feet, and then making a volumetric calculation on that basis.
Mineral deposits do not work that way, and describing a mineral deposit as a
rectangular space to a specific depth has always been a warning sign of a scam to me
that has never been wrong. The Goldstone summaries assume 0.05 ounces of gold
per ton/yard (which is in itself a very odd unit–is it tons or is it cubic yards or is it
tons per cubic yards?), but that concentration does not appear to be based on
SME - Society for Mining, Metallurgy and Exploration. The SME standards are a means of
giving an actual meaning to terms such as reserves and resources.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 36 of 81
anything. No mineral deposit is homogeneous, so these calculations don’t work in
the real world.”
• Kingfisher – This is a series of mining claims located in a dry lake bed near
Winnemucca, Nevada. According to the reports prepared by Eric T. Jackalin for
Kingfisher on July 15, 2008, these mines have potential in-ground reserves of nearly
$30 billion. Shumaker states, “The underlying project appears to be operated by
Fallon Mining Company. I have been following Fallon Mining Company (FMC) via
their website since the late 1990s. It has my opinion since that time that the project
proposed by FMC is not viable and can never be viable. FMC has utilized the
services of at least three incompetent or fraudulent assayers with whom I am
familiar.” He continues: “Any conclusions based on the assay work, or calculations
using the assay work, provided by the above assayers or by FMC would be incorrect
and badly misleading.”
82. Petro additionally claims as assets interests in 28 oil and gas wells in Wyoming
owned by DCD Operating, Inc. Hawkins, Brown and Alvin Sykes provided a 2008 appraisal
report issued by Dr. Vladimir Serebryakov to the U.S. Attorney’s Office regarding the oil and
gas wells. The total value of these interests is nearly $200 million. This deal between DCD
Operating and Petro was analyzed by Burrett Clay, a recently retired Chief, Division of
Minerals, Realty and Resource Protection, with the Bureau of Land Management. Clay found
that “if this is all the technical information provided to potential investors, it is misleading as to
actual conditions.” Clay found that:
• “The economic analysis was based on $90 per barrel for oil and $9 per MCF 29 for
gas. While the $90 per barrel was a good number for Sept 08 (the price was
passing through on its way down), the price of oil had been in free fall since mid-
July and by the end of 2008 was about $32 per barrel. The price of natural gas
was also dropping from the artificial high in July and by Sept was below $8 per
MCF. It hovered in the $5 to $6 range until March 2010 when it dropped another
$1 per MCF;”
• “The economic analysis escalates the price by 5% per year and the number it uses
for Sept 2010 is $99.23 per barrel for oil and $9.92 per MCF for gas while the
actual numbers were about $72 per barrel for oil and about $4 per MCF for gas.
The best that can be said for this analysis is that at the time it was written it was
1000 cubic feet, a unit of measure in the oil and gas industry for natural gas
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 37 of 81
• “The second economic evaluation increases the recoverable oil from 1,981,500
barrels (from Dr. Serebryakov’s Aug 1, 08 report) to 1,116,000,000 barrels (from
Dr. Serebryakov’s Oct 27, 08 report). This is a 500% increase for which there is
no explanation;” and
• “There is also a mention of increasing production by horizontal drilling, but in the
materials I have there is no reference to the costs of additional drilling at all let
alone the higher costs horizontal drilling.”
83. From September 11, 2009 through February 11, 2010, Johnny Heurung received a
total of $5,822 from Windsong Ventures via checks. The memo lines on the checks bear
notations including “expenses,” “travel expenses,” and “car.” Numerous wire transfers from
Windsong Ventures account 794488569 have been sent out with references to “Johnny.”
84. On July 27, 2009, Money Investment, Inc. received a $14,000 check from
Windsong Ventures for “flight reimbursement.” On August 20, 2009, Money Trust Company
received a $100,000 wire that was sent to another Johnny Heurung entity from Windsong
Ventures. An additional $38,600 in wires to Money Investment Inc. occurred between August
13, 2009 and January 19, 2010 with memos such as “our company car,” “Merry Christmas,”
and “Happy New Year.” A shareholder list provided to the SEC on April 6, 2009, by an
attorney representing Petro America, indicates that Money Investment, Inc. holds 53,000,000
shares of Class B Petro America stock. Money Investment, Inc. also holds 100,000,000 shares
of Class A Petro America stock. The shareholder list shows Money Investment, Inc. paid only
$300 for all the Petro America shares and the rest were “gifted.”
85. Heurung claims he received $100,000 from Windsong Ventures to put in trust for
the mines in case of a lawsuit. Heurung said he received another $30,000 of Petro money from
Brown via wire transfer.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 38 of 81
86. During a May 20, 2010 interview with federal agents, Heurung stated that he does
not have a college degree. He said his role in Petro was to help obtain the surveys and geologist
reports. Brown paid him for this work. Heurung said he arranged for the mining reports and
Brown would pay for them. Brown also paid Heurung for expenses.
87. During a September 9, 2010 interview with federal agents, Heurung stated that he
has brought 24 mines to Petro. Heurung claimed the 24 mines had excellent geological reports
that were less than a year old and had all of the Geologist Certifications. Heurung stated he
eliminated many mines that had a lot of “bogus paper” (old geological reports) and mines that
were not good. Hawkins also brought some mines into Petro. Heurung said that Hawkins
wants him to bring in more mines to bring up Petro’s value. Heurung believes it will take $1
billion to get the mines running.
88. Heurung said the mine reports were completed by outsiders and Gus Meade.
Heurung described Meade as an 80-years-plus man (he is actually 96). Heurung said Meade
worked with Brown on some mines. Heurung said both he and Meade know that the gold mines
are worth more than the values that have been quoted because there are extra “legs” to the mines
that do not show up on the reports. He explained that those “legs” can indicate more gold in the
mines than is currently estimated. Heurung said the mines were actually worth $7 trillion, but
he does not want this to get out because he wants to release the news slowly, after Petro goes
public, to keep the share price going up.
89. Heurung explained how he first became involved with Petro. On October 13,
2008, Teresa Brown approached him while he was in Florida doing his radio show because
Heurung had experience with mines and oil and she knew he could bring in good assets.
Heurung stated he now has the largest voting block of shares in Petro and has turned down three
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 39 of 81
“coups” already of shareholders trying to get rid of Hawkins. Despite this support, Heurung
does not believe Hawkins is qualified to run a billion-dollar corporation.
90. Heurung said Brown rewrote all of the mining contracts in April 2010, and placed
her name on them, removing Heurung’s. Heurung was supposed to get Petro shares for
bringing in the mines, but Brown stopped giving him shares, so he stopped bringing in mines.
He asked for an accounting of his shares from Brown, but never received it. He said he is short
300 million shares and he feels that Brown was taking his shares for herself. Heurung claims
Brown still owes him $20,000 to $40,000.
91. Hawkins recently told Heurung that $3.9 million is missing from Petro and he
blames Brown. Heurung believes that both Brown and Hawkins have embezzled from Petro.
Heurung says he cannot prove this but he knows it has happened. Heurung believes Hawkins is
trying to blame Brown. During a recent conversation, Hawkins asked Heurung to refrain from
talking about Brown.
92. Heurung also alleges that in February and March 2010, Brian Langenbach and
David Greene, an attorney from Colorado, reprinted 3.9 million bogus Petro shares. Heurung
said that Greene went to the printer in Kansas City that Petro used and said Hawkins had given
him permission to print the shares. Greene called Heurung and asked if he wanted some of the
shares, and Heurung refused. Heurung said Greene is selling the shares for 10 to 20 cents a
share. Greene wanted Heurung to draft a backdated letter stating the shares were legitimate.
Heurung said he refused.
93. Heurung stated that Hawkins asked him to hold the weekly calls. Heurung said
any information he gives on the weekly calls regarding Petro all comes from Hawkins.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 40 of 81
94. Heurung stated he has never seen Petro’s financials but he has asked Hawkins for
them a dozen times. Heurung said he has never seen a business report or a checking account.
Hawkins told Heurung that he is not giving any financials until they are put together and are
right. Heurung has asked Hawkins to send him the records and he would have the financials put
together. Hawkins has not sent any documents to Heurung.
95. Heurung said he made a mistake by not taking his own company public, and
instead getting involved with Petro. He wants to pull his mines back but he has brought
investors into Petro and does not want to abandon them.
Clarence Moore and Petro’s Accountant Issues
96. In February 2010, Hawkins circulated a valuation letter purportedly signed by a
CPA from Atlanta named Clarence Moore, whom Hawkins describes as “the first African-
American accountant for Gulf Oil and also a former auditor for Exxon.” Hawkins used the
letter as evidence that Petro America had been valued at $284 billion and a $24 per share,
figures based on “holdings” consisting nearly entirely of the mines. In actuality, Clarence
Moore is not and has never been a CPA. He says he attended Clark College briefly in 1968 but
did not graduate because he got shot in the back of the head, which causes him equilibrium
problems. He worked briefly as an accounting clerk for Gulf Oil in the 1970s. He has never
worked for any accounting firms, attended conferences, or taken classes to improve his skills.
In 1972, he worked for Exxon, where he audited cash registers at service stations. He admits he
has spent time in prison or jail in each of the last three decades primarily for criminal forgery
and fraud. Moore said that he had never before seen the valuation letter, it is not on his
letterhead, and the signature is not his. He said that he did speak to Hawkins on the phone
about Petro’s valuation. Hawkins provided the $284 billion number and said that Petro had 12
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 41 of 81
billion shares outstanding. Moore stated he simply divided the two numbers Hawkins had given
him and that is where the $24 per share “book value” came from.
97. Moore explained that Hawkins asked him later in 2010 to drive to Kansas City to
help get Petro’s books in order, and to prepare tax returns for Petro and Hawkins. Moore said
he stayed at Hawkins’ house by a lake for four days, working with Hawkins. Hawkins
explained that he did not own the house by the lake, it was being rented by Petro. Moore said
the $284 billion in assets he listed on Petro’s 2009 return was from the gold mine valuations,
and this number was given to him by Hawkins. Hawkins told Moore that Petro traded stock to
obtain the interests in the mines. Moore said Hawkins’ filing system was a mess and was
“atrocious.” Hawkins provided some of Petro’s numbers to Moore verbally. Hawkins
explained to Moore that Petro had a lien or levy on its bank accounts and no source documents
were available and he could not get them. Hawkins later admitted to investigators that for the
valuation, he gave Moore some monthly Petro America bank statements and less than ten
receipts. Moore said Hawkins was supposed to set up an accounting office in Atlanta for Moore
but it never happened.
98. On June 11, 2010, Hawkins sent Petro’s 2007 to 2009 tax returns to the U.S.
Attorney’s Office. The tax returns were prepared by Clarence Moore. On the cover page for
the tax returns, Hawkins wrote on Petro letterhead, “Clarence Daniel Moore has a vast amount
of CPA and accounting and expertise. Mr. Moore has worked as an auditor for Exxon and as
the first African-American CPA for Gulf Oil.” “Mr. Moore is a 1976 graduate of Atlanta
University with a major in Business Administration and a minor in accounting, and received his
CPA license from the state of Georgia.”
99. Petro’s 2007 return showed $150,000 in assets and taxable income of $3,545.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 42 of 81
Petro’s 2008 return showed $81,101,654 in assets and a loss of $104,642. Petro’s 2009 return
showed $284,000,098,192 in assets and taxable income of $9,334. For the three years of filed
tax returns, Moore and Hawkins listed a loss of $91,763 in aggregated income totals. Hawkins
stated that all the income shown on the tax returns was generated by Performance Packaging.
100. On July 20, 2010, Hawkins sent an e-mail to the U.S. Attorney’s Office that
contained a letter stating Petro has hired the services of Malone & Bailey, LLC and CPA firm.
On July 19, 2010, Petro also engaged the CPA services of Albeck Financial Services for pre-
audit support. A CPA with Albeck was interviewed. The CPA described a conversation with
Hawkins about some mines Petro claimed to own. Hawkins told the CPA that several mine
owners with mineral rights have joined together with him. The CPA explained that with natural
resources, “reserved reports” are required to determine valuation. (In the oil and gas industry,
for instance, reserved reports are prepared by petroleum engineers who determine the best
estimate of reserves in the ground and what has been taken out of the ground.) The CPA asked
Hawkins for “reserved reports” on the mines. Hawkins replied that he has some reports but the
CPA was not sure of what kind of reports they are. The CPA asked Hawkins if the mines are
producing and he responded no. Hawkins explained that “we are trying to raise the money.”
The CPA further explained that cases where the mines or claims are not producing, they are
considered “unproved” and no value is assigned to them. The CPA said the $284 billion figure
shown on Clarence Moore’s Petro financial statements “in no way can be accurate.”
101. Johnny Heurung told federal agents that Hawkins told him that Petro’s stock
offering was not going forward because of the accounting procedures. According to Heurung,
the last accountant Hawkins hired for Petro was out of Atlanta. Heurung believed that
accountant put the value of Petro at $284 billion.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 43 of 81
102. Heurung told Hawkins that the previous accountant Petro was going to use in
Kansas City, whom he thought was named Allen Baskett, could not be used because he was not
approved by NASDAQ. Heurung said the accountant lived behind a gas station. The
accountant took all the mines and other assets and added the values together. Heurung believed
that the Kansas City accountant at one time had been a CPA but was not currently a CPA.
Teresa Brown and Windsong Ventures, LLC
103. From September 2008 through April 30, 2010, Teresa Brown received in excess
of $3 million from Petro America investors into accounts she controlled. Brown has a
registered shell company30 known as Windsong Ventures LLC (Windsong). Its address is listed
as , Bandera, Texas, which is Brown’s residence. Investors sent some
money directly to Brown, and other money came from finders collecting it on her behalf. From
June 2009 through April 2010, Brown spent at least $542,197.77 of Petro investor proceeds on
personal expenditures. Items include a $37,335 boat, a $32,750 SUV, expensive jewelry,
clothing, luxury goods (including a $5200 piece of Louis Vuitton luggage purchased in
Switzerland, timeshares, spa expenses, personal investments, and travel). In addition, Teresa
Brown has sent at least $830,000 to Petro America accounts, which was then withdrawn, mostly
by Hawkins, via structured cash withdrawals.
104. The Missouri Securities Division took Hawkins’ deposition on April 7, 2009. He
testified that Teresa Brown runs the conference calls for Petro America and she is the one who
solicited the investors into Petro America from the beginning. 31
A shell company is an inactive corporation without assets that is used as a legal and financial
entity through which a person or another entity can conduct certain matters.
Hawkins was asked in the same deposition if the conference call was “an opportunity for
people to hear about the blessing, the opportunity that Petro America offered?” He explained
how the conference calls first started. On an unknown Sunday, he explained, he received a
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 44 of 81
105. Larry Contier told federal investigators that Teresa Brown began selling her
“Windsong” shares in Fall 2009 at $1,000 for 100,000 shares. According to Contier, Brown set
this price. In a separate interview, Gina Kelly told investigators the same thing, adding that
Contier began selling these Windsong shares around the end of November 2009. (The below
chart of monthly deposits into Windsong’s JP Morgan account 794488569 supports the
recollections of Contier and Kelly by showing an income jump at that time.) Kelly said the
reason the Windsong shares were sold for 100 times the original price was because they (Brown
and Kelly) thought the value was higher. Kelly said that this was because of the things that
were being said by Hawkins and Heurung on the Thursday night calls. Kelly admitted she sold
Brown’s shares by saying to investors, “Petro is an opportunity to get involved in for 1 penny a
share, once Petro Kansas merges with PTRZ [Petro Delaware] it will open anywhere between
$2 to $5 per share.”
6/30/2009 $85,775.00 11/30/2009 $77,590.69
7/31/2009 $200,365.94 12/31/2009 $493,097.66
8/31/2009 $271,291.07 1/29/2010 $270,925.00
9/30/2009 $193,059.00 2/26/2010 $695,179.00
10/30/2009 $21,546.90 3/31/2010 $460,479.01
phone call from Teresa Brown. “And she asked me to – would I participate in talking to people
about Petro America.” He went on to say, “And she said, well, what is your vision for the
company and what you’re trying to accomplish, can you share that? So that’s basically the
purpose of the call. I did not initiate the call. I did not know who they were or anything like
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 45 of 81
106. On May 12, 2010, a search warrant was executed on Teresa Brown’s home in
Bandera, Texas. Agents seized seven computers and additional records related to Windsong
and Petro America. Brown claimed that Petro America is real, and that she is merely a private
shareholder who is selling her own shares that she owns outright. She did not explain why, if
she was merely selling her own shares, and she owned the shares outright, she had been sending
hundreds of thousands of dollars from the sales to Hawkins.
107. A shareholder list provided to the SEC on April 6, 2009, by an attorney
representing Petro America, indicates that Windsong Ventures has been issued a total
90,000,000 shares of Petro America Class B stock. The listing indicates that Windsong paid
$300,000 for the shares. It also indicates that Windsong holds 100,000,000 Class A shares. On
the shareholder listing, Windsong is one of the largest Petro America shareholders. Brown was
interviewed by federal agents on May 12, 2010, and she stated she purchased 1 billion shares of
Petro stock. She paid $30,000 for those shares. Brown said some of the $30,000 came from
money she saved and some came from a 401K. Other shares were gifted to her for doing work
for Petro. She stated that Windsong Ventures currently owns 50 million shares of Petro stock.
Sunstar Investment Group Inc, another company owned by Brown, currently owns 350 million
shares and Martin and Teresa Brown own 20 million. Brown stated that Aaron Brown owns 25
million shares of Petro stock.
108. In the interview with federal agents on May 12, 2010, Brown stated she does not
solicit shareholders, she said, “all I said was I have shares to sell, I put the word out.” On May
6, 2009, Teresa Brown sent an e-mail to a shareholder soliciting Petro shares. She wrote, "I
have someone putting up 20 million shares for sale. The price is $300 per 100,000. After taxes
are paid the remainder of the funds will be going to the Petro Legal Defense Fund. They
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 46 of 81
wanted to really help contribute and felt this would raise more funds than just a donation." In a
later e-mail to the shareholder on May 11, 2009, Brown admitted that "the shares belong to
Windsong Ventures LLC of which I am the managing director." But Brown did not disclose
that she personally would be taking a cut of the shares sold.
109. On December 8, 2009, Brown sent an e-mail to a Petro shareholder that said “We
have a small window of opportunity for all the shareholders who have been desiring some extra
shares. We have an individual who has some private shares that is willing to sell some to assist
in raising money for Petro. This will help pay for some of the additional costs that have been
accrued over the last month with the problems with the other transfer agent and also help all of
us get our shares in a timely manner. The shares will be available at the price of $1,000.00 for
100,000 shares. This is well below the current market price and a great opportunity for all those
looking for some extra.” Once again, Brown did not disclose that she personally would be
taking a cut of the shares sold. Title 15 U.S.C. § 77q makes it unlawful to promote a security in
exchange for compensation through dissemination of materials without fully disclosing the
receipt and amount of the compensation.
110. From October 2009 through February 2010, another shareholder purchased
7,000,000 shares from Brown for $70,000. This shareholder later told investigators that he did
not know he was buying Brown’s shares. He thought Petro had set aside shares to sell to get the
audit done. His understanding was the shares were available through Brown because Petro
needed to raise $180,000 to get money to have an accountant do an audit to compute the book
value. Since the mines were not generating cash, the stock sales were supposed to raise the
cash. He thought Brown was an agent for Petro, and he knew he was sending money to her
LLC, but he thought the money would be going to Petro. Brown said she was selling shares to
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 47 of 81
raise money for the Petro accounting because she was “someone who believes in the dream,”
and she wanted to help the company grow and get to the market. Brown told the shareholder in
an e-mail she had written the check to the accountant. Brown did not tell this shareholder that
she would be taking a hefty cut of the $70,000 he sent.
111. On June 11, 2009, a shareholder e-mailed Brown asking about comments made on
Johnny Heurung’s weekly call. The shareholder wrote, “Last time Johnny mentioned that he
was going to speak with the person that created the problem for Petro America (Kansas) and
resolve the issue and that PAC (Kansas) would be going public ASAP.” Brown responded back
saying “Even with all the set backs and hold ups Petro has still managed to go public and get a
new symbol...” The shareholder was clear on the e-mail that the company the shareholder was
talking was Petro Kansas and not PTRZ. Brown failed to make clear the distinction between
Petro Kansas and PTRZ.
112. On June 13, 2009, Brown sent an e-mail to undisclosed shareholders that said
“Everyone….Johnny and I have incredible news for you. We are all truly blessed and abundant.
Today Petro announced and went public! Many of you are now MILLIONAIRES! We
congratulate you and love that we have this great achievement together. SEND THIS TO
EVERYONE YOU INTRODUCED TO PETRO IMMEDIATELY!!! I was told Petro WE
CLOSED AT $1.01 YESTERDAY!!!!!!! (Stock Symbol- PTRZ). OOPs I was so excited that I
forgot to add that the new symbol is PTRZ and that is what we are now trading under.....We still
have to go through the audits and other legal processes before we get our shares however. I
understand that this is so value can be established.”
113. On August 3, 2009, a shareholder e-mailed Brown that she had spoken to her
stockbroker about Petro and Hawkins. The stockbroker said that PRTZ and Petro Kansas are
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 48 of 81
not the same company. In a later e-mail to Brown by the shareholder, she asked what the
symbol for Petro was. Brown responded by saying "ASWD went to PRTZ. The symbol for the
other company is PETRO."
114. On September 14, 2009, Brown e-mailed Hawkins "Johnny [Heurung], informed
me that I was to send additional funds when I have them, I will see what I can do. Since you
stated all the funding for the mines must come from us, that leaves me little left over for you.
We have to date added $103 Billion dollars in assets to Petro through the mine acquisitions and
paid for your joint venture with Jet Black Oil. All documentation will be provided to the SEC,
including all funds that have been sent to you for our shares" (emphasis added). Hawkins
responded to Brown by saying, "Do not contact the SEC, let that come from Petro America
Corp, the company, if the SEC has not contacted you do not contact them. We have not hired or
recommend any shareholder to act on behalf of Petro America regarding the SEC, only the
Company's legal counsel should deal with these matters.”
115. In December 2009, three shareholders pooled their money together to purchase
Petro shares from Brown. The group sent $7,000 via wire transfer to Windsong Ventures to
purchase the shares. Prior to the purchase the three shareholders held a conference all with
Brown. Brown told the shareholders that she was selling her Petro shares to raise funds to help
with accounting and transfer agents for Petro. Brown told them the previous transfer agent quit,
so Petro needed money for new transfer agents. Brown did not tell these shareholders she
would be taking a share of the money for herself. In fact, she told the shareholders that she was
taking a loss by selling her shares to them at $0.01 per share. One of the shareholders felt
Brown mislead him into believing they were purchasing PTRZ shares. Prior to the call with
Brown the shareholder looked up the value of PTRZ and at the time it was approximately $0.25
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 49 of 81
per share. The shareholder asked Brown why the shares were being sold to them for around
$0.01 to $0.02 per share. She told the group that they should “be thankful for the gift you got.”
116. Notebooks seized by agents from Brown’s residence show Brown was attempting
to conceal the transfer of Petro shares to Windsong Ventures from her associates. The
notebooks contain handwritten notes by Brown that give the impression that Hawkins instructed
Brown to transfer shares held by Heurung and other to Windsong to resell the shares at far
greater cost. These notes appear to be taken by Brown during a phone conversation with
Hawkins. Brown writes that “no one can know that Johnny is giving the shares back to
Petro...nothing in writing...never talked about with anyone” and “never had agreement for funds
to come back to Petro...otherwise null and void.” She also writes that it was not in the Petro
corporate resolution. Additional handwritten notes, dated March 9, 2010, were found during the
search warrant. They show Brown calculating the number of shares Heurung and others
transferred to Brown. She transferred shares from Heurung’s company and Heurung’s family
totaling 100,000,000. She also transferred 50,000,000 shares from Love Eternal LLC and
50,000,000 from Kyle, Carla and Laura Biver. Hawkins instructed her to transfer 25,000,000
from Arizona LG, 30,000,000 from DCD Operating, 20,000,000 from GBS Financial,
25,000,000 from Randy Whittle, 25,000,000 from Shelly Davidson and 5,000,000 from Gene
117. On September 9, 2010, Heurung told federal agents that Hawkins gave Brown
150 million shares of Petro stock to sell for Petro. Heurung did not know how Hawkins was
able to transfer the shares into Brown’s name. All of the money for purchased shares of Petro
stock went through Brown. Heurung claimed he forwarded all money he received for selling
Petro shares to Brown. Heurung said Brown told him that the money from the stock sales was
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 50 of 81
needed for accounting, Transfer Agents, mine development expenses (updated appraisals and
reports) and to pay business expenses. Brown did not tell Heurung she would be taking any of
the money for herself.
118. In a May 24, 2010 interview, Larry Contier told federal investigators that during a
meeting with Hawkins and Brown in Kansas City, Contier witnessed Brown giving Hawkins a
$130,000 check. Contier said Hawkins told him that the money was needed to pay fees to take
Petro public. Contier stated that Brown had already given Hawkins money in the past to pay
119. In a May 12, 2010 interview, Brown told federal agents that “I am selling my
shares and donating the money to Petro America Corp to get assets on the books.” She claimed
she was donating her shares to the company to fund it to get it public. She claimed that most of
the money from the sales of her shares went to the mine owners. Brown said “I’m just trying to
help the shareholders." But she was not able to explain how taking over $500,000 of the funds
for her personal expenses helps the shareholders.
120. A letter dated February 12, 2010, drafted by Brown, was seized during the
execution of the search warrant at Brown’s residence. It indicated that the law firm of Hogan &
Hartson represented the Institute for Marketing and Management in Lichtenstein. The
document is being used to commit 400 million shares of Petro shares to LFV Trust (company
operated by Brian Langenbach). Shares were transferred to Langenbach to pay him a finders
fee for mining projects presented to Petro. He was also given 10 million shares of Brown’s
Petro stock to sell. 32
121. Steve Ballew from Hogan & Hartson stated that he has never heard of Teresa
This is discussed in further detail below.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 51 of 81
Brown, Petro America, the Institute for Marketing and Management in Lichtenstein, or the LFV
Trust. Ballew retired at the end of last year, before the February 12 letter was issued. Although
he has done some work since then, he did no work for these entities. When Brown was
interviewed on May 12, 2010, she stated she could not remember what the Institute for
Marketing and Management was, and could only recall that it was located in Lichtenstein.
Records located on Brown's laptop indicate that the Institute for Marketing and Management
owns 250 million Petro shares, which would make it the largest shareholder on the list of over
Brown’s J.P. Morgan accounts
122. From June 16, 2009 through March 2, 2010, 559 wires totaling $1,743,136.55
from Petro America investors were deposited into Windsong Ventures’ account 794488569.
Another $403.365 was deposited via checks and cash from Petro America investors in amounts
ranging from $300 to $5,000. These deposits were made at J.P. Morgan bank branches across
the United States and occurred approximately 2 to 3 days per week up to 8 times per day.
123. From March 3, 2010 through April 30, 2010, $727,907.41 in incoming wires and
deposits went into Windsong Ventures account 794488569. The majority of deposits consisted
of wires and checks in round numbers of thousands and were from across the U.S. and Canada.
Most referenced the purchase of Petro America shares. Many of the wires noted “purchase of
Petro America Shares,” “purchase of PTRZ 250,000 shares at .01 per share,” “purchase 150,000
shares Petro paid stock attention Gina Kelly,” “Petro America,” etc.
124. From August 28, 2009 through February 23, 2010, at least $5,500 was received
into Windsong Ventures’ account 794488569 from Petro investors located in Missouri. As
evidenced previously in this declaration, Petro America has been subject to a Missouri cease
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 52 of 81
and desist order since November 12, 2008.
125. Teresa and Martin Brown hold personal checking account 4922485598 at J.P.
Morgan. From May 5, 2009 through May 8, 2009, $9,800 in Petro investor funds were filtered
through this account.
Money transferred by Teresa Brown to Owen Hawkins
126. Bank records from J.P. Morgan Windsong account 794488569 indicate that
Teresa Brown has sent large checks to Petro America and Hawkins. From December 14, 2009
through March 25, 2010, 11 such checks totaled $830,000:
Date Amount Payee Memo
12/14/2009 $125,000.00 Petro America Corp
12/16/2009 $10,000.00 Petro America Corp legal opinion
12/17/2009 $25,000.00 Petro America Corp
12/18/2009 $5,000.00 Owen Hawkins Merry Christmas
12/18/2009 $55,000.00 Petro America Corp
01/22/2010 $40,000.00 Petro America Corp
02/04/2010 $50,000.00 Petro America Corp
02/12/2010 $100,000.00 Petro America Corp
02/24/2010 $140,000.00 Owen Hawkins Petro
03/16/2010 $180,000.00 Petro America Corp
03/25/2010 $100,000.00 Petro America Corp
127. Records obtained from Mazuma show that Petro America Financial Services is
the holder of account 193566, which was set up on May 9, 2009. From December 14, 2009
through February 24, 2010, checks totaling $830,000 were deposited into this account from
Windsong Ventures, payable to Petro America and Hawkins. When the first deposit was made
on December 16, 2009, the previous balance was zero.
Other persons receiving money from Teresa Brown
128. Windsong Ventures is sending money to an individual who uses Teresa and
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 53 of 81
Martin Brown’s listed residence address as his business address. Records from J.P. Morgan
Windsong account 794488569 show that Teresa Brown is writing checks to Robbie Nicolai.
From September 24, 2009 to March 25, 2010, Teresa Brown wrote a total of 13 checks totaling
$47,600 to Robbie Nicolai. Robbie Nicolai and her husband Joseph Crane have an entity called
Angel Gate Creations, , Lake Hills, Texas. This address was listed as the
residential address on Teresa and Martin Brown’s signature card from their personal J.P.
Morgan account 830203410.
129. Other individuals and companies who received large amounts of money via wire
transfer and checks from Windsong Ventures and who appear to be involved in selling the Petro
America shares include:
• David J. Plasters, an attorney in Greeley, C On January 16, 2007,
Plasters opened escrow U.S. Bank account 5858, noting his business
was a law firm. Bank records show that fro 2009 to October 13, 2009,
five wires totaling $172,500 were sent to Plasters from Windsong account
794488569. The memo on the wires state “per instructions from Johnny, email to
follow.” The money was then wired out to Petro America Financial bank account
193566 at Mazuma.
• On September 15, 2009 a $7,500 wire sent to a company called Exmin, LLC
references “for Petro America per Johnny.” On January 4, 2010, a $100,000 wire
was sent to a company called Exodus 15, LLC referencing “Johnny Heurung
• Mary Anne Devan, Kathy Edstrom and SC Business Services, Inc. – From August
27, 2009 through February 18, 2010, wires totaling $35,500 from Windsong with
the memo “Love you” went to these apparent Petro America recruiters.
Bank of Colorado accounts held by Teresa Brown
130. A signature card obtained from Bank of Colorado for account 8302716212 in the
name of Windsong Ventures reveals this account was opened on May 4, 2009. Brown is the
only signer. She holds an additional business account in the name of Crystal Lotus
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 54 of 81
Metaphysical Centre (Crystal Lotus), account number 7871, which was opened on
September 27, 2001. The resolution of authority listed on the Crystal Lotus account lists the
business as a sole proprietorship, with Brown as the sole proprietor. The business is listed as
“spiritual counselor” on the organization records from La Plata County, Colorado. Teresa and
Martin Brown are the signers on the Crystal Lotus account.
131. From July 9, 2009 to February 26, 2010, $106,814 in wire transfers from Petro
America investors were received into Windsong account 8302716212. From September 2008
to November 2009, $9,490 in wire transfers from Petro America investors were deposited into
Crystal Lotus account 7871. Additional checks totaled $46,690. The majority were in
even hundred dollar or thousand dollar increments. Many were money orders and some
referred to “Petro stock,” “Petro shares” or “Petro oil.” Another $10,000 was wired into the
account from Windsong’s J.P. Morgan account 794488569.
Teresa Brown’s personal use of Petro America proceeds
132. Teresa Brown is using a large portion of the money sent by Petro America
investors for personal expenses, personal investments, and unrelated business ventures not
known to Petro America investors:
On October 8, 2009 a $14,327.37 cashier’s check to Gold Key Ocean Beach was
paid out of Windsong account 794488569 at J.P. Morgan. It was deposited into
an account held by Ocean Beach Club LLC, 932 Laskin Road, Virginia Beach,
Virginia. This entity’s parent is Concord Servicing Corp, which is a confirmed
timeshare business. Debit activity in the Windsong account revealed spending
activity in the Virginia Beach area from June 30, 2009 through July 7, 2009.
From September 14, 2009 to October 9, 2009, $70,000 was wired from the
Windsong account to a bank in Liechtenstein held by First United Investments.
The memos on these wire transfers reference “Teresa Brown for Container
At the same bank in Liechtenstein, Windsong wired $5,000 to the Institute for
Marketing and Management and $10,000 to Anivo Stiftung, both on January 11,
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 55 of 81
2010. Memos reference “consulting fees.” Debit activity on the account revealed
that Teresa and Martin Brown visited Switzerland at the end of February 2010.
On December 30, 2009, the Browns opened investment account CA2-158011
with Chase Investment Services. On the same date, $50,000 was transferred from
Windsong account 794488569 to Teresa and Martin Brown’s personal checking
account 3410 at the same bank. The $50,000 was then transferred to the
investm ount CA2-158011 and was used to purchase 50,000 shares of J.P.
Morgan cash equivalent liquid assets. In January 2010, $48,986.45 of the
$50,000 was used to purchase securities with Chase Investment Services. On
February 12, 2010, $20,500 from the investment account was deposited into their
personal J.P. Morgan account 3410.
On February 12, 2010, after Teresa and Martin Brown deposited the $20,500 into
their personal account, a $13,000 withdrawal was made. From that withdrawal,
one check was written to Martin Brown for $3,000 and a $10,000 wire transfer
went to Cresta Motor Yachts in Queensland, Australia.
On March 24, 2010, a $37,335.83 debit on Windsong account 794488569 was
made payable to Tracker Retail. Records obtained from Tracker Marine Boat
Center in San Antonio, Texas show the Browns purchased a 2010 Mercruiser
Tahoe 215 XI (Hull # BUJB08JUL910) and a Trailstar trailer (VIN
#4TM15PK25AB001193) to tow the boat. They were paid in full for $37,225.83,
with a debit card used by Teresa Brown from the Windsong Ventures J.P. Morgan
account. The title as lists the Browns as the owners,
with an address of , Bandera, Texas.
On April 21, 2010, a $32,750.00 cashier’s check was purchased by Teresa and
Martin Brown from Windsong account 794488569 payable to 1st Source Bank.
Bank records show the Browns purchased a 2008 Chevrolet Suburban K1500
(VIN #3GNFK16358G185303), paid in full.
In addition, Teresa Brown spent the following from Windsong account
794488569 at J.P. Morgan on jewelry from September 2009 through March 2010:
Date Vendor Amount
9/20/2009 Colorado Collection $1,938.96
11/6/2009 Ben Bridge Jewelers $374.39
12/15/2009 Ultra Diamonds $2,542.89
12/23/2009 Jared-Galleria $2,313.85
12/24/2009 Jared-Galleria $1,916.50
12/26/2009 Jared-Galleria $3,119.41
12/26/2009 Jared-Galleria $840.03
12/27/2009 Jared-Galleria $1,930.00
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 56 of 81
Date Vendor Amount
12/28/2009 Jared-Galleria $2,792.87
1/20/2010 Jared-Galleria $4,307.70
2/4/2010 Jewelsite.com $2,700.00
2/7/2010 B&B Fine Gems $9,800.00
2/12/2010 Diamond Cutters $2,900.00
2/25/2010 Juwelier Heldwein $14,677.64
3/4/2010 Jared-Galleria $7,460.58
133. During the September 9, 2010 interview with federal agents, Heurung stated that
during a meeting in Tucson with Brown, Heurung saw Brown purchase $60,000 in jewelry.
When confronted on the source of the money, Brown said it was from her husband’s estate
(which Heurung suspected was false because he knew her husband was a recently-released
felon). Heurung stated Brown also has new items in her house and buys expensive handbags
and clothes. Heurung claims Brown has money in Lichtenstein, Austria and Panama.
According to Heurung, Brown called Hawkins two weeks after the search warrant at her
residence and said the Feds did not get all of her funds.
134. In addition to the jewelry, from June 27, 2009 through March 23, 2010,
$26,303.93 was spent from the Windsong account for personal items including clothing,
sunglasses and shoes. Teresa Brown spent another $9,687.19 on handbags and purses,
including a $5,262.86 at Louis Vuitton on February 22, 2010 in Zurich, Switzerland.
Additional spending from that account in the period by Teresa Brown include $7,557.70 for
beauty supplies, $41,128.03 for home design items, $25,274.93 for air travel, and $32,378.67
for hotels. Travel included Caribbean cruise trips and travel to Switzerland.
135. Additional personal expenditures from the Windsong J.P. Morgan account
included a $3,462.91 purchase of a Nautilus Bowflex on September 1, 2009. From January 3,
2010 through March 4, 2010, $1,779.60 was spent on Nutri-System weight loss products. From
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 57 of 81
July 22, 2009 through March 26, 2010, $13,494.92 was spent by Teresa Brown on spa expenses
at places including The Spa at Hotel, Lake Austin Spa Resort, and Yardley’s, all three in Texas.
Out of the Windsong account, a total of $4,632.25 was spent at restaurants, $335.92 for the
purchase of Omaha steaks, and $1,997.43 on groceries. Items purchased from QVC television
shopping network totaled $15,050.29. Other personal spending from this account not accounted
for previously (with the exception of gasoline), including purchases at home improvement
stores, department stores, warehouse stores, including pet supplies, books and electronic games,
total $39,753.79. In addition to these expenditures, $7,157.19 of ATM withdrawals were made.
136. Bank of Colorado records reveal that Teresa Brown also purchased jewelry with
investor proceeds out of accounts held at that bank. In February 2010, Teresa Brown purchased
$21,575 in jewelry using funds out of Windsong account 8302716212. In addition, Teresa
Brown also paid for personal airline travel, lodging, clothing, meals, spa expenses, timeshare
purchases and additional jewelry out of the Crystal Lotus account 7871 at Bank of
Colorado. From September 9, 2008 to December 23, 2009, Teresa Brown spent $11,911.43 on
these types of personal expenditures out of the Crystal Lotus account. She also paid for her
personal vehicle, a 2006 Chevrolet Equinox LT (VIN # 2CNDL63F366034196). From
September 11, 2008 to March 1, 2010, $16,199.97 was paid to HSBC Auto Finance for Teresa
Brown’s personal vehicle. From September 2008 to November 2009, the Crystal Lotus account
received $66,180 in Petro America proceeds.
137. Scottrade records reveal that account 41-13 was opened on September 26,
2007 in both Teresa and Martin Brown’s names. From July 17, 2009 through January 8, 2010,
$11,600 was deposited from Windsong account 794488569 at J.P. Morgan. It was used to
purchase 73,050 shares of Petro America Delaware (PTRZ) stock that as of March 31, 2010 was
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 58 of 81
valued at $15,340.50. The Browns have also purchased 40,004 shares of World Transport
Authority stock, which has committed multiple violations of SEC regulations.
138. J.P. Morgan bank records from June 16, 2009 to April 30, 2010, show that
numerous incoming wires and checks deposited into Windsong account 794488569 are from
Petro America investors. No other sources of deposit were evident. From September 2008 to
February 2010, Windsong account 8302716212 and Crystal Lotus account 7871 at Bank
of Colorado received Petro America investor money. Bank records from Associated Bank and
Mercantile for Regina Kelly, Michael Kelly, and their company Crystal Clear show they are
selling Petro America shares and sending those funds back to Windsong.
139. From June 17, 2009 through July 2, 2009, four wires totaling $55,175 were sent
by Regina and/or Michael P. Kelly to the Windsong Ventures account 794488569. Checks paid
out of the Windsong Ventures account show that Regina Kelly is receiving commissions for
selling Petro America stock. From September 14, 2009 through March 20, 2010, Regina Kelly
received $44,200 in funds from Windsong Ventures. The memo line on the checks referenced
“pd in full” and “commissions.”
140. From July 6, 2009 through February 17, 2010, there were numerous deposits of
checks from Petro America investors into Windsong account 794488569. Many reference
“shares” or “100,000 shares of Petro America Stock” or “gifted shares” on the memo line. A
total of $121,749.40 of these checks came from Regina Kelly, Michael P. Kelly and Crystal
Clear Ventures, LLC (Crystal Clear). The checks were then signed over to Windsong Ventures
for deposit. According to bank records obtained from Mercantile Bancorp, Inc., Crystal Clear,
500 Maine St. Apt. 308, Quincy, Illinois is owned by Regina and Michael Kelly. Bank records
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 59 of 81
from Associated Banc-Corp (Associated Bank) show that Regina and Michael Kelly hold
personal bank account number 1854. Deposits analyzed from June 18, 2009 through
July 30, 2009, reveal 26 checks deposited into account 1854 totaling $47,000 from Petro
America investors throughout the U.S. and Canada. Most of the checks, money orders and
cashier’s checks deposited have notations such as “Petro,” “Petro Shares” or “PTRZ.”
141. Associated Bank records reveal that Regina and Michael Kelly opened account
5628 for Crystal Clear on July 21, 2009. They are the only signers. On August 13,
2009, a cashier’s check to Crystal Clear for $20,955 was issued to close account 5628
(Crystal Clear account). Based upon records from J.P. Morgan, this check was deposited into
Windsong account 794488569. On the same day, a cashiers check to Michael P. Kelly for
$7,794.40 for closed account 1854 (Kelly’s personal account). Records from J.P.
Morgan show this check was deposited into the Windsong Ventures account 794488569.
142. Bank records show that the Kellys opened Crystal Clear account 101009348 on
September 1, 2009. Both are listed as managers of Crystal Clear. On March 20, 2010, a
$25,000 check from Windsong account 794488569 at J.P. Morgan was deposited into the
Crystal Clear account at Mercantile Bank. It was made payable to Gina Kelly and Crystal
Clear. The memo line of the check stated “commissions.”
143. In a June 3, 2010 interview with Gina Kelly, she stated that in April or May 2009,
Brown began reselling her Petro shares. Kelly said Petro needed the money at the time and
Brown had the idea to resell her Petro shares. Brown told Kelly the reason she wanted to resell
her Petro shares was because she wanted to raise money for Petro to help buy gold mines, pay
people to inspect the mines and to help build the value of Petro. Kelly stated the money raised
by selling Brown’s shares was not to be used to buy cars, boats, houses and jewelry.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 60 of 81
144. In the interview, Kelly admitted that in June or July 2009, she started receiving a
20% commission on the shares she sold for Brown. That was not agreed to up front. She did it
for free in the beginning, but it became too time consuming, so she approached Brown about
receiving a commission. Investors wired money made payable to Kelly into her account. They
did this because Brown was traveling. Gina would then take her 20% commission and wire the
remainder to Windsong Ventures.
145. Kelly resold Brown’s Petro shares at $1,000 for 100,000 shares. Kelly stated the
reason they were sold for 100 times [it was actually 10 times] the original price was because
they [Brown and Kelly] thought the value was higher. This was because of the things that were
being said by Hawkins and Heurung on the Thursday night calls. Kelly sold Brown’s shares by
saying to investors, “Petro is an opportunity to get involved in for 1 penny a share, once Petro
Kansas merges with PTRZ [Petro Delaware] it will open anywhere between $2 to $5 per share.”
146. Kelly said Larry Contier from Colorado is also selling Brown’s Petro shares.
Kelly has not told Contier that she was receiving commissions from Brown.
147. From July 13, 2009 through March 1, 2010 Larry Contier received $12,000 from
Windsong Ventures. The Office of the Attorney General for the State of Colorado contacted
Larry Contier on November 3, 2008 regarding e-mails he sent out recruiting investors into Petro
America. Contier was notified by Gary Garcia a Criminal Investigator with Office of the
Attorney General for the State of Colorado of the investigation by the state into Petro America.
During Gary Garcia’s conversation with Contier, Contier did not seem surprised by the
investigation. Garcia told Contier there is no legitimate way to promise a return of $200,000 on
a $100 investment as Petro America had proposed. Contier agreed with Garcia’s statement.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 61 of 81
Contier stated he knew of 45 people who he had sent the e-mail to, who had invested in Petro
America. Contier also stated there were approximately 6,000 investors in his “group”. Of the
45 people Contier signed up, there was no investment over $500.
148. Johhny Heurung said Larry Contier is selling Petro shares and was telling
Heurung’s clients that he (Contier) was taking $100 of every $1,000 received for shares sold.
Heurung said he called Contier and chewed him out and said what he was doing was illegal.
After this he and Brown had a falling out because Brown said Heurung cannot talk to her people
149. In a May 24, 2010 interview with federal agents, Contier stated he became
involved with Petro because he received an e-mail from Martin Roper. He did not receive the e-
mail directly from Roper, but received it from a friend. Contier said “I forwarded it out to 200
people, close good friends, family, cousins, aunts and uncles.” Contier stated that
approximately 60 or 70 people purchased Petro shares because of the e-mail he forwarded. He
said they were supposed to send the money directly to Petro.
150. During the interview, Contier was asked about the $2 per share value that Petro
was shown on the e-mail he forwarded from Martin Roper. Contier stated he did believe in the
$2 per share value, even though he said “yes, it’s deceitful, but when it goes public…it’s a huge
151. Brown asked Contier if he would be willing to collect data from people who want
to buy Petro shares from Windsong Ventures. Contier stated the shares Brown is selling are
owned by Windsong Ventures. The shares are being sold at $1,000 for 100,000 shares.
According the Contier, this amount has been going on for months and it was determined by
Brown. Contier began selling Windsong shares around the end of November 2009.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 62 of 81
152. Contier said he sold a few hundred people Petro shares held by Windsong
Ventures. Some people bought several hundred thousand shares but the average amount spent
per investor was between $2,000 and $3,000. Contier told investigators that his “phone was
ringing off the hook and he (Contier) spent many hours selling the Brown’s Petro shares.”
Contier stated that Hawkins knew Brown was reselling her shares.
153. Contier said Brown sent him $10,000 to pay for his recent medical bills. He also
received a $2,000 check from Brown about a year and a half ago.
154. The Arizona Securities Division is currently investigating Brian Langenbach for
offering and selling unregistered securities in the state of Arizona. Documents provided by
Langenbach to the Arizona Securities Division show that Langenbach received 10,000,000
shares of Petro stock from Teresa Brown, who together with Johnny Heurung, advised him to
resell the shares to raise capital pending the Petro public offering, which she and Heurung had
represented was imminent. Langenbach sold 2,297,650 shares of Petro stock to various third
parties at $0.20 per share. Brown was paid $105,000 from Langenbach for the 10,000,000
shares. Langenbach obtained the money from the proceeds of the third party sales.
155. Of the $459,530 received from the sale of the shares, $105,000 was remitted to
Brown, $118,000 was used by Langenbach to pay off existing business obligations, $118,000
was remitted to David Greene, a business partner of Langenbach. The remaining $118,000 was
distributed to various individuals whom Langenbach believed to be in need of financial
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 63 of 81
156. Around October 1, 2008, a Texas resident received an e-mail from Martin Roper
offering an investment opportunity in Petro America, an oil company that would be going on
the stock market within the next six months. Funds were to be sent to Roper in Kansas City,
Kansas, who would deliver the funds to Petro America. The email stated:
a. Israel Owen Hawkins was the president of Petro America;
b. Martin Roper was collecting payments for Petro America;
c. For each $100 investment, investors would receive 100,000 shares of Petro
d. “Mr. Hawkins confirmed that there is currently $68 Million on Petro Books
with SEC Exchange. Attorney has notarized and signed off on this
e. “This ‘special offer’ is ending soon for new Stockholders. This offer is
being presented through a Stockholder, not the Company. Initially,
they only wanted 1,000 people;”
f. Petro America was working with “various insurance companies who are
offering to purchase these shares and either place them in an annuity
or a combination of annuity/buy out, which means if you purchase $200.00
worth of shares, you could place $100.00 worth into an annuity and have
them place the other $100 worth into an escrow account, until everything
is finalized. It can only be done in increments of $100 though….That means
no matter what the stock market does you have made a huge profit
already, because at this moment the insurance companies have to place
a value of $2.00 per share. $100.00=100,000 shares=$200,000.00;”
g. “to participate here is what I need you to do. Let me know YES in the
Subject Line and I will need you to send me your Personal Check,
Money Order or Cashier’s Check. Make it payable to Petro America Corp;”
h. “You will receive your Stock Certificate within just a few days. Within the
next 6 months, it is expected to be offered on the Pink Sheets stock market.
It will possibly go on the market in November or December of this year.”
The Texas resident was also provided a telephone number and a personal identification
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 64 of 81
number to a call center to listen to a pre-recorded conference call. The call repeated the same
pitch as in the email from Roper. In addition, the Texas resident learned that an annuity on
100,000 shares would pay approximately $1,700 per month for the investor’s life. On October 1,
2008, the Texas resident sent an e-mail to Petro America asking how to set up an annuity. She
received an e-mail back from George Verhulst, a Petro America representative regarding the
annuities. The Texas resident decided not to invest in Petro America.
157. Around September 29, 2008, an Oregon resident received an e-mail concerning
Petro America, providing Roper as a contact. The Oregon resident listened to a pre-recorded
conference call. On October 1, 2008, the Oregon resident purchased a $200 cashier’s check for
an investment in Petro America. The check was made payable to “Petro America Corp” and
was submitted to Martin Roper in Kansas City, Kansas via U.S. mail. Soon thereafter, the
Oregon resident decided to withdraw from the investment. He sent an e-mail to
email@example.com, but did not receive any response. The Oregon resident then
telephoned Petro America’s Missouri office to request a refund. A Petro America
representative said the message would be passed to Hawkins for processing. As of November
2008, the Oregon resident had not received a refund of his investment.
158. In a March 31, 2009 deposition of Martin Roper taken by the Missouri Securities
Division, Roper stated he did not draft the original e-mail he sent out to shareholders. He said
he was approached by Allen Collins initially regarding Petro America. Collins told Roper that
he would be gifted a million shares for every ten people he brought into Petro. He also said he
received the original e-mail about Petro from J.J. Jeansome in Louisiana sometime in
September 2008. A friend of Roper’s named Bill Miller knew Jeansome and that is how he
[Roper] received a copy of the e-mail. Roper said he modified the e-mail because he felt there
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 65 of 81
was too much information on Jeansome’s e-mail and he deleted some of it. He also wanted to
personalize the e-mail and “made it mine.” He put his information on the bottom of the e-mail
and sent “it out to my people.”
159. In October 2009, a Petro shareholder purchased 3,000,000 shares from Brown by
wiring $30,000 to her Windsong bank account. George Verhulst solicited the shareholder to
buy Brown’s shares. Verhulst had explained that Petro was top heavy on assets but needed
more liquid assets. Verhulst said he had been involved with Petro for some time and the $230
billion of assets claimed by Petro (gold mines and oil) had been substantiated. The shareholder
invested in Petro because of these assets. Verhulst told the shareholder that Petro America
Delaware (PTRZ) had been in business six years and the money for the gold mines was paid for
by PTRZ’s oil sales. Verhulst failed to disclose that Petro had only been in existence since
2007, that PTRZ was a shell company formerly called American Southwest Music Distribution,
and that it was unrelated to Petro America Corp., which was actually the entity with the claimed
Fungible Property Can Be Forfeited
160. In pertinent part, 18 U.S.C. § 984(b) provides: 1) In any forfeiture action in rem in
which the subject property is cash [or] funds deposited in an account in a financial institution-
a) it shall not be necessary for the Government to identify the specific property involved in the
offense that is the basis for the forfeiture; and b) it shall not be a defense that the property
involved in such an offense has been removed and replaced by identical property. 2) Except as
provided in subsection (c), any identical property found in the same place or account as the
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 66 of 81
property involved in the offense that is the basis for the forfeiture shall be subject to forfeiture
under this section.
161. In essence, Section 984 allows the United States to seize for civil forfeiture
identical property found in the same place where the “guilty” property had been kept. See
United Stated v. All Funds Presently on Deposit at American Express Bank, 832 F. Supp. 542,
558 (E.D.N.Y 1993).
162. The “fungibility” rule of Section 984(b) cannot reach back in time for an
unlimited period. Section 984(b) provides: “No action pursuant to this section to forfeit
property not traceable directly to the offense that is the basis for the forfeiture may be
commenced more than one (1) year from the date of the offense.” Section 984(b) thus applies
so long as the “action” to forfeit the property is commenced within one year from the date of the
offense given the base for the forfeiture. Here, as described above, the dates of the offense
giving rise to the seizure are within the one year period.
163. While Section 984 does not explicitly define the term “action,” the section’s
legislative history clearly establishes that Congress intended the seizure of property to constitute
the “action” to be commenced within one year of the offense in order to obtain the benefit of the
application of that section’s fungibility rule: “Section 984 provides that in cases involving
fungible property, property is subject to forfeiture if it is identical to otherwise forfeitable
property, is located or maintained in the same way as the original forfeitable property, and not
more than one year has passed between the time the original property subject to forfeiture was
so located or maintained and the time for the forfeiture action was initiated by seizing the
property of filing the complaint, regardless of whether or not the fungible property was
continuously present or available between the time it became forfeitable and the time it was
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 67 of 81
seized.” Money Laundering Enforcement Amendments of 1991, H.R. No. 102-28 (March 20,
1991), 1991 WL 42201 (emphasis added). See American Express Bank, 832 F. Supp. at 558
(quoting legislative history to the effect that Section 984 applies to money in seized accounts to
the extent that money involved in money laundering or structuring existed in those accounts
within one year of the seizure).
164. Thus, Section 984 makes the property in the accounts described below subject to
seizure and forfeiture to the extent that monies involved in structuring were located in the
account in the year preceding the seizure.
Specific Assets to be Forfeited
J.P. Morgan Bank accounts
Windsong Ventures, LLC account 794488569- $53,030.77
165. Windsong Ventures filed a Certificate of Organization on December 17, 2008
with the New Mexico Secretary of State’s office. The signature card obtained from J.P. Morgan
on business checking account 794488569 for Windsong Ventures was signed by Teresa Brown
on June 16, 2009. Teresa Brown is the only signer on the account.
166. From June 16, 2009 to April 30, 2010, a total of $2,874,408.96 was deposited into
Windsong Ventures account 794488569 from Petro America investors. The deposits came from
wire transfers, cash, money orders, personal checks and business checks. In addition to the
money coming directly from Petro America investors, Windsong Ventures was also receiving
investor proceeds from individuals and businesses across the U.S. and Canada who are believed
to be soliciting investors to buy Petro America stock. This includes wire transfers and checks
received from Regina Kelly in Illinois, wires from Shelly Davidson in Alberta, Canada and
wires from LFV Management, LLC in Gilbert, Arizona. At set forth in the main body of the
declaration, above, all of the above described funds represent proceeds of a conspiracy and
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 68 of 81
scheme in violation of 15 U.S.C. § 78ff (securities fraud), 18 U.S.C. § 1343 (wire fraud), and
18 U.S.C. § 371 (conspiracy to commit wire fraud).
Windsong Ventures, LLC account 854824216 - $9,950.00
167. On March 25, 2010, Teresa Brown opened up an account 854824216 at J.P.
Morgan in the name Windsong Ventures, LLC. To date the only activity on this account is a
$10,000 opening deposit on March 25, 2010 that was transferred from Windsong Ventures J.P.
Morgan account 794488569. As shown above, all money received into account 794488569,
was from Petro America investors and is traceable to the fraud outlined in the declaration.
Sunstar Investment Group, LLC account 2957730480 - $1,000.00
168. Sunstar Investment Group, LLC filed a Certificate of Organization on August 4,
2009 with the New Mexico Secretary of State’s office. The signature card for J.P. Morgan
business savings account 2957730480 in the name of Sunstar Investment Group, LLC was
signed by Teresa Brown on April 1, 2010. Teresa Brown is the only signer on the account.
169. On April 1, 2010, $1,000 was transferred from Windsong Ventures account
794488569 to Sunstar Investment Group account 2957730480. As shown above, all money
received into account 794488569, was from Petro America investors and is traceable to the
fraud outlined in the declaration.
Sunstar Investment Group, LLC account 893873356 - $3,975.00
170. Signature cards obtained for J.P. Morgan business checking account 893873356
in the name of Sunstar Investment Group, LLC was signed by Teresa Brown on April 1, 2010.
Teresa Brown is the only signer on the account.
171. On April 1, 2010, $4,000 was transferred from Windsong Ventures account
794488569 to Sunstar Investment Group account 893873356. As shown above, all money
received into account 794488569, was from Petro America investors and is traceable to the
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 69 of 81
fraud outlined in the declaration.
Hope United, Inc. account 0315-0000486982-7 - $54,609.42
172. Signature cards were obtained for J.P. Morgan business checking account 0315-
0000486982-7 in the name of Hope United, Inc. This account was formerly held by
Washington Mutual and was opened on January 3, 2007. Kittya Paigne of 1533 Alamitos Ave.,
Long Beach, CA is the only signer on the account. Statements were reviewed for the period
June 1, 2008 to March 31, 2010. There was little activity on the account until an incoming wire
for $100,000 from Petro America Financial was on received February 19, 2010. The wire
originated from Mazuma Credit Union account 193566, in the name of Petro America
Financial. As shown in this declaration, there is probable cause to believe the funds deposited
into the Petro America accounts from September 30, 2008 thru March 31, 2010 represent
proceeds from the conspiracy and scheme to commit wire fraud and securities fraud, and also
constitutes a financial in violation of 18 U.S.C. § 1957 (money laundering).
Teresa and Martin Brown’s Investment account CA2-158011 - $28,918.13
173. On December 30, 2009, Teresa and Martin Brown opened up investment account
CA2-158011 with Chase Investment Services, Inc. On that same date $50,000 was transferred
from Windsong Ventures account 794488569 to Teresa and Martin Brown’s personal checking
account 3410 at the same bank. The $50,000 was then transferred to the investment
account CA2-158011. This $50,000 was used to purchase 50,000 shares of J.P. Morgan liquid
assets in a cash equivalent money market for Teresa and Martin Brown. In January 2010,
$48,986.45 of the $50,000 was used to purchase securities with Chase Investment Services.
The money transferred from Windsong Ventures account 794488569 to the Brown’s personal
checking account and then moved to the investment account is traceable to money from Petro
America investors, and constitutes a money laundering transaction. On February 12, 2010,
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 70 of 81
Teresa and Martin Brown pulled out $20,500 out of the investment account and deposited it into
their personal J.P. Morgan account 830203410.
Bank of Colorado account
Windsong Ventures, LLC account 8302716212 - $3,860.25
174. A signature card obtained from Bank of Colorado for account 8302716212 in the
name of Windsong Ventures reveal the account was opened on May 4, 2009. Teresa Brown is
the only signer on the account.
175. From July 9, 2009 to February 26, 2010, wire transfers from Petro America
investors resulting from the conspiracy and scheme to commit wire fraud received into Bank of
Colorado account 8302716212 in the name of Windsong Ventures totaled $106,814.
Mazuma Credit Union account
Petro America Financial Services, Inc. account 193566 - $138,682.21
176. Petro America Financial Services was incorporated in the state of Kansas.
Articles of Incorporation list HMC Enterprise Corporation as the resident agent at the same
address as Petro America Financial Services, and the incorporator is Owen Hawkins. The
company was incorporated on February 9, 2009.
177. Mazuma account number 193566 for Petro America Financial Services was set up
on May 9, 2009. On the original signature card dated May 9, 2009, John Hammond (SSN:
, DOB: 1959), , Kansas City, Missouri is listed as CEO of
Petro America Financial Services. Israel O. Hawkins (SSN: , DOB: /1955),
Kansas City, Kansas is an authorized signer and he is listed as the
Chairman of the Board for Petro America Financial Services. An additional signer on the
account is Marcia P. Parker (SSN: DOB: 1964), ,
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 71 of 81
Raytown, Missouri. Parker is listed as the Secretary on the signature card. An updated
signature card for Petro America Financial Services was signed on December 16, 2009. This
signature card has only Hawkins and Parker as the authorized signers on the account.
178. Checks and money orders deposited into Petro America Financial account 193566
at Mazuma from the period May 9, 2009 thru January 22, 2010 indicate they are Petro America
investor deposits. They are in round $100 increments, mostly in money orders. They indicate
in the memo section “shares,” “Petro,” “gifted shares” or “2M shares.” Additionally during the
spring and summer of 2009, there are a large number of investor checks, in $25 amounts that
indicate they are for “Petro defense fund.” For the period, 70 checks and money orders were
deposited totaling $13,615 from investors. An additional 71 checks were deposited totaling
$4,824.95 for the Petro America defense fund.
179. In addition to the investor proceeds deposited into the account at Mazuma, from
July 16, 2009 thru October 13, 2009, $172,310 was deposited via wire transfers from David J.
Plasters, from Greeley, Colorado. From July 9, 2009 thru October 9, 2009 Plasters received
five wire transfers from Windsong Ventures account 794488569 totaling $172,500. Once the
wire transfers were received into Plasters bank account, the money was subsequently wired to
Petro America Financial bank account 193566 at Mazuma Credit Union. Mazuma Credit Union
records for Petro America Financial bank account 193566, reveal the five wires sent out of the
Plasters account totaling $172,310 were received into the Petro America Financial account at
Mazuma Credit Union.
180. From December 14, 2009 through March 25, 2010, eleven checks were sent to
Petro America and Hawkins from Windsong Ventures J.P. Morgan account 794488569 totaling
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 72 of 81
181. The funds deposited into the Petro America account represent the proceeds of the
conspiracy to commit wire fraud and securities fraud either directly as deposits from investors
or indirectly as a result of both direct wire transfers from the Windsong Ventures or from
Windsong Ventures funds routed through David Plasters account. In addition, the transfers
from Plasters and Windsong Ventures are money laundering transactions.
Bellco Credit Union account
Larry and Karin Contier account 583916370 - $ 10,000.00
182. A credit union application was signed by Larry Contier and Karin Contier on
September 27, 2005 at Bellco Credit Union. The Contier’s hold a savings account 583916370
at Bellco Credit Union. From July 13, 2009 through March 1, 2010 the Contier’s deposited
$10,000.00 into their savings account 583916370 from Windsong Ventures account 794488569.
As shown in the declaration, all money received into account 794488569, was from Petro
America investors. Therefore, any funds transferred from that Windsong Ventures account are
traceable to proceeds of the conspiracy and scheme to commit wire fraud and securities fraud,
and represented a money laundering transaction.
Bank of America account
Uniti Capital Corporation account 457018209174 - $53,232.78
183. On April 8, 2010, Teresa Brown wrote a check to cash for $160,000 written on
the Windsong Ventures J.P. Morgan account 794488569. She converted those funds on the
same day into a $160,000 cashier’s check made payable to Uniti Capital Corporation, LLC.
The $160,000 cashier’s check was deposited into Bank of America account 457018209174 held
by Uniti Capital Corporation, LLC.
184. On March 6, 2010, Windsong Ventures issued Gary A. Smith a $130,000 check
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 73 of 81
out of account 794488569. Smith took the check to a J.P. Morgan bank branch and converted
the $130,000 into two cashier’s checks; one made payable to Uniti Capital Corp, LLC for
$125,000, one payable one to himself for $2,500, and took the remainder in cash.
185. In a May 12, 2010 interview with Teresa Brown by federal agents, she stated
Uniti Capital is a bond program that buys and sells bonds. She stated she sent $160,000 to Uniti
in order to raise funds to help Petro America “complete the process [of going public].” Brown,
J.J. Jeansome and Larry Contier pooled money together and gave it to Brown to forward to
Uniti. Brown’s contact for Uniti is William Payton who is located in Panama.
186. As shown in the declaration, all money received into account 794488569, was
from Petro America investors. Therefore, any funds transferred from that Windsong Ventures
account are traceable to proceeds of conspiracy and scheme to commit wire fraud and securities
fraud, and to violations of 18 U.S.C. § 1957 (money laundering).
Mercantile Bank account
Crystal Clear Ventures, LLC account 101009348 - $4,052.14
187. From September 1, 2009 to March 30, 2010, Mercantile Bank account 101009348
for Crystal Clear Ventures, LLC was analyzed. The account was opened on September 1, 2009
by Regina A. Kelly (SSN: DOB: 1954) and Michael P. Kelly (SSN:
, DOB: 1947), . Quincy, Illinois. They are both listed as
managers of Crystal Clear Ventures. On March 20, 2010, a check from Windsong Ventures
account 794488569 at J.P. Morgan for $25,000 was deposited into the Crystal Clear Ventures
account 101009348 at Mercantile Bank. The check was made payable to Gina Kelly and
Crystal Clear. The memo line of the check stated “commissions.” As shown in the declaration,
all money received into account 794488569, was from Petro America investors. Therefore, any
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 74 of 81
funds transferred from that Windsong Ventures account are traceable to proceeds of conspiracy
and scheme to commit wire fraud and securities fraud, and to violations of 18 U.S.C. § 1957
Home Savings of America account
John F. Heurung and Josephine A. Heurung account 0100260463 - $130,129.07
188. From August 13, 2009 to January 19, 2010, John Heurung received a total of
$38,600 in wires from Windsong Ventures J.P. Morgan account 794488569. The wires went to
John Heurung’s business account 2283110670, in the name of Money Investment, Inc. at
Associated Banc-Corp. The memos on the wires include, “our company car,” “Merry
Christmas,” and “Happy New Year.”
189. On August 20, 2009 a $100,000 wire was sent by Windsong Ventures out of
account 794488569 to Money Trust Company, another business that appears to be owned by
Johnny Heurung. The address for Money Trust Company is 6701 Stratford Road, Woodbury,
Minnesota. This is the same address for Money Investment, Inc. This wire was deposited on
August 20, 2009 into account 0402 in the name of Money Trust Company at Associated
Bank. After the wire was received, it was transferred to account 0670 in the name of
Money Investment, Inc. at Associated Banc-Corp. The funds remained in that account until
Heurung closed the account on April 13, 2010. The $100,000 in the account was converted into
a cashier’s check payable to Money Investment Inc FBO John F. Heurung.
190. The $100,000 cashier’s check was then presented for deposit to Farmers and
Merchants State Bank on April 13, 2010 when Heurung opened a money market account. That
cashier’s check in addition to two others was deposited into Farmers and Merchants State Bank
money market account #481069 on April 14, 2010. The other two checks presented for deposit
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 75 of 81
was cashier’s check # 7399 from Associated Banc-Corp for $10,000 out of Money
Investment Inc. account # 10670 and cashier’s check #3592001 for $10,000.15 from
Associated Banc-Corp account # 4746. Those three checks were deposited on the same
day to Farmers and Merchants State Bank. The account was closed on April 27, 2010 by
Farmers and Merchants State Bank. At the time the account was closed, funds in that account
totaled $123,015.11. Those funds were converted to a cashier’s check made payable to Money
191. A signature card for joint checking account 0100260463 held at Home Savings of
America in the name of John F. Heurung and Josephine A. Heurung was signed on April 27,
2010. John Heurung is the only person to sign the signature card and his address is listed as
6701 Stratford Road, Woodbury, Minnesota.
192. On April 27, 2010, the $123,015.11 cashier’s check out of the Farmers and
Merchants State Bank account that was made payable to Money Investment, Inc. was deposited
into Home Savings of America account 0100260463. As shown in the declaration, all money
received into account 8569, was from Petro America investors. Therefore, any funds
transferred from that Windsong Ventures account are traceable to proceeds of conspiracy and
scheme to commit wire fraud and securities fraud, and to violations of 18 U.S.C. § 1957 (money
193. This declaration establishes probable cause that these vehicles are subject to
seizure and forfeiture to the United States pursuant to 18 U.S.C. §§ 981 and 982 on the grounds
that they constitute property involved in, or traceable to violations of 15 U.S.C. § 78ff
(securities fraud), 18 U.S.C. § 1343 (wire fraud), Title 18 U.S.C. § 371 (conspiracy to commit
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 76 of 81
wire fraud), and Title 18 U.S.C. § 2314 (interstate transportation of stolen property). In
addition, in some instances the property traceable to financial transactions in amounts greater
than $10,000 involving the proceeds of these Specified Unlawful Activities. As such, the funds
on deposit in the accounts are traceable to violations of 18 U.S.C. § 1957 (money laundering).
2006 Chevrolet Equinox LT
194. Teresa Brown and Martin Brown’s 2006 Chevrolet Equinox LT (VIN#
2CNDL63F366034196) was paid for out of the Crystal Lotus Metaphysical Centre (Crystal
Lotus), account 7871 at Bank of Colorado. From September 11, 2008 to March 1, 2010,
$16,199.97 was paid to HSBC Auto Finance for the 2006 Chevrolet Equinox out of this
account. As evidenced in the declaration, from September 2008 to November 2009, Petro
America proceeds were received into the Crystal Lotus account totaling $66,180.
195. In addition to the Petro America proceeds going directly into the Crystal Lotus
account, from July 9, 2009 to March 18, 2010, $46,200 was transferred from Windsong
Ventures account 8302716212 at Bank of Colorado to Crystal Lotus. During that same period,
$106,814 in wire transfers was received from Petro America investors into the Windsong
Ventures Bank of Colorado.
196. From September 29, 2009 to August 25, 2010, an additional $10,000 was
transferred to the Crystal Lotus account from the Windsong Ventures J.P. Morgan account
794488569. As shown in the declaration, all money received into J.P. Morgan account
794488569, was from Petro America investors.
197. As shown in this declaration any funds from Petro America investors are traceable
to violations of 15 U.S.C. § 78ff (securities fraud), 18 U.S.C. § 1343 (wire fraud) and 18 U.S.C.
§ 2314 (interstate transportation of stolen property) and is property traceable to such Specified
Unlawful Activities. In addition the funds used to purchase the 2006 Chevrolet Equinox are
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 77 of 81
traceable to proceeds of conspiracy and scheme to commit wire fraud, and to violations of Title
18 U.S.C. § 1957 (money laundering).
2008 Chevrolet Suburban K1500
198. On April 21, 2010 a $32,750.00 cashier’s check was purchased by Teresa and
Martin Brown from Windsong Ventures account 794488569 and was made payable to 1st
Source Bank. Records obtained from 1st Source Bank reveals that Teresa and Martin Brown
purchased a 2008 Chevrolet Suburban K1500 (VIN #3GNFK16358G185303). The vehicle was
paid in full. As shown in the declaration, all money received into J.P. Morgan account
794488569, was from Petro America investors. In addition the funds used to purchase the 2008
Chevrolet Suburban are traceable to proceeds of conspiracy and scheme to commit wire fraud
and securities fraud, and to violations of Title 18 U.S.C. § 1957 (money laundering).
2010 Mercury Tahoe Cruiser 215 XI and Trailstar trailer
199. On March 24, 2010 a $37,335.83 debit on Windsong Ventures account
794488569 was made payable to Tracker Retail, San Antonio, Texas. Records obtained from
Tracker Marine Boat Center, in San Antonio, Texas reveals that Teresa and Martin Brown
purchased a 2010 Mercury Cruiser Tahoe 215 XI (Hull # BUJB08JUL910) and a Trailstar
trailer (VIN #4TM15PK25AB001193) to tow the boat. The boat and trailer were paid in full for
$37,225.83, with a debit card used by Teresa Brown from the Windsong Ventures J.P. Morgan
account. As shown in the declaration, all money received into J.P. Morgan account 794488569,
was from Petro America investors. In addition the funds used to purchase the Mercruiser Tahoe
and Trailstar trailer are traceable to proceeds of conspiracy and scheme to commit wire fraud
and securities fraud, and to violations of Title 18 U.S.C. § 1957 (money laundering).
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 78 of 81
Jewelry and Louis Vuitton Luggage
200. This declaration establishes probable cause that the following jewelry and
handbags seized during the execution of the search warrant at Teresa Brown’s residence are
subject to seizure and forfeiture to the United States pursuant to Title 18 U.S.C. §§ 981 and 982
on the grounds that they constitute property involved in, or traceable to violations of 15 U.S.C.
§ 78ff (securities fraud), 18 U.S.C. § 1343 (wire fraud), Title 18 U.S.C. § 371 (conspiracy to
commit wire fraud), and 18 U.S.C. § 2314 (interstate transportation of stolen property). In
addition, in some instances the property traceable to financial transactions in amounts greater
than $10,000 involving the proceeds of these Specified Unlawful Activities. As such, the assets
are traceable to violations of 18 U.S.C. § 1957 (money laundering).
201. As shown in this declaration, from September 2009 through March 2010. Teresa
Brown spent $59,614.82 on jewelry out of Windsong Ventures account 794488569 at J.P.
Morgan. In addition, Brown spent $21,575 on jewelry purchases from Windsong account
8302716212 at Bank of Colorado in February 2010.
202. On May 12, 2010, federal agents executed a search warrant on Teresa Brown’s
residence located at , Bandera, Texas. During the execution of the
search warrant, federal agents seized approximately 35 pieces of jewelry from Brown’s
residence. These items include an 18 karat gold diamond necklace (paid $15,000), an 18 karat
gold alexandrite diamond ring (paid $9,800), an 18 karat gold LeVian ring (paid $8,400) and a
Swiss Baume and Mercier men’s watch.
203. During an interview with federal agents, Brown stated she purchased a new
computer and jewelry with the sales of Petro America shares. Brown estimated that she has
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spent $20,000 on jewelry, which includes a $2,000 ring that she was wearing. She purchased
the jewelry to have something to sell in case currency was devalued. Brown said that the
shareholders that are purchasing her shares “understand that the money is mine.” As
established in this declaration, most shareholders who purchased shares from Brown thought the
money was going back to Petro to provide the company funds to take it public. This is because
Brown told shareholders by e-mails and conference calls that the money would be used for that
purpose. Based upon interviews done by federal agents with shareholders who purchased
shares from Brown, she did not disclose to them that she was taking a cut of the money for
herself. In any event, the funds used to purchase the jewelry are traceable to proceeds of
conspiracy and scheme to commit wire fraud and securities fraud, and to violations of 18 U.S.C.
§ 1957 (money laundering).
Louis Vuitton Luggage
204. As shown in this declaration, Teresa Brown purchased a 3 piece set of Louis
Vuitton luggage for $5,262.86 on February 22, 2010 in Zurich, Switzerland. This purchase was
made from Windsong Ventures account 794488569 at J.P. Morgan.
205. On the May 12, 2010 search warrant at Teresa Brown’s residence, federal agents
seized the 3 piece set of Louis Vuitton luggage. When Brown was asked by federal agents why
she purchased multiple pieces of Louis Vuitton luggage, she said when she traveled to
Switzerland something spilled inside the original luggage she took on the trip. She purchased
additional luggage and claims the Louis Vuitton luggage was the only kind of luggage she could
find for sale in Switzerland.
Case 4:10-cv-01042-DW Document 2-2 Filed 10/22/10 Page 80 of 81
206. This declaration establishes probable cause that the assets listed in the Complaint
are subject to seizure and forfeiture to the United States pursuant to 18 U.S.C. §§ 981, 982,
1957 and 1961(1), and 28 U.S.C. § 2461, on the grounds that they constitute property involved
in, or traceable to violations of 15 U.S.C. § 78ff (securities fraud), 18 U.S.C. § 1343 (wire
fraud), 18 U.S.C. § 371 (conspiracy to commit wire fraud), and 18 U.S.C. § 2314 (interstate
transportation of stolen property). In addition, in some instances the property traceable to
financial transactions in amounts greater than $10,000 involving the proceeds of these Specified
Unlawful Activities. As such, the funds on deposit in the accounts, and the physical assets, are
traceable to violations of 18 U.S.C. § 1957 (money laundering).
/s/ Special Agent Devin Fields
Special Agent Devin Fields
Internal Revenue Service – Criminal Investigation
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