Ky. judge freezes assets of oil securities firm

LOUISVILLE — A federal judge on Friday froze the assets of a Kentucky-based oil securities firm that promised revenue from wells to be drilled in Kentucky and three other states.

U.S. District Judge Joseph H. McKinley's order requires Heartland Resources of Bowling Green, along with its officers, to give the court a list of assets within 20 days.

A group of investors from around the country sued Heartland Resources, accusing the company of securities fraud. The investors say they put up more than $10 million to back oil wells in Knox County that were never completed. McKinley wrote that freezing the assets was the only way to ensure there would be money left if the investors win.

McKinley said none of the wells had been completed and the investors' money has not been accounted for. McKinley also noted that there is evidence of Heartland Resources' owners and directors transferring assets to family trusts since the suit was filed in September.

Messages left for an attorney for Heartland Resources, David Broderick, and Wynne James, an attorney for the investors, were not immediately returned Friday.

Heartland Resources solicited investments in oil and gas wells in Kentucky, Texas and Kansas and working interests in oil and gas wells in Oklahoma. The 53 plaintiffs, who are from 16 states, sued in September, claiming Heartland Resources and its owners facilitated the fraudulent sale of securities.

The investors say they put up anywhere from $60,000 to $800,000 in two payments for an interest in the wells, including more than $6 million collectively after being told the wells were ready to start producing.

But, the investors said, there were multiple things they were not told by Heartland Resources' sales team, including that Alabama and Wisconsin had barred the company from selling securities.

The investors also claim that they weren't told that one of Heartland Resources' owners, David A. Stewart, pleaded guilty to tax evasion and spent about a year in federal prison before being released in September. That case stemmed from Stewart's involvement with another oil and gas investment firm, Robo Enterprises.

Three other suits against Heartland Resources and its owners are pending in federal court in Kentucky.