HELENA — The federal government is investigating an alleged fraud scheme in which people handed over their savings to invest in what they believed was an oil and gas development project on the Fort Peck Indian Reservation.
The investors received nothing in return and the individuals soliciting the investments through Hotmail and Yahoo!-maintained email accounts don't actually own any oil and gas leases on the northeastern Montana reservation, according to court filings.
Since last year, three people have sent more than $43,500 to be invested, according to affidavits filed Dec. 16 by J. Christopher Wood, a special agent for the U.S. Department of Interior's Office of Inspector General.
The agency has asked for and received permission from a U.S. magistrate judge in Great Falls to search the messages and account information of four email addresses for information to identify and locate the people who set up the accounts. The search warrants also seek to find out who else was approached and how much more money may have been involved.
No arrests have been made. A call to Wood was not returned.
Kris Kolesnik of the Interior Department's inspector general's office in Washington, D.C., said he could not comment on ongoing cases.
Wood's affidavit says that a California investor was contacted last year by a man purporting to represent a company called Domestic Energy Solutions. The California investor sent more than $37,000 after the representative gave him a copy of a 2006 letter from the Bureau of Indian Affairs that approved the sale of three Fort Peck leases to Domestic Energy Solutions.
The investor contacted the BIA in July 2010 because he had not received any returns on his investment and he could no longer make contact with the company. Two other investors from Nevada and California contacted the BIA later in 2010 and earlier this year to say they had invested $2,500 and $4,000 based on that same lease approval letter.
A Yorba Linda, Calif.-based company called Domestic Energy Solutions did successfully bid on those leases in 2006, but the leases were canceled in 2007 because of non-payment of fees and rents, according to the affidavit.
There is no Domestic Energy Solutions listed as a business entity with the California Secretary of State. The Yorba Linda address listed for the company in its bid was traced to a UPS Store mailbox.
BIA officials contacted this week in Billings, Fort Peck and Washington, D.C., did not respond to requests for information as to who owns those leases today or whether there has been any oil and gas development on that land.
In June, Domestic Energy Solution's representative sent the BIA a message from a different email address saying that the company wanted to partner with another company to drill for oil and build a refinery on the reservation.
Representatives of the new company, U.S. Oil and Gas LLC, later contacted the BIA to ask the agency to sign a letter of intent to allow it to build the refinery.
In November, an Illinois man told the BIA that he had been asked to invest with U.S. Oil and Gas LLC. The BIA told him the company did not have any oil and gas leases on the reservation.
U.S. Oil and Gas LLC was formed in July, according to Articles of Organization filed with the Montana Secretary of State's office. The address of the company in that document is a UPS Store mailbox in Great Falls. There are no Montana telephone listings for the two men named as company managers.
U.S. Magistrate Judge Keith Strong of Great Falls approved the warrants to search Yahoo! and Microsoft offices in California for records of the four email accounts used to solicit investments or contact the BIA. As of Wednesday, those warrants had not been executed.
Yahoo! spokeswoman Amber Allman did not address the case but said in a statement Wednesday the company evaluates each demand carefully to determine its legal obligations to respond.
"Just like other communications companies, Yahoo! assists law enforcement by responding to valid legal process that complies with U.S. Law, including the Electronic Communications Privacy Act, and we take that responsibility very seriously," the statement said.