Beware of oil and gas schemes, state securities regulators warn investors

—Con artists may seek to exploit fears over Mideast, oil supply—

MONTGOMERY, ALABAMA (March 6, 2003) - With oil prices near $40 a barrel because of supply shortages and Mideast war fears, state securities regulators anticipate an increase in oil and gas scams. Regulators in at least seven states – Alabama, Kansas, Kentucky, Ohio, Oklahoma, Texas and Wisconsin -- have recently taken actions against investment promoters pushing oil and gas schemes and they worry that news of high oil prices could make investors more vulnerable to crooks.

“Con artists always use the headlines as a way to get into investors’ wallets -- and everyone knows oil prices are up because they can see it at the gas pump and in their heating bills,” said Joseph Borg, the Director of the Alabama Securities Commission.

Regulators are concerned that a desire to cash in on rising oil prices may lure investors into unsuitable or fraudulent oil and gas ventures. Oil prices were recently near $40 a barrel. Heating oil prices are up 50% over the past year, according to the U.S. Department of Energy.

In Alabama, the Securities Commission has previously brought a number of administrative and criminal cases involving oil and gas ‘deals’ and others are under investigation. Borg noted that the fraud is normally structured with the firm’s office in one state, the operation and physical presence of the field in a second state, and the offerings made to prospective investors in states other than the initial two states. This reduces the possibility of an investor dropping by a well site or a nonexistent company headquarters. Presently the Commission is investigating an oil and gas lease venture opportunity, where most of the wells were supposedly off-shore. The various geographical locations in oil and gas investment opportunities make it more difficult for law enforcement officials and victims to identify and expose the criminals in this type of scam.

In Kentucky, regulators recently shut down a promoter for Albany, Ky.-based Vision Oil Company who claimed that God, not geology, was the key to finding oil. “God gave me a vision of three oil wells,” Linda Stetler said in a letter sent to potential investors. Regulators allege that over the course of several years Stetler and her company engaged in illegal practices, including inadequate disclosures of risks and selling to unsuitable investors. Vision Oil Co and its agents were fined by the state and ordered to pay restitution to investors.

In Texas earlier this year, David M. Phillips, III, of Dallas, was sentenced to 34 months in jail and ordered to pay over $1 million in restitution in connection with an oil scheme that spanned

- more -
17 states. Phillips admitted, in papers filed in U.S. District Court, that none of the invested funds

were used to develop oil wells. Instead he and his associates used much of the money for personal expenses.

Borg said, “Speculation on oil and gas wells is risky business no matter what is going on in the rest of the world.” Borg urged investors to do the following:

Beware of cold callers. High-pressure sales tactics and “once in a lifetime” opportunities are signals to hold onto your wallet.

Read carefully any written material provided. Make sure that what you are hearing from the promoter is consistent with what you have read.

Before investing contact the Alabama Securities Commission (ASC) to determine if the investment and the promoter are properly licensed or registered in Alabama. If they aren’t, don’t invest.

Contact ASC for inquiries regarding securities broker-dealers, agents, investment advisors, investment advisor representatives, financial planners, the registration status of securities, to report suspected fraud, or obtain consumer information:

ALABAMA SECURITIES COMMISSION

770 WASHINGTON AVE, SUITE 570

MONTGOMERY, ALABAMA 36130-4700

Telephone: (334) 242-2984 or 1-800-222-1253. Fax: (334) 242-0240

Email: asc@asc.state.al.us. Website: www.asc.state.al.us

###

If you have questions or require more information contact:

Daniel G. Lord

Education and Public Affairs Manager